The office towers at 621 17th St., right, and 633 17th St. as seen from the corner of 17th and California streets on Nov. 19, 2024. (Thomas Gounley/BusinessDen)
The reset of office valuations in downtown Denver just hit an eye-popping low.
EQ Office, a Chicago-based real estate investment firm managed by Blackstone, sold the office towers at 621 and 633 17th St. earlier this month, according to public records. The deal also involved a host of parking, including a surface lot and two garages.
The paperwork recorded by Denver county doesn’t include the price. But multiple sources told BusinessDen this week that the towers — about 970,000 square feet of combined office space, plus a parking garage — sold for approximately $7 million, or $7 a square foot.
That’s well below what other buildings in Denver’s struggling Upper Downtown, also known as the Central Business District, have fetched since the pandemic.
The Denver Club building at 518 17th St. and the Hudson’s Bay Centre building at 1600 Stout St. both fetched about $52 a square foot when they sold to local buyers in 2022 and earlier this year, respectively.
The buyer of 621 and 633 is also local. The towers were purchased by two LLCs with an office address corresponding to that of Denver-based E2M Ventures. Marc Perusse, who founded E2M in 2023, signed the deal paperwork.
Perusse did not respond to requests for comment on Wednesday. His firm was also involved in the purchase earlier this year of 410 17th St. That building also sold at a deep discount, although still multiples above $7 a square foot.
The seller, EQ Office, declined to comment.
EQ Office bought the towers in 2016 from Denver-based Toma West. Kenneth West, president of Toma West, declined to disclose what he sold the towers for. But he told BusinessDen his firm bought them for $112 million in 2008.
In addition to the general struggles of the office sector and Upper Downtown, the towers at 621 and 633 17th have some complicating factors that likely influenced the sale price.
The office towers at 621 17th St., left, and 633 17th St. as seen from the corner of 18th and Welton streets. A parking structure for the towers is in the foreground. (Thomas Gounley/BusinessDen)
The towers and their parking garage comprise a full city block formed by California and Welton streets between 17th and 18th streets. Additionally, the sale also included the adjacent block between 18th and 19th streets, which has another parking garage and surface lot.
But part of that land on the block with the towers is ground leased, meaning the new owner — and EQ Office before it — owns the structures, but not all of the ground under them.
Ground leases are rare but not impossible to find in Denver. Block 162, one of downtown’s newest office tower, sits on a ground lease. Kitty-corner to 621 and 633 17th St., a parcel that sold to a condo developer in 2022 was not only ground leased but also, for a time, ground subleased.
When ground leases expire, the landowner gets ownership of any structure that sits on the land. The value of the structure generally decreases as the ground lease expiration date gets closer.
The towers are also older. The 28-story 621 17th tower, about 400,000 square feet, was completed in 1957. The 32-story 633 17th tower went up in 1974. Both were the tallest building in Denver for a time, but no longer make the top 10.
The 633 building lost a notable tenant two years ago. Denver law firm Sherman & Howard, which had operated there for 45 years, moved to Block 162 in 2022.
The towers have a shared courtyard at the corner of 17th and California streets. (Thomas Gounley/BusinessDen)
JLL marketed the building for sale — and it’s already doing so again.
A listing on the brokerage’s website that went up after the recent sale said the smaller 621 17th St. building is nearly empty after a “programmatic de-leasing plan,” which makes the structure “an ideal target for residential or hospitality conversion or redevelopment.”
“The historically low acquisition basis and high levels of optionality with the business plan allow the Investor maximum flexibility, in a highly centralized location in Denver’s CBD,” JLL’s marketing materials state.
The property’s parking garage includes 391 spaces, according to the listing.
Larry Thiel, a JLL broker marketing the property, declined to comment on the new listing.
While Upper Downtown property is selling for prices that would have been unthinkable five years ago, those in the industry generally see rock-bottom deals as a necessary step to a revitalization of the area — something akin to the common saying, “It’s always darkest before the dawn.”
Existing owners, many of whom have defaulted on their loans, are reluctant to spend money to boost the value of a property that may ultimately be taken by their lender, the thinking is. But new owners, who don’t need to take out huge loans, will be willing to invest.
Editor’s note (12/3/24): This story has been updated to note that the sale also included an adjacent block, which has a parking garage and surface parking lot on it.
The office towers at 621 17th St., right, and 633 17th St. as seen from the corner of 17th and California streets on Nov. 19, 2024. (Thomas Gounley/BusinessDen)
The reset of office valuations in downtown Denver just hit an eye-popping low.
EQ Office, a Chicago-based real estate investment firm managed by Blackstone, sold the office towers at 621 and 633 17th St. earlier this month, according to public records. The deal also involved a host of parking, including a surface lot and two garages.
The paperwork recorded by Denver county doesn’t include the price. But multiple sources told BusinessDen this week that the towers — about 970,000 square feet of combined office space, plus a parking garage — sold for approximately $7 million, or $7 a square foot.
That’s well below what other buildings in Denver’s struggling Upper Downtown, also known as the Central Business District, have fetched since the pandemic.
The Denver Club building at 518 17th St. and the Hudson’s Bay Centre building at 1600 Stout St. both fetched about $52 a square foot when they sold to local buyers in 2022 and earlier this year, respectively.
The buyer of 621 and 633 is also local. The towers were purchased by two LLCs with an office address corresponding to that of Denver-based E2M Ventures. Marc Perusse, who founded E2M in 2023, signed the deal paperwork.
Perusse did not respond to requests for comment on Wednesday. His firm was also involved in the purchase earlier this year of 410 17th St. That building also sold at a deep discount, although still multiples above $7 a square foot.
The seller, EQ Office, declined to comment.
EQ Office bought the towers in 2016 from Denver-based Toma West. Kenneth West, president of Toma West, declined to disclose what he sold the towers for. But he told BusinessDen his firm bought them for $112 million in 2008.
In addition to the general struggles of the office sector and Upper Downtown, the towers at 621 and 633 17th have some complicating factors that likely influenced the sale price.
The office towers at 621 17th St., left, and 633 17th St. as seen from the corner of 18th and Welton streets. A parking structure for the towers is in the foreground. (Thomas Gounley/BusinessDen)
The towers and their parking garage comprise a full city block formed by California and Welton streets between 17th and 18th streets. Additionally, the sale also included the adjacent block between 18th and 19th streets, which has another parking garage and surface lot.
But part of that land on the block with the towers is ground leased, meaning the new owner — and EQ Office before it — owns the structures, but not all of the ground under them.
Ground leases are rare but not impossible to find in Denver. Block 162, one of downtown’s newest office tower, sits on a ground lease. Kitty-corner to 621 and 633 17th St., a parcel that sold to a condo developer in 2022 was not only ground leased but also, for a time, ground subleased.
When ground leases expire, the landowner gets ownership of any structure that sits on the land. The value of the structure generally decreases as the ground lease expiration date gets closer.
The towers are also older. The 28-story 621 17th tower, about 400,000 square feet, was completed in 1957. The 32-story 633 17th tower went up in 1974. Both were the tallest building in Denver for a time, but no longer make the top 10.
The 633 building lost a notable tenant two years ago. Denver law firm Sherman & Howard, which had operated there for 45 years, moved to Block 162 in 2022.
The towers have a shared courtyard at the corner of 17th and California streets. (Thomas Gounley/BusinessDen)
JLL marketed the building for sale — and it’s already doing so again.
A listing on the brokerage’s website that went up after the recent sale said the smaller 621 17th St. building is nearly empty after a “programmatic de-leasing plan,” which makes the structure “an ideal target for residential or hospitality conversion or redevelopment.”
“The historically low acquisition basis and high levels of optionality with the business plan allow the Investor maximum flexibility, in a highly centralized location in Denver’s CBD,” JLL’s marketing materials state.
The property’s parking garage includes 391 spaces, according to the listing.
Larry Thiel, a JLL broker marketing the property, declined to comment on the new listing.
While Upper Downtown property is selling for prices that would have been unthinkable five years ago, those in the industry generally see rock-bottom deals as a necessary step to a revitalization of the area — something akin to the common saying, “It’s always darkest before the dawn.”
Existing owners, many of whom have defaulted on their loans, are reluctant to spend money to boost the value of a property that may ultimately be taken by their lender, the thinking is. But new owners, who don’t need to take out huge loans, will be willing to invest.
Editor’s note (12/3/24): This story has been updated to note that the sale also included an adjacent block, which has a parking garage and surface parking lot on it.
