As Denver’s office market faces increasing vacancies, more property owners are opting for office-to-apartment conversions. With 1,398 units set for conversion this year—up 55% from 2024—this trend reflects a larger nationwide shift. The surge in conversions is driven by high office vacancies, which hovered at 30% in the fourth quarter of 2024, leading owners to explore adaptive reuse as a way to revitalize their properties.

Tax Implications of Converting Office Space

Property owners considering conversions should be aware of the following tax considerations:

  1. Property Tax Adjustments: Converting office space into residential units could result in a change in property tax assessments. Since office and multifamily properties are taxed differently, property owners may see adjustments to their tax rates.

  2. Tax Incentives: Adaptive reuse projects may qualify for state and local tax incentives, helping offset renovation costs.

  3. Depreciation Benefits: Conversions may qualify for accelerated depreciation, allowing owners to save on taxes by depreciating property improvements faster.

Opportunities in the Market

While office-to-apartment conversions still make up a small portion of the multifamily market, Denver has substantial potential for future conversions. With 23.6 million square feet of office space considered viable for residential redevelopment, the opportunity for property owners and investors to tap into this market is significant.

What Does This Mean for Tax Breaks?

For property owners considering a conversion, here’s what you need to know:

  • Know the impact on property tax assessments: Be prepared for potential changes in your property’s assessment and tax rate following the conversion.
  • Explore tax incentives: Research local tax credits and programs to maximize savings.
  • Leverage depreciation: Benefit from accelerated depreciation to improve your cash flow in the early years after the conversion.

 


Catalyst Property Tax Consultants can help you navigate the complexities of property tax assessments and ensure your adaptive reuse project is financially beneficial. Reach out to us for a complimentary assessment—we’re here to guide you through every step of the process.