Denver, faced with a glut of empty space and not enough demand to fill it, is joining cities across the country in a push to repurpose a growing pool of office properties into much-needed housing.
The city and county of Denver, working with the global architecture firm Gensler, recently identified 20 conversion candidates based on a building's design, proximity to public transit and other factors. Gensler is now tasked with taking a closer look at 16 of them to determine what issues might be involved in the overhauls.
Conversions would "help us meet some of our housing and sustainability goals as well as potentially revitalize and create a central neighborhood district," said Jennifer Ramsey, adaptive reuse senior development project administrator for the city and county of Denver. "This isn't only about identifying or even trying to identify which buildings should be converted. For the city, it’s about understanding how we can start to assist adaptive reuse holistically."
If converted, those 16 properties could result in more than 5,000 new housing units spread across 4.3 million square feet of new residential space in downtown Denver alone, according to the initial study.
Across the country, cities that include New York, Chicago and Washington, D.C., are also pursuing initiatives to hasten the conversion of underused office space. Many hope to revive downtown business districts and boost their cities' housing stock.
Record-high vacancy and sublease availability rates have meant Denver now ranks among the worst-performing office markets in the country, according to a CoStar analysis. The city's low office attendance rate and tenants' ongoing efforts to downsize their space needs have pushed the city's average vacancy to nearly 16%, which climbs even higher for buildings constructed before 2000.
Denver's high concentration of older properties has made the idea of office-to-housing conversions especially attractive as trends such as tenants' flights to higher-quality buildings make it unlikely that those properties will soon rebound back to full occupancy.
While city officials have been discussing ways to encourage alternative uses for office space, it can take a while before talk turns into action. For example, some office buildings are less adaptable to residential use than others, and the costs can be prohibitive.
Change of Use
Although much discussed in the past year, conversions remain relatively rare.
Between 2016 and 2022, about 260 offices across the country were converted to other uses, according to a report from the real estate firm CBRE. That figure is projected to climb this year as office landlords — especially those for older properties with fewer amenities — look to find a more productive use for their real estate.
Apartments have been the most common reuse for outdated office buildings. Since 2016, more than 90 office properties have been converted to housing across the United States' largest metropolitan areas, according to CBRE. Those projects have collectively changed the space into more than 14,000 rental units.
Some potential conversion candidates in Denver include Republic Plaza, the city's tallest building at 370 17th St., which Gensler found highly compatible with a residential overhaul. Other buildings identified in the study include the Denver Energy Center at 1675 and 1625 Broadway, the Capitol Center building at 225 E. 16th Ave. and the 31-story tower at 1660 Lincoln St.
The city and county of Denver recently debuted its Upper Downtown Adaptive Reuse Pilot Program, specifically created for office-to-residential conversions. Through the program, eligible building owners and applicants are paired with city project coordinators to guide them through the permitting process, which was recently streamlined to help expedite proposals.
A building must be located within specified bounds of downtown Denver to be eligible for the program, and each property must be more than 30 years old and at least 50% vacant.