The forecast for Colorado commercial real estate in 2026 is partly cloudy with a chance of sunshine.
Tal Diamant, a partner with BCLP’s real estate practice group in Denver, expects vacancies to persist in office spaces, “experiential retail,” such as restaurants and fitness centers, to flourish and the slump in commercial real estate to gradually level off thanks to selective opportunities in the market. “We may be looking at the bottom of the downward trend right now,” he said.
About nine months ago, Diamant joined the Denver office of BCLP. The firm focuses on leasing, acquisition and disposition, development, real estate partnership formation and financing work for a wide variety of assets. Yet his experience in commercial real estate is deep, with more than 25 years in the industry.
To look forward, Diamant first looked back. Contrasting current economic trends with the Great Recession of December 2007 to June 2009, he said, “After COVID, we saw this more gradual recession” that was fairly expected. “People have short memories, but we were all asking when the cycle would bottom out,” he recalled.
What’s different now is that the market has been inching up and down in waves since 2022, “and people don’t want to be in the market if they don’t know what will happen,” Diamant said.
He said a colleague has compared today’s market to “death by a thousand knives,” adding, “This feeling that we’re in a long lull is universal,” impacting Europe, Asia and the United States.
Cloudy Conditions
The lull in commercial real estate extends from office to retail, but Diamant predicts some sunshine.
After years of more people settling in Colorado than leaving, the number of residents exiting the state is growing, and some businesses have relocated to states that offer a “friendly environment for development,” he said. “Every businessperson I talk to is nervous about doing business here.” He cites the length of time it can take a Colorado business to finalize permits, entitlements and other documentation.
In addition, “the economy isn’t where it was for people to meet those benchmark building standards” that were set for environmental reasons by cities about a decade ago, he said. “People move because it’s too expensive, taxes are too high, and many of those say that Colorado is an amazing place, but we’re just going to do business somewhere else.”
In the Denver metro, vacancies are high, with about a quarter of office spaces sitting empty at the end of 2025. The outliers are Class A office buildings, which are rich with amenities and provide the experience workers and tenants have demanded when returning to more post-pandemic, in-person hours. Suburban office markets also are performing better than most downtown spaces.
Clear Skies Ahead
The best news, said Diamant, is that unlike with depressions and recessions in the past, more controls are in place, and “there’s more balance in most economies,” he said. This balance can lead to more “waves” between rising and falling economics, but the consequences are less dire than in the past.
And for those who are willing to take risks, “don’t stop looking for opportunities.” It’s not enough to say that the market moves in cycles, Diamant said. Instead, “We’ve been asking for a reset for a long time, so get out there. Maybe you can’t go out right now and invest, but adopt the mindset of not giving up, working hard and being patient. The opportunities will be there.”
One way to persevere in commercial real estate is to embrace the rising trend of “experiential retail.” Desired retail providers have shifted from big box stores to specialty retail shops in which customers can play with technological products, experiment with skincare or take a class. “People need to rethink what their shopping centers look like,” he suggested.
Forecast: Growth
As for Colorado in 2026, Diamant hopes business and government agencies will adopt a shared vision for commercial growth alongside social development.
“There are, in this town, some really intelligent, highly experienced business leaders with a lot of really good ideas,” said Diamant, referring to Denver government leadership. “Get those businesspeople together and work with them. This requires legislative and executive to work with business leaders.”