Denver Tech Center Office Tower Trades Hands For First Time In 14 Years

An office tower south of Denver sold to two Colorado-based commercial real estate companies. 

Louisville-based Real Capital Solutions and Greenwood Village-based Dunton Commercial purchased Terrace Tower in the Denver Tech Center for an undisclosed amount on Oct. 9. The companies said in a statement that they acquired the office tower “at a fraction of replacement cost.”

“The repricing of office real estate continues to create compelling opportunities for investors with the capital and experience to be selective,” RCS Chief Acquisitions Officer Adam Abeln said in the statement. “We’re focused on high-quality assets with durable cash flow that can be acquired well below replacement cost. Terrace Tower is a strong example of the opportunities we’re pursuing.”

Built in 1984, Terrace Tower is an approximately 243K SF office building at 5619 DTC Parkway. It last sold in 2012 for $37.8M to Sun Life Assurance Co. of Canada, according to Arapahoe County property records. The county appraised the office tower at $34M this year, property records show.

The 12-story Class-A office building underwent $10M in capital improvements in 2021, including a new roof and upgrades to its lobby, fitness center, tenant lounge, conference rooms and building system.

Terrace Tower was 72% occupied at the time of purchase, on par with occupancy rates throughout the Denver metro. The average lease in the building is for 7.2 years, RCS and Dunton Commercial said in a statement. Tenants include branches of the U.S. General Services Administration, Vitesse Energy and Holmes Murphy.

Dunton will oversee Terrace Tower’s leasing, operations and management. This is Dunton’s sixth office purchase in the Denver area. The company owns and manages about 5M SF of office, retail and industrial space in Colorado.

Terrace Tower is RCS’ 15th office acquisition since 2024. The company has acquired about 900K SF of office space in the Tech Center corridor over the last two years, including Belleview Tower for $20M, 116 Inverness Drive E. and MetroPoint I and II for $22M.

Buying Terrace Tower is part of RCS’ investment strategy and comes as the company targets $400M for its first investment fund. Capital from the fund will be used to acquire discounted office properties across the U.S., according to RCS. CEO Marcel Arsenault put forth $50M to start the new fund earlier this year.

Office market recovery from the pandemic has been uneven and varies by location and asset class. Overall U.S. office vacancy sits at 18.3%, according to CBRE’s second-quarter office report. Denver’s office vacancy hovers between 22% and 28.8%, according to recent reports from Marcus & Millichap and CBRE. The vacancy rate in the southeast suburban office market, including the Denver Tech Center, is about 20%, according to TRE.

Vacancy rates, rising interest rates and loans that are coming due have caused several Denver office buildings to sell at a discount. In late September, the Regency Plaza building at 4643 S. Ulster St. sold for about $57M, about 20% less than what the previous owner spent on the 335K SF building in 2019. Last year, two office towers at 1625 and 1675 Broadway sold for about 97% less than what the previous owner paid in 2013.