Republic Plaza, an icon of the Denver skyline and the tallest building in the state, is worth hundreds of millions of dollars less than it was a decade ago as the shift to remote work empties out downtown offices.
The 56-story office tower was appraised at $298 million last month, down from $535 million the last time the building was valued in 2012, according to Trepp, a company that analyzes commercial property loans. The amount of empty space at the skyscraper is climbing, loan documents show.
Republic Plaza is hardly an outlier. More than one-quarter of downtown Denver’s office space is vacant as companies cut space, according to the most recent update from CBRE, a real estate company. The buildings most likely to lose tenants are older properties that don’t have the modern finishes and updated amenities of newer buildings. Republic Plaza was built in 1984. The plunge in the property’s value was reported earlier by the Denver Business Journal.
Commercial properties generate a lot of tax revenues, and a rapid decline in values could leave a hole in big city budgets across the U.S. as office workers continue to do their jobs from home.
Denver boosters have been trying to get people to spend more time downtown with pandemic restrictions largely in the rearview mirror. And while a lot of people are coming out to have fun, office attendance remains stubbornly stuck well below pre-pandemic norms.
The city is exploring options to convert unused office space into apartments, but those types of projects are expensive and can be a tough sell for developers. In the meantime, landlords are stuck with a lot of vacant space that isn’t generating income. That means property owners are more likely to default on their loans, leaving lenders and city officials on the hook to figure out what to do with half-empty buildings.
The owners of Republic Plaza have already run into trouble with the mortgage on the property. The landlords are still making payments for now, but the fate of the building is unclear.
