Asher Luzzatto’s nine-figure real estate plans are getting kickstarted with a fire sale.
The real estate developer – who splits time between Los Angeles and Taos – purchased an entire city block with two office towers on it and plans to convert it to apartments.
“These buildings in Denver represent an opportunity to make good on my thesis that we have all of the square footage we need to build the housing we need,” Luzzatto said.
He paid $3.2 million for 621 and 633 17th St., a source familiar with the deal told BusinessDen. The property record has yet to be recorded.
In 2008, the buildings sold for $112 million. The recent deal is valued at about $3.30 a foot for the office buildings built in 1957 and 1974.
Luzzatto’s plan is to fashion at least 700 apartments out of the existing structures, which total around 970,000 square feet. At a development cost of $150 to $200 million, it will be one of the biggest office to residential conversions west of New York, he said.
The seller in the deal, Denver-based E2M Ventures, bought the property last November. BusinessDen was unable to determine the price. E2M’s founder, Marc Perusse, declined to comment.
“We want it to be a really, really vibrant block. And we want to provide services that benefit both the residents of the building and the CBD at large,” Luzzatto said.
Luzzatto, 37, runs his family’s real estate business, The Luzzatto Co. The firm has a handful of employees and offices in California, Texas and New Mexico. His dad, Marc Luzzatto, started the company in 2007 after decades of investing in real estate. His son called him a “pioneer” of the creative office space, and said his dad turned industrial properties into open concept offices for companies looking to do production and desk work under one roof.
Luzzatto is hoping to get a little bit of everything out of his new office towers.
The first step will be to put retail on the building’s ground floors via partnerships where he will own part of the business.
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“Denver feels really good to me,” he said. “It’s a city that was the fastest growing city through the 2010s … I don’t see that growth stopping, I think it’s a really well located city, it’s got a really beautiful natural environment.”
But Denver has faced some growing pains lately, particularly in its downtown office market, which is languishing from a 35 percent office vacancy rate, according to brokerage CBRE. Only one downtown Denver office tower, 1600 Glenarm Place, has been converted into residences, and that was 20 years ago.
To fund this project, Luzzatto will have to perform some real estate artistry, cobbling together disparate funding sources to make the development happen.
“We’re going to look at any and all sources of funding to make the economics work with the understanding that the more diverse the financing sources, the better,” he said. “Our highest goal is to bring achievable rents to these buildings. And so any dollars that we can get outside of private equity will be dollars that will help drive rents down.”
“Above all else – that is our mission.”
One of those key sources will be the $570 million in funding the Downtown Denver Authority will be able to dish out to projects like Luzzatto’s. Downtown voters approved a measure last November to unlock funding for residential conversions and other downtown development projects. Luzzatto registered for the agency’s funds and will submit an official application by July.
Another wrinkle: the developer doesn’t actually own all of the land he just bought; some of it is tied to ground leases. Working around that will be critical to the project, he said.
“We can go as fast as the city can go as far as approvals and permits. Our hope is that the city will recognize the value of this project and will help move it along so that we can start building,” Luzzatto said.
Luzzatto has tapped New York City architecture firm HLW to draw up the plans.
“We’re already started on architectural [work], and we’ve engaged with some local people to work with us on the DDA process which we’re starting on as well,” he said.
Luzzatto said he’s been scouring the Mountain West and Southwest for an office to residential conversion. About six months ago, he settled on Denver as the location. The 621 and 633 buildings were the first call he made in town.
“These buildings came up in the fall and I pursued them basically the day they went online. We were the first call on these buildings,” Luzzatto said.
The buildings have the right column spacing, window lines and cores that lend themselves well to a conversion, he added. Both properties will be almost totally vacant once the Colorado Department of Labor and Employment departs from the premises later this year.
“I think it was a reason we ended up at the price we did and on the terms we did,” Luzzatto said.
While this will be Luzzatto’s biggest development to-date, he’s no stranger to high-profile projects. He helped develop Sweetgreen’s headquarters in Los Angeles and built the University of Southern California’s Ellison Institute for Transformative Medicine, funded by billionaire Larry Ellison.
Currently, Luzzatto is working through a 450,000-square-foot redevelopment of a 12-building office park in Austin, Texas. He also briefly ran for mayor of Los Angeles in 2022 on a platform of reducing housing regulations and converting commercial space into new houses.
“We need to stop thinking of commercial buildings as office or retail or residential or hospitality,” Luzzatto said. “We sort of need to scrap the idea of all these different categories … and look at what is the highest and best use for this building.”
“I think in most cases – it will be housing.”
Story via BusinessDen
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