The first quarter wasn't the greatest for Denver's retail segment — but that didn't stop strong rent growth.
Negative absorption in the first three months of the year totaled -407,332 square feet, according to a market report from JLL. That weighed on vacancies, leading to the category spiking by 30 basis points quarter-over-quarter to 4.1 percent. On the plus side, vacancy remains small— only 50 basis points above the historical low Denver posted in the fourth quarter of 2018.
"Limited new construction is helping offset the impact of negative net absorption by minimizing new supply additions," said JLL.
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"Net deliveries totaled 26,263 s.f. in Q1 2025, a 4.4% increase from Q4 2024 and a positive shift from Q1 2024 (-462,268 s.f.)."
As of March, just 380,000 square feet was under construction, only representing 0.2 percent of the total retail inventory in Denver. Also, the demolition of retail product is keeping the supply scarce. Over the past four years, a total of 1.8 million square feet has been demolished.
As a result, rents rose by 2.9 percent year-over-year to $26.51 per square foot. The growth rate outpaces the national average of 1.9 percent.
Meanwhile, it was a little more mixed on the leasing front. The 683,497 square feet in activity represented a 10.3 percent surge from the fourth quarter — but a 36.1 percent drop year-over-year. Again, vacancy is low, which is leading to a slowdown, according to JLL. This trend, along with rent growth, is expected to continue in the short term.
"Limited new construction will restrict supply additions as retailers compete for available retail space," the brokerage wrote.
"This competition is likely to sustain annual rent growth, helping Denver outperform the nation.
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Anthony Russo
Anthony Russo has been contributing to GlobeSt. since July 2024. Along with CRE, his financial background expands to capital markets, the economy, and consumer issues. Previously, he has written for CapitalWatch and was a senior reporter for The US Sun.
