In our December 2022 Otten Johnson Alert, we reported that the City of Denver planned to evaluate buildings in the downtown area that might be suitable for converting potentially underused office space to much needed residential space. The City recently completed its study, identifying a total of twenty-two buildings that it considered good candidates for conversion.

The primary categories that were assessed as part of this study included:
• Site Context: analyzing the walkability of surrounding area, access to public transportation, availability of natural light, amount of obstructed views in the vicinity, and whether the building would provide any south facing windows.
• Building Form: determining whether the building was of suitable shape to be converted to housing units as opposed to offices.
• Floor Plate: calculating the average distance between the core of the building and windows (often a key challenge with office to residential conversions) along with the number of existing elevators in the building.
• Envelope: examining how easily windows could be replaced to be suitable for residential use.
• Servicing: evaluating the loading, parking, and general structure of the building for compatibility with residential purpose.

The study evaluated each of these categories and scored the buildings on a scale of 1 to 10. The categories were also given weighted conversions for the scores, with building form and floor plate scores being more heavily weighted than site context or envelope, indicating that overall building structure was more critical for conversion compatibility. Of the top twenty-nine properties initially considered, twenty-two scored above an 80%, indicating a high compatibility with residential conversion. Sixteen of the twenty-nine candidates were provided an individual compatibility assessment that expanded on the scores in each category, providing further insight into why these buildings might or might not have potential to become residential spaces. The majority of the buildings identified as ideal candidates for conversion are located within the Central Business District, with some in the Union Station and Northern Capitol Hill neighborhoods.

While the study provides a starting point for the City of Denver in its journey to convert office buildings to housing, there are still many challenges ahead. The City will first need to approach building owners about their interest to either sell the building to the City for the City to convert or for the owner to consider pursuing conversion on its own. Inclusion in the study did not necessarily mean any of the buildings were actually considering conversion, but instead aimed to provide a comprehensive set of options for the City to pursue. Now the City will need to work with these building owners for the next steps.

Additionally, the study does not consider the individual cost of a conversion for each site, noting that renovation costs would need to be considered on a case by case basis. The study further indicates that while the zoning does not require a change in use, the residential use would have to “comply with all current regulatory instruments such as Design Guidelines, Current codes, and Zoning Requirements,” all of which add to the potentially steep cost of a renovation. As we discussed in our December 2022 Otten Johnson Alert, the cost of conversion is perhaps the steepest barrier to overcome when considering converting an office building to residential as these are often complicated, intricate renovations requiring specific expertise. As the City approaches building owners, it will have to navigate the cost conversation and work with building owners to ease concerns regarding regulatory and permitting obstacles.

Affordable housing remains a hot topic in the Denver Metro area. Converting the top sixteen candidates identified in the study to housing could add approximately five thousand units to Denver’s housing stock, which could help in easing some of the housing burden in Denver, which was estimated to be short roughly 70,000 units as of June, 2023.