What Is the Current State of Denver's Office Market?
Denver's office market is navigating the most significant transformation in its modern history, shaped by the lasting impact of remote and hybrid work models, a wave of sublease space returning to the market, and shifting tenant preferences toward higher-quality, amenity-rich buildings. For investors and owner-occupants seeking office loans in Denver, understanding these dynamics is essential to identifying opportunities and structuring appropriate financing.
The numbers reflect a market in transition. Denver's metro-wide office vacancy reached 26.3% in the fourth quarter of 2025 across 121.4 million square feet of total inventory. Average asking rents sit below $31 per square foot, under the national average for large Western markets. Office sales volume has declined approximately 60% from pre-pandemic levels, and the development pipeline has largely paused. These headline metrics paint a challenging picture, but they also obscure the significant variation across Denver's office submarkets and property classes.
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The flight to quality is the defining trend in Denver's office market. Tenants are consolidating into newer, well-amenitized Class A buildings in walkable, transit-connected locations, while older Class B and C properties struggle to attract and retain occupancy. Sublease availability for Class A space has declined 33.8%, signaling that the highest-quality buildings are finding their footing. Class B sublease space has declined 24.5%, a more modest improvement that reflects continued challenges for properties that lack the amenities and location advantages that modern tenants demand.
For borrowers exploring commercial loans in Denver, the office sector presents a bifurcated opportunity set. Premium Class A properties in Cherry Creek, RiNo, and LoDo with strong tenant rosters command institutional financing on favorable terms. Distressed and underperforming Class B properties available at significant discounts offer repositioning upside but require bridge financing and experienced execution. Understanding which financing tools match each opportunity is the key to successful office investment in Denver's current environment.
What Office Loan Options Are Available in Denver?
Denver's office lending landscape has tightened considerably since 2022, but multiple financing pathways remain available for borrowers who understand which programs match their property profile and investment strategy.
Conventional Bank Loans serve stabilized Denver office properties with 85%+ occupancy, creditworthy tenants, and weighted average lease terms (WALT) of three years or more. Rates range from 6.5% to 8.0% with 5 to 10 year terms and maximum LTV of 65-70%, down from 75% in the pre-pandemic office market. Colorado banks with established Denver office lending programs include institutions with deep submarket expertise who evaluate deals based on local market knowledge rather than purely national vacancy statistics. Properties in Cherry Creek and Denver Tech Center with strong tenant rosters attract the most competitive bank terms.
SBA 504 Loans represent the strongest financing option for owner-occupied Denver office buildings. With up to 90% financing at fixed rates between 6.0% and 7.0% for 20 to 25 year terms, the SBA 504 program enables businesses to purchase their office space with as little as 10% down. Denver law firms, accounting practices, medical groups, and technology companies that occupy at least 51% of a building can leverage this program. The long-term fixed rate eliminates interest rate risk, and the low equity requirement preserves working capital for business operations.
Bridge Loans fill the critical financing gap for Denver office properties undergoing repositioning, lease-up, or conversion. Rates range from 8.0% to 11.5% with 12 to 36 month terms and up to 75% LTV. Bridge lenders remain active in Denver's office market, though they require significant borrower experience, substantial liquidity, and detailed business plans demonstrating a viable path to stabilization or sale. The most active bridge loan opportunities involve acquiring distressed Class B buildings in strong locations at deep discounts and executing tenant improvement and repositioning programs.
CMBS and Conduit Loans offer non-recourse financing for larger Denver office assets with strong in-place income. Rates range from 6.0% to 7.5% with 5 to 10 year terms and up to 65-70% LTV. CMBS lenders have become more selective in the office sector, focusing on properties with long-term leases to credit tenants, limited rollover risk, and locations in Denver's strongest submarkets. Buildings with more than 20% of leases expiring within three years may face difficulty qualifying.
DSCR Loans serve smaller Denver office properties where investors qualify based on rental income rather than personal income documentation. Rates range from 7.0% to 9.0% with up to 70-75% LTV. These loans work well for investors acquiring smaller office condos, professional suites, or single-tenant office buildings in suburban Denver submarkets. Use our DSCR calculator to evaluate qualification.
Hard Money Loans provide fast capital for distressed office acquisitions where speed and flexibility outweigh cost considerations. Rates range from 10.0% to 13.0% with 6 to 18 month terms and 60-65% LTV. Denver hard money lenders focus on the underlying land value and collateral protection rather than the building's current income, making these loans accessible for vacant or severely distressed office properties that no other lender will finance.
How Do Denver's Office Submarkets Compare for Investment?
Denver's office market performance varies dramatically by submarket, and lender underwriting reflects these differences. Selecting the right submarket determines both investment returns and financing availability.
LoDo and CBD (Central Business District) represent Denver's largest office concentration with the highest vacancy rates at 28-32%. Asking rents range from $32 to $42 per square foot, with Class A properties at the higher end. Sale prices range from $150 to $300 per square foot, reflecting significant discounts from peak values. LoDo's urban walkability, transit access, and proximity to Coors Field and the Union Station entertainment district continue to attract younger companies and creative tenants, but the submarket must absorb substantial vacancy before fundamentals normalize. Bridge loans and opportunistic capital are the primary financing tools for LoDo office acquisitions today.
Cherry Creek stands out as Denver's most resilient office submarket, with vacancy of 15-20% versus the metro-wide 26.3%. Asking rents command $38 to $50 per square foot, the highest in the metro area. Sale prices range from $250 to $400 per square foot for quality buildings. The submarket benefits from affluent surrounding demographics, walkable retail and dining, limited developable land, and strong demand from financial services, legal, and wealth management firms. Lenders view Cherry Creek office properties favorably, offering higher leverage and better rates than other Denver submarkets. Conventional bank and CMBS financing is most accessible here.
Denver Tech Center (DTC) serves as the metro area's primary suburban office hub with vacancy of 22-26%. Asking rents range from $28 to $36 per square foot, with sale prices of $120 to $200 per square foot. DTC benefits from excellent highway access along I-25, light rail connectivity, and a concentration of technology, financial services, and corporate headquarters. The submarket's Class A buildings with modern amenities continue to attract tenants, while older product faces repositioning challenges. DTC represents a middle ground for financing, with stabilized Class A properties qualifying for conventional loans and older buildings requiring bridge or value-add financing.
RiNo and Platte Valley have emerged as Denver's creative and technology office hub, with newer building stock commanding rents of $35 to $45 per square foot. Vacancy ranges from 18-24%, lower than the CBD but still elevated. Sale prices range from $200 to $350 per square foot, with One Platte trading at $539 per square foot as a benchmark for trophy-quality product. The submarket attracts venture-backed startups, design firms, and technology companies seeking open floorplans, exposed architecture, and neighborhood vibrancy. Lenders are more comfortable with RiNo office than CBD due to the submarket's demographic strength and limited future supply.
Aurora and I-225 Corridor offers Denver's most affordable office entry point with asking rents of $22 to $28 per square foot and sale prices of $80 to $140 per square foot. Vacancy runs 20-24%, but the submarket benefits from government tenants (federal and state agencies), healthcare operators, and professional service firms that provide stable, creditworthy occupancy. Value-add investors using bridge financing can acquire Aurora office buildings at substantial discounts and reposition for government and medical office users.
What Returns Can Office Investors Expect in Denver?
Denver office returns vary widely based on property class, submarket, tenant quality, and the investor's ability to execute repositioning strategies. The current market offers attractive entry pricing for investors who can navigate the elevated vacancy environment.
Stabilized Class A Office generates cap rates of 5.5% to 7.0% for properties with strong tenant rosters, long lease terms, and locations in Cherry Creek, RiNo, or DTC. Cash-on-cash returns range from 6% to 10% with conventional financing at 65-70% LTV. While these returns are modest compared to pre-pandemic levels, the declining sublease availability and stabilizing demand provide a foundation for gradual improvement. Investors with long-term hold horizons benefit from locked-in below-replacement-cost basis and the eventual recovery of rental rates.
Value-Add Class B Office offers the highest return potential in Denver, with initial cap rates of 7% to 10% and targeted IRRs of 15% to 25% for successful repositioning. The strategy involves acquiring well-located but underperforming buildings at $80 to $180 per square foot, investing $30 to $60 per square foot in renovations (lobby upgrades, coworking amenities, fitness centers, outdoor spaces), and re-leasing at rates 20-30% above previous levels. Denver's tenant flight to quality favors renovated properties that deliver Class A experiences at Class B pricing. Bridge financing at 8-11.5% funds the repositioning period, with an exit into conventional or CMBS financing after stabilization.
Owner-Occupant Investment through SBA 504 financing generates compelling economic returns by converting rent expense into equity building. A Denver professional firm paying $25 per square foot in rent on 5,000 square feet ($125,000 annually) can often purchase a comparable space and reduce monthly occupancy costs by 15-25% while building equity in a real asset. With SBA 504's 90% financing, the total cash invested is minimal, and the 20-25 year fixed rate provides decades of cost certainty.
Conversion Opportunity: Denver's office market has generated significant discussion about office-to-residential conversion. While the economics are challenging for most buildings (conversion costs of $200-$350 per square foot, complex zoning approvals, and structural limitations), select properties with favorable floor plates, window lines, and zoning may present viable conversion candidates. The City of Denver has signaled support for conversions that address housing supply, and some tax incentives may become available. Bridge and construction financing would fund the conversion, with the exit into permanent residential financing.
What Do Lenders Require for Denver Office Loans?
Office lending standards in Denver have tightened significantly in response to elevated vacancy and evolving tenant demand patterns. Understanding what lenders require helps borrowers prepare competitive applications and manage expectations on leverage and terms.
Occupancy and Lease Quality: Most conventional lenders require minimum occupancy of 85% for Denver office loans, with weighted average lease terms (WALT) of at least three years. Properties with concentrated rollover risk (more than 20% of leases expiring in a single year) face more conservative underwriting, including lower leverage and higher DSCR requirements. Lenders scrutinize tenant credit quality, with investment-grade tenants on long-term leases receiving the most favorable treatment. Government tenants (GSA leases) are considered among the strongest credits.
DSCR Requirements: Denver office loans typically require a minimum DSCR of 1.25x to 1.35x, higher than the 1.20x to 1.25x standard for multifamily. The elevated DSCR threshold reflects the greater income volatility of office properties, where tenant departures can significantly impact cash flow. Lenders may apply a "downtime" deduction, reducing projected income to account for potential vacancy between lease expirations and new tenant occupancy.
Leverage Limits: Maximum LTV for Denver office loans has compressed to 65-70% for conventional and CMBS financing, down from 75% in the pre-pandemic market. SBA 504 loans remain the exception at up to 90% LTV for owner-occupants. Bridge lenders offer up to 75% of as-is value. The reduced leverage means Denver office investors must bring more equity to transactions, which creates both a barrier and an opportunity, as higher equity creates a larger margin of safety and better loan terms.
Borrower Requirements:
- Minimum credit score of 680 for conventional loans (650 for bridge)
- Net worth equal to or exceeding the loan amount
- Post-closing liquidity of 12 to 18 months of debt service (higher than multifamily due to rollover risk)
- Office ownership or management experience strongly preferred
- Detailed tenant retention and leasing strategy for properties with near-term rollover
Property Due Diligence:
- Third-party MAI appraisal (lenders may discount appraisals on office properties more aggressively given market conditions)
- Phase I environmental assessment
- Property condition report evaluating HVAC, elevator, roof, parking structure, and building systems
- ADA compliance assessment
- Lease audit confirming rent terms, escalations, options, and tenant improvement obligations
Contact Clear House Lending to discuss which office loan structure matches your Denver property and investment strategy. Our team can provide a preliminary assessment within 24 to 48 hours.
What Financing Strategies Work Best for Denver Office Properties?
Denver's bifurcated office market demands strategy-specific financing approaches. The right structure depends on property quality, occupancy status, target submarket, and the investor's risk tolerance.
For Owner-Occupants: SBA 504 financing is the clear winner for Denver businesses purchasing their own office space. With 90% financing, fixed rates for 20 to 25 years, and no ongoing covenant restrictions, SBA 504 loans enable professionals to lock in occupancy costs well below market rents while building equity. Denver's current market offers owner-occupants a rare window to purchase quality office space at 25-40% below replacement cost. Target Cherry Creek, DTC, or RiNo buildings where your business can occupy 51% or more of the space.
For Stabilized Investors: Conventional bank loans or CMBS financing provide the best terms for fully leased Denver office properties with credit tenants and long WALT. Focus on Cherry Creek and DTC properties where lender confidence is highest. Lock fixed rates for 7 to 10 years to protect against the prolonged recovery timeline. Maintain 30-35% equity to access the most competitive rates and demonstrate commitment to the asset.
For Value-Add Investors: Bridge-to-permanent financing strategies fund the repositioning of underperforming Denver office buildings. Acquire Class B buildings in strong locations (LoDo, RiNo, DTC) using bridge loans at 65-75% LTV. Execute tenant improvements, lobby renovations, and amenity additions. Lease to quality tenants at repositioned rents. Refinance into conventional or CMBS financing once occupancy exceeds 85% and WALT exceeds three years. Budget 24 to 36 months for the full repositioning cycle in Denver's current office market.
For Distressed Acquisitions: Hard money and aggressive bridge financing fund opportunistic purchases of vacant or severely underperforming Denver office buildings. These transactions require the most borrower experience and capital reserves but offer the highest return potential. Target buildings in markets where the underlying land value provides downside protection, such as LoDo (where residential demand supports alternative uses) and Cherry Creek (where scarcity ensures long-term value). Partner with experienced Denver office brokers and property managers who can execute aggressive leasing campaigns.
Use our commercial mortgage calculator to model financing scenarios across different LTV, rate, and occupancy assumptions for your Denver office target.
What Risks Should Denver Office Investors Evaluate?
Denver's office market carries the highest risk profile of any major commercial property type in the current cycle. Successful investors acknowledge and plan for these risks rather than ignoring them.
Prolonged Vacancy Recovery: Denver's office vacancy has increased for six consecutive years, and the 26.3% metro-wide rate represents a structural challenge rather than a cyclical correction. The shift to remote and hybrid work has permanently reduced office space demand per employee, and the recovery timeline is measured in years rather than quarters. Investors should underwrite conservative lease-up assumptions and ensure bridge loan terms include extension options sufficient to weather a slower-than-expected recovery.
Tenant Flight to Quality: The migration of tenants from Class B and C buildings into Class A space creates a two-tier market where Class A properties stabilize while lower-quality buildings face persistent vacancy. Investors targeting Class B value-add must invest sufficiently in amenities, design, and services to compete for tenants who increasingly demand Class A experiences. Half-measures in renovation will not attract quality tenants in Denver's tenant-favorable market.
Interest Rate Sensitivity: Office cap rates are more sensitive to interest rate changes than any other property type because of the higher perceived risk. If rates increase further, cap rates on Denver office could expand, reducing property values even for stabilized assets. Fixed-rate financing provides protection, but investors should stress-test their exit assumptions under multiple rate scenarios.
Regulatory and Conversion Risk: Denver's energy performance requirements, seismic retrofit mandates, and evolving building codes can create unexpected capital expenditure obligations for office property owners. Buildings that fail to meet energy efficiency benchmarks may face penalties or restrictions on leasing. Factor regulatory compliance costs into acquisition underwriting.
Refinancing Risk: Properties financed with bridge loans face refinancing risk if the permanent lending market tightens further or if the property does not achieve projected stabilization metrics within the bridge term. Ensure you have multiple exit pathways, including selling the property, recapitalizing with equity partners, or extending the bridge loan. Do not rely on a single refinancing scenario.
Contact Clear House Lending to discuss office financing strategies and risk mitigation for your Denver office investment.
Frequently Asked Questions
What is the minimum down payment for an office loan in Denver?
Down payments for Denver office loans range from 10% to 40% depending on the loan program and property profile. SBA 504 loans require as little as 10% for owner-occupied office buildings, making them the most leveraged option. Conventional bank loans require 30-35% down (65-70% LTV) for investment office properties. Bridge loans require 25-35% equity. CMBS loans require 30-35% down. Hard money loans may require 35-40% equity due to the elevated risk profile of distressed office assets. Use our commercial mortgage calculator to estimate your equity requirement.
What cap rates are Denver office buildings trading at in 2026?
Denver office cap rates range widely from 5.5% to 10% or higher depending on property class, occupancy, tenant quality, and submarket. Class A buildings in Cherry Creek with strong tenants trade at 5.5-7.0%. Class A in DTC and RiNo trades at 6.0-7.5%. Class B properties in LoDo and CBD trade at 7.0-9.0%. Distressed and vacant office buildings may trade at effective cap rates above 10% based on projected stabilized income. The wide cap rate spread reflects the market's uncertainty about the pace and extent of office recovery.
Can I finance a Denver office building conversion to residential?
Yes, though the financing structure is complex. Office-to-residential conversions typically require a phased financing approach: bridge or hard money financing for acquisition, construction financing for the conversion buildout, and permanent residential financing upon completion. Conversion costs in Denver range from $200 to $350 per square foot depending on building configuration. Not all office buildings are suitable for conversion; ideal candidates have shallow floor plates (60 feet or less), operable windows, and favorable zoning. Contact our team to evaluate financing options for a specific conversion project.
How long does it take to close an office loan in Denver?
Closing timelines for Denver office loans vary by program. Bridge and hard money loans close in 14 to 30 days. Conventional bank loans close in 45 to 75 days. SBA 504 loans require 60 to 120 days. CMBS loans close in 60 to 90 days. Office loans may take longer than comparable multifamily or industrial transactions because lenders conduct more extensive tenant credit analysis, lease review, and market due diligence given elevated vacancy conditions.
What DSCR do lenders require for Denver office properties?
Denver office lenders typically require a minimum DSCR of 1.25x to 1.35x for conventional and CMBS financing, higher than the 1.20-1.25x standard for multifamily. The elevated threshold reflects office income volatility and rollover risk. SBA lenders may accept 1.15-1.25x for owner-occupied properties. Bridge lenders are more flexible at 1.0-1.10x for transitional properties. Verify your property's DSCR using our DSCR calculator.
Is now a good time to buy office space in Denver?
Denver's office market presents a contrarian investment opportunity for investors with appropriate risk tolerance, capital reserves, and execution capability. Prices have declined 25-40% from peak levels across most submarkets, creating entry points well below replacement cost. Sublease availability is declining (particularly for Class A), the construction pipeline has paused, and employment growth continues to support eventual demand recovery. The strongest risk-adjusted opportunities are in Cherry Creek (lowest vacancy, premium tenants), owner-occupied purchases using SBA 504 financing (90% LTV at fixed rates), and well-located Class B buildings in RiNo and DTC that can be repositioned for modern tenant needs.
Sources: Cushman & Wakefield Denver MarketBeats, Avison Young Denver Office Reports, Hoff & Leigh Q1 2025 Market Reports, CommercialCafe Denver Office Data, Crexi Denver Market Analysis, Bisnow Denver.