Another Downtown Denver Office Tower Lands On Auction Block
Denver’s DC Building at 518 17th St. is for sale, following the Denver Energy Center to the auction block, though this time not forced by foreclosure.
Owned by Unico Properties and Goldman Sachs, the 24-story, 275K SF property is just under 31% occupied, according to BusinessDen, which first reported the auction.
A Unico representative told BusinessDen that the company decided to sell the property via an auction on the CRE platform Ten-X after receiving broker feedback and examining its broader portfolio strategy.
The two-day auction is scheduled for Aug. 22 with a minimum bid of $9M. Unico purchased the property in 2015 for $30M and spent another $10M on renovations, including the addition of a bowling alley in 2018.
The DC building name references The Denver Club, the city’s oldest private social club, which retained a 99-year lease for the building’s top floors in exchange for the site of its former home, a brownstone that was razed for the tower.
It’s the second prominent downtown Denver building to go to auction so far this year. The Denver Energy Center sold at auction in June to JP Morgan Chase Commercial Mortgage Securities Trust, which submitted the lone bid for $88M.
With Block 162 complete and signing tenants and the 700K SF 1900 Lawrence office project under construction, it’s evident there’s still some interest in downtown, with some industries, such as law firms, shifting to newer product.
But elevated office vacancy rates persist in downtown Denver, according to second-quarter market reports from major brokerages in the city.
Because all brokerages track data differently and have their own geographic definitions of neighborhoods, the specific vacancy figures vary somewhat between reports issued by CBRE, JLL, Cushman & Wakefield and Newmark. But all of the reports placed the downtown office vacancy rate in the range of 26%-28%, compared with the pre-pandemic range of 15%-16%.
A portion of the vacancies in downtown and across Denver can be attributed to new construction, including projects that delivered in the midst of the pandemic. Developers’ interest in Denver is still active, but they are increasingly targeting areas outside of downtown.
To the southeast of downtown, Cherry Creek’s reputation as a shopping and dining hub is expanding to include office uses, with a recent flurry of office development and corporate relocations announced in the neighborhood.
