The struggling Denver Pavilions could gain a new lease on life after a special city taxing district charged with helping revive downtown announced an agreement to purchase the open-air mall for $37 million.
The property opened in 1998 on two blocks along the then-16th Street Mall. But it struggled when the pandemic drove office workers away and construction along 16th Street, set to wrap up this weekend, kept shoppers away. Valued at $140 million a decade ago, the mall’s owners had defaulted on an $85 million loan due in July and were facing a foreclosure.
Mayor Mike Johnston, Downtown Development Authority board chair Doug Tisdale and City Council President Amanda Sandoval announced the purchase at an afternoon news conference held at 16th and Glenarm Place. The long-term plan is to come up with two or three mixed-use redevelopment visions for the site and then choose one with public input, said Bill Mosher, the city’s chief projects officer.
The authority would then sell the Pavilions and two adjacent parking lots, which the DDA announced in July it would purchase for $23 million, to a developer willing to implement its plan.
“What it allows us to do is be really specific about the kind of user experience we want at this site,” Johnston said of the purchase. “If you are an out-of-state investor from Singapore and you own this property, you don’t care if there are seven 7-Elevens on the ground floor, or if there are locally-owned and -run businesses that are some of people’s favorite parts of the city, that they want to find downtown.”
The site is only 60% leased after several high-profile departures, including the Hard Rock Cafe and the Japanese clothing retailer Uniqlo.
Officials said they wanted to step in before the site deteriorated further and risked becoming blighted. They suggested a revitalized Pavilions could set Upper Downtown on a new course, in much the same way the redevelopment of Larimer Square, Union Station and the Milk Market did on the other end of downtown.
“Just as the revitalization of Union Station brought new life to Lower Downtown, a reimagined Pavilions will rejuvenate the landscape of Upper Downtown, rendering it a vibrant Upper Downtown,” Tisdale said.
The Pavilions intends to keep its current tenants, which include Maggiano’s Little Italy, a Regal movie theater, an H&M store and a Lucky Strike bowling alley. The authority will also retain the current property manager, Mosher said.
The deal, which the DDA board approved on Tuesday, is expected to close in two to three months, Mosher said. The authority also allocated another $8 million for property improvements, leasing and redevelopment planning. The council will have a final say on the purchase and the future redevelopment plan, Sandoval added.
The agreement was approved by the DDA’s board on Tuesday afternoon.
The authority oversees a voter-approved tax district that uses a portion of tax revenue generated downtown to support projects that benefit the area. Last year, downtown-area voters approved an expansion of the district’s boundaries and up to $570 million in new debt for revitalization efforts.
The district’s setup means that the city can buy the Pavilions without tapping its general fund — which has been cut amid a budget crisis — and without “burdening our taxpayers,” Tisdale said. Johnston emphasized that no citywide funds will be spent on the purchase or redevelopment.
In late July, the authority announced about $100 million in awards to support 10 downtown projects, including office-to-housing conversions and new businesses, including $23 million for the surface lots adjacent to the Pavilions. Tuesday’s purchase agreement would lock up another $45 million.
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