Downtown Denver’s office crisis just hit another milestone.

Los Angeles developer Asher Luzzatto picked up the two-tower Denver Energy Center at auction last week for nearly $5.3M — a property that last traded for $176M in 2013, the Denver Business Journal reported.

The 900K SF complex at 1625 and 1675 Broadway is just 18% occupied, according to the DBJ.

Luzzatto said he plans to convert at least one tower into apartments while keeping some office space active. The redevelopment could yield roughly 500 units.

“Denver is distressed in a way that doesn’t actually comport with the underlying fundamentals,” Luzzatto told the DBJ. “For those reasons, we really loved the market and want to be active in it.”

It’s the second bargain-basement deal for Luzzatto this year. In April, his firm, The Luzzatto Co., bought 621 and 633 17th St. for $3.2M — down from a $200M valuation in 2019 — with plans to deliver more than 700 apartments plus retail, daycare and other amenities.

Across the two deals, Luzzatto has spent $8.5M for 1.9M SF of Denver office space.

Those sales come amid a historic reset downtown. CBRE pegs second-quarter vacancy at 36.8%, up from 35.3% in Q1. The iconic Wells Fargo Center was reappraised this summer at $115M, a 76% value drop from 2019, triggering losses for CMBS bondholders.

Denver now ranks No. 6 nationally for CMBS office delinquencies at 27.2%, nearly triple the U.S. average, according to Trepp.

Office-to-residential conversions are accelerating. RentCafe data shows Denver is on pace to deliver nearly 1,400 apartments via conversions this year — a 55% increase from 2024.

For Luzzatto, the opportunity is scale. Between the two projects, he’s eyeing more than 1,200 units.

“That’s a seismic shift in the lifeblood of downtown,” he told the DBJ.