Denver's downtown office vacancy rate of 40% — the highest among the top 50 U.S. cities — is attracting a new kind of investor willing to bet on conversion over demolition.
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Developer bets $5.25M on America's emptiest downtown revival
Developer Asher Luzzatto paid $5.25 million for the 785,000-square-foot Energy Center complex in downtown Denver late last year, a 97% discount from its 2013 purchase price, to convert half the space into about 1,100 apartments.
"We had our real heyday and now we're paying for it," said Bill Mosher, a veteran real-estate executive tapped by Denver's mayor to help revive the city's struggling downtown core.
Luzzatto acquired four downtown office towers for a combined $8.45 million — including two buildings that Blackstone bought for about $100 million in 2015 — and plans to add a bookstore, art gallery, children's museum and daycare center. The Downtown Denver Development Authority approved a $63 million loan in March, the largest in its history, to support the conversion.
The bet hinges on whether suburban workers will reverse-commute from a revitalized downtown core, a question that will determine if Luzzatto's model can be replicated across other struggling U.S. downtowns from St. Louis to Portland, Oregon.
The plunge in office values is reshaping the economics of conversion. Nationwide, the office-to-apartment conversion pipeline grew 28% to 90,300 units at the start of 2026, according to apartment search website RentCafe. In Calgary, Alberta, a city-subsidized program launched in 2021 has spurred close to two dozen projects, with eight completed and enjoying strong demand at profitable rents, developers say.
Luzzatto's rock-bottom acquisition costs make his math work where others see risk. He paid $3.2 million for two towers valued at roughly $100 million a decade ago — less than Blackstone spent on upgrades after the pandemic. The Energy Center's two towers cost less than some single-family homes in Denver's Cherry Creek district. Rents for the converted units will range from about $1,700 for a studio to $4,500 for a three-bedroom, with 75 units designated as affordable.
Conversion costs remain steep
Luzzatto faces a $30 million price tag just to address asbestos and replace single-pane windows on two of the buildings. Denver's energy standards and building codes add further costs, though city officials have worked to cut through red tape. The buildings' long floor plates and large window bays — designed for the oil-boom era of the 1970s and 1980s — offer advantages for residential conversion, with mountain views that Luzzatto says could be a selling point.
"Imagine if this were your apartment," he said, motioning to the Rocky Mountains visible from the 29th floor.
The challenge is convincing workers who have embraced remote and hybrid schedules — Denver's remote-work rate is well above the national average — to move into a downtown that has emptied out. Vacant storefronts, darkened office floors and deserted streets greet visitors today. Yet Luzzatto argues that the same factors that hollowed out downtowns — remote work, suburban flight, collapsing office values — create the conditions for reinvention.
"If this works in Denver, it works anywhere," he said.
This article is for informational purposes only and does not constitute investment advice.
