Denver Government Plans To Expand Lease At Troubled Republic Plaza
The Denver city government plans to lease an additional 72K SF across three floors in the troubled Republic Plaza building to use as a “swing space” while it completes renovations to the Wellington Webb building.
The city already leases about 74K SF in Republic Plaza but wants to expand that footprint temporarily. City documents show a lease rate of $22 per SF, well below the $38-per-SF average for downtown, according to Cushman & Wakefield data.
Denver Director of Real Estate Lisa Lumley told the city council’s finance committee on Sept. 12 that the city requested information from three separate office buildings. The city chose Republic Plaza because of its “low lease rate, move-in-ready condition, and the quick timing of document execution,” all of which will allow the Webb building project to stay on schedule, Lumley said.
The lease expansion contract would run for 36 months and could cost the city more than $4.9M, according to a proposal filed with the city. If approved by the full city council, the expanded lease would give Denver a more than 146K SF footprint in the office building and bring the total maximum contract value of the lease up to more than $54M. Republic Plaza has agreed to provide all furniture, workstations and wireless internet, Lumley said.
The lease was unanimously approved by the finance committee, but it still needs to be approved by the full city council before it goes into effect. That vote could happen by the end of the month.
“When Mayor [Mike] Johnston took office, he asked us if we could reconsider sending Denver employees to work from home during construction to support the downtown rehabilitation and restabilization,” Lumley said. “We also wanted to find swing space that was cost-effective and would allow our employees to stay downtown versus sending them home.”
In May, Denver officials approved a two-year, $135.5M facelift for the Wellington Webb building, an 800K SF office building at 201 West Colfax Ave. that serves as city hall. Several city departments call the building home, including the clerk and recorder’s office and community planning and development. Renovations include improving accessibility, technology updates and improving the bathrooms, Lumley said.
The departments located at the Webb building will move one by one to the new Republic Plaza space when it is time to renovate their floor, Lumley said. The goal is to minimize the impact of the renovations on government services and the public, she added.
The expanded lease at Republic Plaza also comes as the office building is struggling financially. Gensler estimated the building’s vacancy rate at 32%, according to Denver’s adaptive reuse study.
Meanwhile, the building’s value has dropped by more than 44% over the last year because of pandemic-related economic impacts. Meanwhile, building owners Brookfield and MetLife Insurance have modified their loan to avoid lenders foreclosing on the property.
