Value Of Denver’s Republic Plaza Drops 44% In Last Decade
The value of Republic Plaza, Colorado’s tallest building, has fallen by 44% in the last decade, a startling indicator of the damage done to Denver’s office market in recent years and the struggles faced by older office towers in the central business district.
According to bond holder data reviewed by the Denver Business Journal, which first reported the drop, the 56-story office building in the heart of Denver’s central business district was recently valued at about $298M, down from a $535.4M valuation when the building was financed 10 years ago.
The new valuation comes as Denver office landlords are facing a 10-year high in vacancies and investors across the country are shying away from office assets, particularly those of the same vintage as Republic Plaza, which was built in 1984.
“No one knows how much occupancy will come back over time, and that just puts a question in everybody’s mind about how much buildings are worth,” Glenn Mueller, a commercial real estate professor at the University of Denver, told DBJ.
News of Republic Plaza’s declining valuation also comes just months after the $134M loan securing the building became delinquent in April. A fund owned by Brookfield Partners, which owns Republic Plaza along with insurance provider MetLife, has also let two of its towers in Los Angeles go into receivership recently.
In late April, the Gas Co. Tower, a 52-story Class-A office building in downtown Los Angeles, went into receivership after Brookfield became delinquent on more than $350M of debt attached to the building. A month later, Brookfield became delinquent on a more than $275M mortgage attached to EY Plaza in Los Angeles’ financial district.
The struggles of Denver’s Republic Plaza to retain tenants are similar to challenges office landlords face nationwide. In April, commercial real estate data firm Trepp measured Republic Plaza’s occupancy rate at about 79%, a decline of more than 12% year-over-year.
Denver’s overall office vacancy rate increased by 1.4% year-over-year up to nearly 21%, according to CBRE. For comparison, the nationwide office vacancy rate is about 13%, Axios reported.
