Commercial properties are turning residential
DENVER (KDVR) – The former Colorado Art Institute on 12th Lincoln Street is being converted into a 10-story building with 194 studio apartments.
It is a recent example of downtown commercial space being converted into residential buildings. The units are tiny – 300 square feet averages – and will rent for $ 1,200 to $ 1,500 per month depending on the rental market once the project is completed by the end of 2022.
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“You’re small, but wait until you see how smart we’re making this layout,” said Melissa Rummel, director of development at Nichols Partnership.
It’s the same company that turned an old Holiday Inn hotel next to Mile High Stadium into the Turntable Studios Apartments.
Rummel said the turntable project confirmed that it’s not just college students who want to live downtown.
“It will meet a wide range of housing demands,” she said. “I can say that from experience.”
The demand for more living space comes as the demand for office space is falling.
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The Denver Downtown Partnership told problem solvers that only 15 to 25% of office workers have returned to downtown office buildings since the COVID pandemic began.
“We were forced to work from home on a great experiment, and we found we were pretty good at it,” said Jeff Engelstad, an economics professor at the University of Denver.
Occupancy in the city center has increased since the beginning of the pandemic.
According to CoStar, which collects information on commercial real estate worldwide, the vacancy rate for office space in downtown Denver was 12% in the first quarter of 2020. It was 13.4% in the second quarter of 2020, then 14.4% in the third quarter, followed by 15.1% in the fourth quarter. By the first quarter of 2021, the vacancy rate had risen to 16.9%.
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“The market always finds a way. Now we have a problem with office space, ”said Engelstad, who believes that there will be more commercial and residential conversions in the city center.
The Denver Metro Association of Realtors told problem solvers that Denver has gained the most workers in the past 12 months from New York City, Chicago, and San Francisco, where people are likely familiar with downtown life.
Local developers are noticing this, which is evident in the change in the plans presented to the town hall. What office space at 955 Bannock Street should be is now a 12-story apartment building.
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It’s not just a downtown trend, either. Cherry Creek North should have a location at 3250 E. Second Ave. be a five story office project. In April, developers submitted new plans to make it a five-story skyscraper with 22 residential units.
Could converting office buildings into living quarters help address Denver’s housing shortage?
“Absolutely,” said Rummel, the developer. “It doesn’t necessarily have to reduce the need for single-family homes. That market still exists and that demand is still there. It gives people the opportunity to live cheaply in the city center. “
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