The California company that owns 821 17th St. in downtown has branded the historic nine-story edifice as The Vault. But old hands know it as the Denver National Bank — one of six standing bank and financial buildings that a century ago anchored the “Wall Street of the Rockies.”
This fall, that landmark captures a moment in time as Upper Downtown straddles a decidedly uncertain future. Downtown office vacancies have dipped slightly to around 38%, giving faint hope of a market recovery, while some newer competing spaces have been picked up for pennies on the dollar, headed for residential conversion.
The Vault perfectly mirrors that vacancy issue: It sits 100% empty.
That perfect 100%-vacant rate has held despite $22.4 million that its owner, Seal Beach-based Harbor Associates, says it poured into a pre-pandemic renovation of its lobby, some office floors and mechanical systems after it purchased the building in 2017 for $17.6 million.
Finding tenants has been a struggle. Office workspace provider WeWork took 40,000 of the property’s 107,000 square feet in 2018 but left the address in 2021 as the pandemic settled in.
Brokers at JLL, which has offered the lease prospects at 821 17th St. and now presents it more as a purchase opportunity, still have signs up for leasable space. But an area broker told The Denver Gazette that when he brought in a potential tenant a year ago, he heard from JLL that owners were refraining from leasing while they contemplated the building’s final resolution.
More upbeat view
The Denver Gazette reached out numerous times to JLL and the building’s brokerage team with opportunities to clarify the property’s disposition. It finally received a brief reply by text and email that the “ownership of 821 17th has declined to comment to any news articles.”
There were times, not that far back, when this building captured a much more upbeat view of Denver’s central business district and its future.
Long after the building’s heyday during the Roaring Twenties, the financial district reemerged with a new vibrancy in the 1980s and 1990s when downtowns across the nation were struggling to stay alive.
Just as in other cities, downtown Denver had seen its historic commercial districts abandoned during the 1960s as bars, hotels and warehouses built during horse-and-buggy days deteriorated into destitution. Teardowns of old buildings that dated from the Silver Boom left little but vast parking lots or were replaced by colorless steel-and-glass office towers.
But Denver ran counter-cyclically to other U.S. downtowns — transforming from what even locals called a “cow town” into a sports and entertainment hub.
Much of the excitement was about Lower Downtown, fostered by urban restoration pioneer Dana Crawford and by the arrival of the Colorado Rockies. But blocks of Upper Downtown right around the Denver National Bank were creating some of their own cachet.
Steak at The Broker
The bank’s colossal vault in the basement was the centerpiece of the downtown Broker Restaurant, which began luring diners through its steel door in 1972 for prime rib and beef wellington accompanied by endless supplies of corpulent shrimp — at then-startling prices of over $30 per plate. (It closed permanently in 2017.)
In 1978, the building opened Women’s Bank — U.S. chartered and bathing in a national spotlight on women-owned businesses and women-targeted lending. It was widely credited as the most successful women’s bank in the country, finally sold to investors in 1994.
Across Champa Street, the newer Art Deco Railway Exchange building was transformed into the Hotel Monaco (still operated by Kimpton and booking rooms now from $250/night). A block north, the Embassy Suites was dressing up an area near the old Greyhound Bus Depot that had run down-at-the-heels.
In 1990, the Rocky Mountain Diner created a glitzy sensation when it opened a block east in the historic Ghost Building, 18th and Stout.
The Denver Dry
Heading a block south, the 16th Street Mall (now called simply 16th Street) that had unfolded in 1982 amid an oil-and-gas industry crash would begin to spark its own retail and dining hot spots. As in LoDo, retail buildings that were struggling to compete against suburban shopping — think Denver Dry Goods Company on California Street — were to make popular conversions to loft properties.
Fast-forward 35 years, and Upper Downtown is struggling to repurpose itself in the wake of the pandemic-driven work-from-home phenomenon.
Along 17th heading northwest from the Brown Palace Hotel, the street still shows those six classical financial buildings — including the First National Bank (1925), the Equitable Building (1892) and Guaranty Bank (1920) next door to the Denver National Bank/Vault building.
Those are now interspersed between sleek office towers, many of them launched during the oil boom — including downtown’s tallest, the 56-story Republic Plaza at 17th and Tremont streets.
Opened in 1984 with 1.2 million square feet and for decades viewed as downtown’s premier office property, it went into receivership this month after its owner defaulted on the loan.
Optiv Security departs
The prospects for newer buildings worsened Friday when The Denver Gazette’s partner 9NEWS reported (from the Denver Business Journal) that Optiv Security was leaving 1144 15th Street, where it had been the building’s headliner.
The 40-story class-double-A tower was one of the only ones built downtown since the oil boom days. The cybersecurity firm, which at one point had 75,000 square feet in 1144, is reportedly moving its headquarters to the Kansas City area.
A spokesperson wrote to The Denver Gazette that the move had formally taken place last month and that Colorado-based employees would continue work here but remotely.
Now investors in Upper Downtown properties, new and old, are again looking to residential conversions — to rentals or, more doubtfully, condominiums — as one way out of the CBD’s vacancy dilemma.
That possibility isn’t that far-fetched for 821 17th St.
The bank was originally designed in 1907 as a showcase for reinforced concrete construction, then dressed up a decade later by prolific architects Fisher & Fisher, who had done a number of the other financial buildings centered on Champa and Stout streets. Several of those had made successful conversions to residential properties decades ago.
Advantages of conversion
Bill Mosher, former chief project officer for the Denver Downtown Development Authority and who had led the Downtown Denver Partnership during the 1990s when it was nurturing Hotel Monaco and other financial district projects, recalls them fondly.
“Generally historic buildings have real possibilities,” Mosher told The Denver Gazette. “They have lobbies that are interesting spaces.”
The building received a historic designation in 1977.
Space-age-era buildings up the street, meanwhile, have disadvantages for conversion that century-old landmarks built before the era of air conditioning might not.
The Denver National Bank/Vault Building, 119 years old, has an L-shaped footprint that leaves a prominent air well down the back corner of the building — making for potential window area and air access that offices no longer need but that apartments and condos covet.
The smaller scale may work better in apartment layouts than do the mammoth footprints of newer towers. The two L-wings of the Denver National Bank/Vault each measure 50 feet wide, a reasonable scale, with windows that might be rendered operable. Republic Plaza, rather, measures 125 x 200 feet, clad in solid concrete and plate glass.
Higher basis
But Mosher notes that towers picked up in this market provide potential developers with vastly lower base costs than a smaller, historic one that was purchased a decade ago and that may reflect a lot of remodeling dollars in between.
Potential sellers of the bank building have not disclosed a list price, but on a website presenting the structure, they crow about its potential for either an office or a residential direction — putting the best spin on its complete lack of tenancy.
“The Vault is offered fully unencumbered by existing leases, providing an investor with the flexibility to pursue office, adaptive reuse or a residential or hospitality conversion,” the site explains.
The owners point up the $22.4 million-plus renovation that the building received, citing a “new lobby, restored 1st and 2nd floors, full exterior façade restoration and modernized base-building systems.” Apparently referring to the former WeWork spaces, it describes “furnished spec suites on floors 6-9 — giving an investor the opportunity to drive immediate occupancy without the cost, risk or timeline of executing that capital program.”
But a peek through locked brass-and-glass doors into the building’s main floor on 17th and Champa — described in the promotion as a “grand 23-foot two-story atrium (that) anchors the ground floor as a signature centerpiece” — looks unfinished and in need of finish and trim. Harking back to the Broker restaurant, it could potentially be a dining or retail space.
Bargain Basement
Meanwhile, Upper Downtown has seen some office towers sell at bargain basement prices to a developer planning apartment conversions.
Over the past year, former Los Angeles mayoral candidate Asher Luzzatto, with support from the DDA, bought four newer buildings that collectively represent 1.75 million square feet — 5% of downtown’s office supply.
Those included the twin-tower Denver Energy Center at Broadway and 16th Street for a reported $5.25 million. The pair had sold a decade earlier for $176 million before a bank took back the property.
Luzzatto’s company also picked up properties at 621 and 633 17th St. at a hugely discounted $3.2 million, with plans to create 700 apartments with 50 hotel rooms — a possibility widened by $63 million in low-interest loans from the quasi-governmental DDA as part of a $242 million strategy to revitalize downtown.
“The reason Luzzatto is doing those is that he bought them for less than 10 bucks a foot,” Bill Mosher noted, highlighting the low-basis investment. “It’s hard to do that with $29 million sunk into building.”
Sticky wicket
Architect-engineer Bradley L. Zieg, with decades of experience including on the older buildings along 17th, said that the residential potential is inviting, but that converting is a sticky wicket whether they are old or new.
“Most buildings of any kind of stature were designed and built to a specific use,” Zieg told The Denver Gazette. “Converting offices into residential uses is a real stretch. Residential architecture is fundamentally different than whatever else you would do.”
Those problems are multiplied, Zieg added, in newer offices where a ceiling is separated by a plenum from the floor above.
“They force air into the floor and they distribute it to the various offices; the return air is in the ceiling plenum,” Zieg said. “Residences don’t do that.”
“Even if you can solve the space-planning problem, now you’ve got all the plumbing; you’ve got all the provided heat and cooling. It’s a nightmare.”
Zieg added that he finds it hard to imagine how those issues would be solved in projects such as the towers Luzzatto Co. purchased.
“I’m very anxious to see how he does it.”
Greg Paugh, vice president and broker at Stream Realty Partners, noted that the Denver National/Vault building’s fortunes say much about the broader downtown market now.
Playing long game
“For several institutional owners that have been trying to hold strong, they’ve decided it’s time to cut bait and for the few playing the long game, betting on Denver’s recovery, it’s another opportunity to capitalize on another heavily discounted sale,” Paugh said in an email.
Paugh told The Denver Gazette that he sees some demand shifting now from LoDo, where the vacancy rate may be less than half that of Upper Downtown, to blocks east past Larimer Street.
“LoDo has gotten to be a tighter and tighter market,” he said, noting that he sees some reverse tenant flow from Cherry Creek and the Denver Tech Center as well.
“The Vault sits firmly in the CBD, and this may help downtown’s perception if it truly can be revitalized,” Paugh said. He said that he doesn’t see the historic building selling at a single-digit price, such as the towers Luzzatto picked up last year.
However, “it will not be in the first wave of downtown comebacks,” he added.
As to the building owners’ reticence in talking with the press, Paugh said that may reflect a pricing discussion ongoing with the brokers.
Mosher noted that at the DDA, he had interacted with the Denver National Bank’s owners at Harbor Associates. Last year, DDA had been reportedly approached by an outside investor looking to purchase the building as a “home for entrepreneurs in Colorado,” but that fell through.
Meanwhile, DDA had agreed to a $17 million loan to Harbor to do a residential conversion of the eight-story Symes Building, a block south at 16th and Champa. Decades of Coloradans had known the handsome office for its F.W. Woolworth’s five-and-dime store and lunch counter.
But that had melted away when the project’s lender took the Symes back after Harbor’s Colorado subsidiary failed to make payments.
“We worked with them on Symes and we approved that, then the lender turned and booted them,” Mosher said. “The lender took over, and now it’s been a year and the lender is back talking to DDA.”
Meanwhile, a stroll a block south of the building to 16th Street, reopened after a $175 million transformation that dropped the word “Mall” from its name, shows an Upper Downtown still struggling with some issues it faced during the pandemic when workers fled the area.
Pedestrian traffic on a typical weekday appears light, with gathering areas that were created during the project drawing some of the transient crowd that had prominently occupied the mall area during COVID. A fire truck blocks all of California Street — not because of a fire, but rather as part of an ambulance run, picking up a party that appears injured in front of a carryout.
Chicken-and-egg
Stream’s Paugh said that some of the optics surrounding properties here are a chicken-and-egg problem — office tenants chasing nicer dining and surroundings and vice versa.
“I think far enough removed from COVID that return-to-work policies have been set,” he said. “It is what it is.”
“It’s a rough go still; Upper Downtown has its challenges,” said Mosher, while adding that he feels good about the direction of the area. “There’s no question it is doing better; the mall is doing better. The homeless issue isn’t gone, but it’s managed and safety is in a better place.”
He added that he saw public support being directed to key projects by the DDA as having the potential to change the broader vacancy picture.
“There’s always 16% to 20% vacancy even in good years. I think (now) there are roughly 7 million square feet beyond that.”
The immediate goal, he said, is to fill a few million square feet, including attracting more jobs. He added that the hotel market serving the Colorado Convention Center was a bright spot.
“The thing I’m worried about is that at best we’re stable in population and jobs, but with midterms coming up and other uncertainty, we’re in a difficult time,” Mosher noted.
“Denver’s not immune from what’s going on around it,” he said. “We will only do as well as Denver and Colorado and the country are doing.”
