Denver has cemented its place as one of North America’s tech hubs, according to CBRE’s 2024 Tech 30 report, but office vacancy rates are still high and negative absorption plagues landlords and developers.

Tech companies accounted for 21.4% of Denver’s office leasing activity in 2024, on par with the national average of 21% in CBRE’s Tech 30. Venture capital funding also poured into the city’s tech ecosystem, with $1.1B secured in the first half of the year across 47 deals, including $38.1M for artificial intelligence-focused companies.

“Tech activity is making up about 20% of what we track weekly, and that’s a strong indicator of ongoing market interest,” CBRE Senior Vice President Nic Weld told Bisnow.

The Tech 30 represents markets across the U.S. and Canada with the highest levels of tech industry employment relative to other sectors that use office space. Denver ranks No. 13, while Toronto is No. 1. Nashville, Dallas-Fort Worth, Indianapolis and Raleigh-Durham, North Carolina, round out the top five.

The Denver metro ranks among the top markets for year-over-year office rent growth, according to the report, with rates climbing 5.7% as of the second quarter — outpaced only by Boston, Baltimore and Nashville.

While tech leasing activity and rent growth paint a positive picture, the macro market tells a more complex story. Denver’s office vacancy rate has nearly doubled since before the pandemic, from about 13% in 2019 to 24.8% in Q3 2024. Downtown Denver, the city’s premier tech submarket, reflects similar trends, with elevated vacancies even as rents climb to an average asking rate of $41.90 per SF​.

Downtown was the only Denver submarket to show positive absorption in Q3, thanks largely to UK-based online sports betting firm Bet365 moving its U.S. HQ into the Mile High City. The entire metro area saw nearly 1M SF of negative absorption in the same period.

“This is the big head-scratcher,” Weld said when asked about rising rents amid low to negative absorption. “A lot of it comes down to the delivery of new buildings, operating costs and concessions.”

Many new buildings in Denver were planned and financed before the pandemic, he said, with developers targeting higher rents to cover construction costs and debt obligations. Weld pointed to significant landlord concessions, such as free rent and tenant improvement allowances, as a key driver behind maintaining rent levels.

A look at sublease availability also shows the Denver office market is struggling. Availability sat at around 2% in Q1 2020, while today it has more than doubled to about 5%, the Tech 30 report shows. San Francisco, Phoenix and Austin saw the largest jumps in sublease availability in that same period.

Despite challenges, Weld expressed optimism about Denver’s future. He highlighted the city’s highly educated workforce, tech diversity and increasing office attendance as reasons for long-term growth.

Nationally, the CBRE report says “most Tech-30 markets are entering the stabilization phase of the office market cycle.”

“There are very positive signals for Denver’s tech market and office landscape in the years to come,” Weld said.