DENVER (KDVR) — The former Colorado Art Institute at 12th Lincoln Streets is being repurposed as a 10-story building that will house 194 studio apartments.
It’s a recent example of converting downtown commercial space into residential living. The units are tiny — 300 square feet on average — and will rent for $1,200 to $1,500 a month, depending on the rental market once the project is complete by the end of 2022.
“They are small, but wait to you see how smart we make this layout,” said Melissa Rummel, a development director with Nichols Partnership.
It’s the same firm that transformed an old Holiday Inn hotel next to Mile High Stadium into the Turntable Studios apartments.
Rummel said the Turntable project confirmed to her it’s not just college students who want to live downtown.
“It will satisfy a broad swatch of housing demand,” she said. “I can say that from experience.”
The demand for more housing comes as the demand for office space is declining.
The Denver Downtown Partnership told the Problem Solvers that only 15-25% of office workers have returned to office buildings downtown since the beginning of the COVID pandemic.
“We got forced into a grand experiment of working from home, and we found out we were pretty good at it,” said Jeff Engelstad, a business professor at University of Denver.
Occupancy rates downtown have been climbing since the pandemic begin.
According to CoStar, which tracks commercial real estate information worldwide, the vacancy rate for downtown office space in Denver was 12% in the first quarter of 2020. In the second quarter of 2020 it was 13.4%, then it jumped to 14.4% in the 3rd quarter, followed by 15.1% in the fourth quarter. By the first quarter of 2021, the vacancy rate had risen to 16.9%.
“The market always figures out a way. Now we have a problem with office space,” said Engelstad, who believes there will be more conversions downtown of commercial space into residential living.
The Denver Metro Association of Realtors told the Problem Solvers Denver has gained the most workers in the last 12 months from New York City, Chicago and San Francisco, places where people are likely familiar with downtown living.
Local developers are noticing, evidenced by the change in plans being submitted to city hall. What was to be office space at 955 Bannock Street will now be a 12-story apartment building.
It’s not just a downtown trend either. In Cherry Creek North, a site at 3250 E. Second Ave. was slated to be a five-story office project. In April, developers submitted new plans to make it a five-story high rise filled with 22 housing units.
Could converting office buildings into residential spaces help address the housing crunch in Denver?
“Absolutely,” said Rummel, the developer. “It doesn’t necessarily alleviate the need for single-family homes. That market still exists and that demand is still there. What it does is it gives people the opportunity to live downtown affordably.”