City strikes nearly $89 million deal to buy former Denver Post building at Civic Center

The city of Denver, no longer content to be a tenant in the former Denver Post building downtown, is moving to buy the 11-story structure for $88.5 million.

Its purchase deal with the New York-based owner of 101 W. Colfax Ave. is intended to make room for the city and county’s courts. Many of the non-criminal courts are squeezed into the historic City and County Building across Civic Center Park. They’re expected to need another 280,000 square feet of space by 2040, according to a courts master plan.

The building is just shy of 306,000 square feet and is located in the heart of downtown, with building security, an auditorium, connections to the city’s computer network and a 635-space parking garage. The Post reported earlier this week that city officials were considering purchasing the building.

The proposed contract is up for consideration before the City Council’s Finance and Governance Committee on Tuesday morning. If it earns approval from the entire council in coming weeks, the deal could close in March, according to city documents.

“The Post building would help the city meet space requirements for district, county, probate and juvenile courts as well as provide dedicated space for non-profit and judicial advocate services, like Colorado Legal Services and multiple rental assistance programs, which currently have undedicated space in other city buildings,” Laura Swartz, a spokeswoman for Denver’s finance department, said Thursday.

In addition to courtrooms in the City and County Building less than two blocks from the building it plans to buy, Denver has court uses in the Minoru Yasui Building, the Lindsey Flanigan Courthouse and the Van Cise-Simonet Detention Center today, Swartz said. All of those buildings are clustered along West Colfax Avenue, between Bannock and Fox streets.

The building opened in 2006 as the joint headquarters of The Post and the Rocky Mountain News, which went on to close down in 2009. The Post’s newsroom and other operations moved out of the building in 2018, into space at the paper’s printing plant in Adams County. But The Post’s ownership group still holds a master lease for the building and subleases that space to other tenants, including the city.

The building is owned by Kayan LLC, an affiliated created by American Properties, which paid $93.4 million for it in 2006, as construction was concluding. That price was higher than the city proposes to pay now, especially when adjusted for inflation.

The difference likely reflects, in part, the impact of high vacancy rates in downtown office buildings after the pandemic changed commuting and remote-work habits. A presentation prepared by the city for the council committee hearing says the negotiated price “falls within the appraisal value.”

The city’s contract will come before the council just as work is ramping up on a two-year, $133.5 million renovation of the Wellington E. Webb Municipal Office Building at 201. W. Coflax, across the street from The Post’s old building

That building is already home base to 2,100 city employees. The renovation has been touted as a way to maximize space in that building and make room for 600 city workers now using subleased floors in The Post building.

Its proximity to other city buildings makes the former Post building an even more attractive opportunity for a city seeking to grow its real estate footprint to meet future needs.

“The Post building’s proximity to existing downtown courthouses makes this a preferred location,” Swartz said. The building also already houses city staff and has the city’s IT infrastructure installed.”

The city began subleasing space from The Post’s owner in 2016, and it has expanded since then to include more floors. The city’s cumulative sublease deal is worth just shy of $44 million through 2029.

Late that year is when The Post ownership’s master lease will expire, according to the council hearing presentation. Until then, city documents say, the building’s leasing structure will help pay off debt the city is taking to finance the purchase.

The city plans to issue certificates of participation, a form of borrowing that pledges city assets and isn’t subject to voter approval, unlike municipal bonds. As the city takes over as landlord, it plans to continue charging rent to The Post’s ownership, amounting to $7.8 million in the first year. That money will come from parking revenue and sublease payments made by tenants — including the city.

After 2029, the city will take over all leasing functions, according to the documents.

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