Two adjacent office towers in downtown Denver recently traded for a fraction of their prepandemic value — a stark indicator of the distress still gripping the city’s office market.
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Los Angeles-based developer Asher Luzzatto purchased the buildings at 621 and 633 17th St. for $3.2M in April, down from an estimated $200M valuation in 2019. The properties, totaling nearly 1M SF, are slated for conversion into more than 700 apartment units.
The dramatic discount shows how much values have eroded in Denver’s urban core. Downtown office vacancy sits at 35%, according to CBRE’s first-quarter office report, and local experts cited by 9News estimate that many office assets have lost between 40% and 50% of their value since 2020.
"I think Denver is experiencing a really high level of distress in office," Luzzatto told 9News. "I've seen empty buildings, I've walked through empty buildings. It's disquieting. It's disquieting because it's so quiet for a downtown."
Rising interest rates, remote work and falling rents have all contributed to the downtown downturn — a challenge echoed in major markets like San Francisco and Seattle, though 9News says Denver’s office market has held up slightly better by comparison.
"We’ve had a tug of war between the return-to-the-office proponents and the work-from-home proponents," Jeff Peshut, director of Metropolitan State University of Denver’s real estate program, told 9News. "We still have the structural problem of people not wanting to work in office buildings in central business districts."
The sale adds to growing momentum around office-to-residential conversions.
Bisnow reported in February that Denver is expected to deliver 1,398 apartments via office conversions in 2025 — a 55% increase from last year — making Denver the 15th-largest adaptive reuse market nationally, according to a RentCafe report.
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