Office Vacancies Approach 40 Percent Downtown As Cherry Creek North Attracts New Development And Commands Premium Rents
by Mark Smiley
Downtown Challenges: Downtown Denver’s skyline remains impressive, but its office market faces significant challenges. Vacancies reached 38.6 percent during the second quarter of 2026, leaving property owners searching for tenants and alternative uses for aging buildings.
While downtown Denver struggles to fill empty office towers, Cherry Creek North is experiencing a building boom. Just a few miles southeast of downtown, developers are planning new office buildings, luxury residences, and retail projects in one of the region’s hottest commercial districts.
The contrast is striking. According to commercial real estate firm CBRE, downtown Denver’s office vacancy rate reached 38.6 percent during the second quarter of 2026. Meanwhile, figures presented by JLL in September placed vacancy in Cherry Creek’s most sought-after office market at just 2.2 percent, with asking rents approaching $94 per square foot. Although the figures reflect different market definitions, they illustrate the dramatic difference between the two areas.
A Building Boom Continues
One of Cherry Creek’s latest proposed developments is a five-story office and retail building at 2701 E. Third Avenue, near Clayton Street. Known as 3rd & Clayton, the project would include approximately 54,000 square feet of office space, ground-floor retail, and three levels of underground parking.
The proposal is one of several projects transforming Cherry Creek North from a boutique shopping district into a major employment, residential, and entertainment destination.
The approximately $500 million Cherry Lane development is expected to add hundreds of apartments, new retail space, and offices. Meanwhile, Oasis Apartments at 299 Milwaukee Street is expected to feature 177 apartments and approximately 26,000 square feet of retail space. Its retail space was reportedly fully leased ahead of the project’s anticipated 2027 opening.
Why Cherry Creek Is Winning
Building Boom: Construction cranes tower over Cherry Creek North as developers continue adding office buildings and luxury properties. The neighborhood’s thriving commercial real estate market stands in sharp contrast to downtown Denver’s struggling office sector.
The shift toward remote and hybrid work has fundamentally changed Denver’s office market. Businesses are seeking smaller, modern spaces surrounded by amenities that appeal to employees and clients.
Cherry Creek offers upscale restaurants, shopping, hotels, and convenient access to affluent residential neighborhoods. Its proximity to Glendale, Hilltop, and Belcaro makes it especially attractive to business owners and executives living nearby.
Investors are paying extraordinary prices for that convenience. CBRE reported that an office property at 255 Fillmore Street sold for approximately $941 per square foot, setting a record and highlighting the neighborhood’s appeal.
However, rapid growth comes with challenges. Increased traffic, limited parking, construction disruptions, and rising rents threaten the neighborhood character that helped make Cherry Creek successful. Smaller independent businesses may find it increasingly difficult to compete with national retailers and larger companies.
Downtown Faces An Uphill Battle
Downtown Denver’s office market is not without hope. CBRE reported 66,000 square feet of positive net absorption during the second quarter of 2026, along with the first quarterly decline in total vacancy since 2024.
Landlords are offering competitive rents and incentives, while some older office towers are being considered for conversion into residential buildings. Still, with nearly four out of every 10 office spaces vacant, downtown faces a difficult recovery. Lower rents alone may not be enough to persuade businesses to return.
