Downtown Denver's new $400 million office tower lands second tenant

One of the newest and largest additions to downtown Denver's office market has landed its second tenant since breaking ground nearly three years ago.

Marsh McLennan, one of the largest brokers in the United States, is set to relocate its regional hub to the new 1900 Lawrence office project, landlord Riverside Investment & Development confirmed. At just 12,000 square feet, the deal provides a slight nudge for the 720,000-square-foot tower's vacancy rate that has been hovering at about 93% since it landed its first tenant in late 2022.

The brokerage is set to take over space on the 19th floor of the 31-story tower, joining law firm Gibson, Dunn & Crutcher, which is set to take over the development's 31,000-square-foot top floor level once its lease kicks off at the beginning of next month.

Additional details about the 1900 Lawrence lease with Marsh McLennan were not disclosed, and it isn't clear when the firm expects to move into its future office. The company declined to comment.

Once realized, the relocation will mark a significant downsizing for the insurance brokerage, which has been leasing nearly 29,000 square feet a few blocks south at the 17th Street Plaza tower for more than a decade. The company signed the deal for the space at 1225 17th St. back in April 2013, according to CoStar data, and accounts for about 4% of the roughly 709,400-square-foot property.

The 1900 Lawrence project, which cost about $400 million to develop, is one of the latest in a handful of new office developments that have hit the Denver market at a point when tenants have been pumping the brakes on large-scale expansions.

Stitching together smaller deals

Similar to other markets across the country, Denver has been struggling to fill a record spike in office vacancies, an effort complicated by tenants signing fewer and smaller deals than those in the years leading up to the pandemic.

A spectrum of U.S. property owners are contending with this new leasing reality in which many are scrambling to balance tepid, but positive, demand among companies with deal sizes that have shrunk by an average of up to 20%, according to CoStar data.

Combined, those move-out and downsizing trends have pushed downtown Denver's vacancy rate up to nearly 30%, according to CoStar data. Available sublease space has more than doubled to 1.1 million square feet, and with the addition of new space at developments such as 1900 Lawrence, the power dynamic is in tenants' hands as landlords scramble to compete for what little demand is floating around the area.

Block 162, another recently completed office development a short walk from 1900 Lawrence, was completed in 2021 and — despite landing more than a dozen deals — is still about 65% leased, according to CoStar data.

To compound that competition even further, more office space is on the way.

In 2023, a joint venture between Boston-based Beacon Capital Partners and Denver's Elevation Development Group broke ground on Steel House, a nearly 323,000-square-foot office project that is expected to wrap up construction later this year. Even with an amenity package that will include a two-level fitness center, a movement studio and outdoor yoga terrace, tenant lounge spaces and ground-floor retail, the project has yet to land a tenant. By Katie Burke, CoStar New