Another major tenant is dialing back its Denver office footprint after signing a deal that will cut its downtown presence in half.
Global law firm Morrison Foerster finalized a lease to relocate its regional hub in a move that will cut its existing 25,000-square-foot space down to less than 11,500 square feet, a spokesperson confirmed with CoStar News. Once realized, the San Francisco-based firm will move from the Republic Plaza high-rise at 370 17th St., where its lease expires in early 2027, to the city's 1800 Larimer tower.
The deal marks the latest hit to the Denver office market as it struggles to establish its post-pandemic footing. Morrison Foerster's looming exit spotlights the increasing challenges plaguing the market in which tenants are still offloading large blocks of space that current demand has been unable to fill.
Companies across the country have spent the past several years reevaluating and solidifying their real estate needs, often leveraging lease expirations or landlord negotiations as a way to upgrade their space. Many have opted to trade out space in older, less attractive properties for offices in newer and better-located buildings. T
hat flight to quality has boosted occupancy at the top-end of the office quality spectrum, but has decimated demand for many older, lower-tier alternatives.
The more than 1.3 million-square-foot Republic Plaza tower, for example, was developed in the early 1980s and is among a cohort of aging properties that have borne the brunt of those shifting tenant preferences — even if they remain iconic fixtures across city skylines.
That phenomenon has become increasingly acute in Denver, where a procession of recent relocations has resulted in significant cuts to tenants’ previous footprints.
Shrinking presence
Morrison Foerster’s new lease marks the latest loss the Brookfield Properties-owned Republic Tower and the Denver market — especially its downtown core — have endured as tenants continue to dump large amounts of space and push the regional vacancy rate beyond historic highs.
Before the end of 2025, Bank of America finalized a deal for 29,000 square feet in the new Block 162 office tower in downtown Denver, a deal that marked a major downsizing from the more than 62,300 square feet the financial giant has been leasing at Republic Plaza.
Elsewhere downtown, insurance firm Marsh & McLennan signed a deal last year for space in the city’s new 1900 Lawrence tower, a move that cut its earlier office hub by more than half. And Houston-based oil giant EOG Resources finalized a lease in the fall for about 100,000 square feet at 1550 17th St., an agreement that shaved off about 60% of the company’s presence in the city.
Depressed demand has pushed Denver’s office vacancy rate in the city up to nearly 18%, according to CoStar data, among the highest in the country. The average lease size in the second quarter was 3,200 square feet, a drop of more than 40% compared with deals signed about a decade ago.
Tenants in the Denver area have collectively handed back 2.3 million square feet more than they’ve leased over the past year, according to CoStar data.
One of the surprising winners of Morrison Foerster's relocation plan is the new owner behind the 1800 Larimer tower.
Before the end of last year, former landlord Beacon Capital Partners ceded the property to its lender in the aftermath of losing Xcel Energy as its anchor tenant. Ownership of the 22-story property has officially been transferred to a Blackstone Mortgage Trust affiliate.
Boston-based Beacon acquired the downtown building for $291 million in early 2022 and took out a nearly $191 million loan shortly thereafter to help finance the deal. The loan was scheduled to mature early this year, and while it remains unclear how much the investment firm still owed for the property, it ultimately decided to toss back the keys.
And for Blackstone, things are beginning to look up.
"This newly renovated, high-quality property has recently experienced leasing momentum and is well positioned to capture tenant demand as the market recovers," a spokesperson said in an emailed statement to CoStar News. "While the asset represents less than 1% of BXMT’s portfolio, we are well equipped to maximize performance by leveraging the resources of our platform [as] the largest owner of commercial real estate globally.”