As of June, Denver's Republic Plaza -- Colorado's tallest building -- is valued at $298 million.
That's down around 44% from its last valuation of $535 million in 2012.
It's not the only commercial building to face that fate. More than three years since the start of the pandemic, scores of workers continue to work remotely. In cities across the country, downtowns continue to struggle as commercial real estate vacancy rates grow and property values drop. At the same time, Denver and cities across the U.S. are grappling with a housing shortage crisis.
So what would it take to turn some of those increasingly empty office buildings into apartments?
A new study of Denver's downtown, funded through federal pandemic recovery dollars, found that Denver has a "large supply" of commercial properties that developers could turn into apartments. The study specifically identified 16 top candidates for adaptive reuse, but report authors suggested that Denver has the potential to convert many more.
The analysis, conducted by the architecture firm Gensler, includes Republic Plaza, along with other recognizable parts of Denver's skyline like the Denver Energy Center.
"If the top 16 buildings from Denver's analysis were converted to residential uses, this could add over five thousand units to our Downtown neighborhood," said Jon Gambrill, Managing Director of Gensler's Denver office, in a statement released last week. "This would also convert upwards of 4.3 million square feet of office space to new residential uses."
The downtown-focused study looked at 69 buildings. Researchers then identified nearly 30 potential properties and conducted a close analysis of 16.
Researchers scored the buildings on factors including walkability, transit availability, light and views, the shape of the building, the number of elevators, parking, and how easy it would be for developers to do things like plan out units and replace windows.
From there, 29 buildings scored high enough to look at more closely. Gensler researchers then chose 16 particularly promising properties to analyze individually and assess what conversion might look like.
But researchers emphasized that Denver has the potential to convert many more buildings than the ones listed in the report.
Gambrill said the company has looked at hundreds of buildings in cities across the country while working on similar analyses. Compared to other cities, he said Denver has a particularly high quantity of buildings that could be converted into apartments.
"I think there's enough of these buildings that are so old that they're just not going to attract office tenants any longer," he said. "There are cities, even Denver, where we were looking at some of these older buildings before the pandemic, and so the pandemic maybe just accelerated it by a few years."
Jennifer Ramsey, an adaptive reuse administrator with the Department of Community Planning and Development, said the study is part of the city's bigger vision to "rebalance" office space with residential and retail space, given the impact of the pandemic on Denver's downtown.
"I think the push for this in general is actually part of a larger effort," she said. "The city is looking at this as an opportunity really to take the Central Business District to a central neighborhood district, and so we're looking to add that additional residential."
Like other adaptive reuse proposals in a car-centric city like Denver, availability of parking was a major factor in deciding whether a building might be a good fit.
Some housing advocates oppose prioritizing parking when planning development. They say that makes it difficult to build new housing and promote car use over other options that are better for the environment, like biking and public transportation. But supporters point to the fact that public transportation in Denver is limited, as is street parking -- something that shows up in the Gensler report.
"Parking continues to be a market driver in Denver for residential leasing," Gensler researchers wrote in their report. "Buildings that don't provide adequate parking to support residents will be challenged."
But just because some office buildings might be good candidates for conversion does not mean they will necessarily become apartments.
That decision is ultimately up to each property owner. They would be the ones to decide if it's safe to bet on the commercial real estate market recovering, or if it's time to redevelop themselves or sell to a developer who might make the residential conversion.
Zoning wouldn't be an issue because, Ramsey said, Denver's downtown office buildings already have flexibility for residential conversion built in. But cost estimates on conversions are challenging, given how much buildings can vary.
"It's very difficult to pin that down because it is going to vary greatly from building to building," said Tobias Strohe, a partner with the Denver-based JNS Architecture and Design firm, which has submitted plans for a few commercial conversions and worked on reuse projects in the past. "It's certainly not cheap."
Tracy Loh, a Brookings Institution fellow who studies commercial real estate, said lingering supply chain issues in the construction industry can sometimes make conversion more affordable, since developers can recycle a lot of materials and finish the project faster.
She emphasized that adaptive reuse is not new; in the past, cities often converted old industrial buildings into offices. Now, those offices might become housing. But the economics of conversion are different.
"What's novel about the current moment is that a type of commercial real estate that used to reliably command the highest dollar per square foot is now having to be down-cycled to other land uses that command a lower dollar per square foot," she said. "That's where the cost conversation becomes tricky. It's not just the absolute hard cost of doing the project, it's the opportunity cost of forgoing office-level rents, in exchange for residential or retail level rents, which are lower."
But Strohe and Loh both said that commercial conversions do have two other benefits: they are better for the environment and preserve local history, which can appeal to owners down the line. Many are located in the hearts of cities, desirable locations new buildings often cannot compete with.
"Tearing existing concrete or steel structures down and building new buildings, you can imagine that that's environmentally not really a great idea," Strohe said. "There's no more sustainable building than when it's already there that you're repurposing."
Denver has turned office buildings to apartments in recent years.
In 2006, 1600 Glenarm Place, a 31-story tower at 16th Street Mall, turned into more than 300 units. Some building owners have taken more recent steps toward conversion as well. In 2022, the owner of Denver's Petroleum Building filed a preliminary plan to turn the office building into around 130 apartment units.
Also that year, Strohe's firm submitted two more sets of plans to convert two downtown office buildings, the Symes Building at 820 16th St. and an 11-story office tower at 225 16th Ave. The plans include more than 200 apartment units, with ground-floor retail and co-working spaces. Strohe said his firm is still going through the planning and permitting process to get the projects approved.
So what happens next?
The city is running a pilot program in Upper Downtown to help owners and developers convert commercial space into residential units. The program gives developers a project coordinator to help them with the review and permit process.
In order to qualify, properties must be located in Upper Downtown, be made up of commercial office space, be constructed more than 30 years ago and have at least a 50% vacancy rate. The owner must also plan to turn at least part of the building into residential housing.
Ramsey said the city currently has two projects in the pilot program, and expects to add more down the line. "There's tremendous interest," she said.
As similar projects play out across the country, Loh said cities need to continue to anticipate the future.
"This isn't about offices and housing, this is about the entire built environment and how it needs to be more flexible and adaptable because the pace of change is faster than ever," she said. "So this isn't the last time that we're going to find ourselves with surplus of one kind of building or infrastructure in one kind of location. We have to get more flexible and we have to be able to adapt."
