Committee hears options for Centennial Building after $120 million renovation estimate

Tobin Follenweider, deputy director of operations for the Department of Personnel Administration, told the Capital Development Committee on Feb. 25 that the Centennial Building at 1313 Sherman is 50 years old, has a failing heating and cooling system, outdated tenant space and non‑friable asbestos, and that a full office renovation is currently estimated at about $120,000,000.

Follenweider said the department currently has roughly $2,000,000 available for the project and has requested $41,000,000 beginning in fiscal year 2027, leaving an estimated $77,000,000 funding gap to complete an office renovation. “We don’t have a recommendation at this point,” he told the committee, noting the department is awaiting a market valuation before making a final recommendation.

The committee heard results of a public–private partnership (P3) study from Tom Kuruk, the department’s P3 director, who said the building could be converted into about 111 to 147 housing units plus a childcare facility but that hard construction costs for such a conversion were estimated at $91 million to $111 million. Kuruk added that those figures exclude expenses such as parking, asbestos abatement and the cost to separate the building from the campus electrical loop, which his presentation estimated would add about $20 million to $40 million. He summarized the finding this way: “It was not economical, for a private partner to take it on without significant subsidizing from the state.”

Mr. Kennedy, the department’s real estate director, placed the proposal in a downtown market context, saying Downtown Denver’s office vacancy is about 39 percent and that low demand and developer incentives make it difficult to justify a large office renovation. Kennedy said the city is actively supporting conversions through entities such as the Downtown Denver Development Authority and that the state is already exploring sale and conversion options for neighboring assets.

Officials also flagged legal and logistical constraints. Follenweider said the Centennial Building is collateral for Certificates of Participation issued under prior legislation (referencing Senate Bill 267) and that, whether the state pursues a sale or a P3, it must identify alternative collateral and negotiate with the treasurer’s office. He also said state archives located in the building’s basement would need an alternative location unless the archives remained a tenant under new ownership.

Kennedy told the committee the property’s carrying cost is about $1,450,000 per year and cautioned that adding separation, remediation and conversion costs would “explode” the total outlay. Representative Winter asked for the data underlying the 39 percent vacancy figure; Kennedy said the department has exhaustive market research and would provide it to the committee.

Committee members expressed caution about both selling and renovating. The chair asked whether selling the asset might foreclose future state needs near the Capitol; Follenweider said the department will consider interim uses and long‑term demand when it returns with the appraisal and final recommendations. The vice chair said she was relieved the department was reconsidering full renovation given the cost and the opportunity cost relative to other state facilities.

Follenweider said the department has ordered a fair‑market appraisal, expected within a month, and will return to the committee with valuation results and a recommended course of action. The committee was reminded of an upcoming Joint Veterans and Capital (JVC) submission deadline and asked to be prepared to finalize that list at next week’s meeting.

The meeting adjourned without any formal motions or votes on the Centennial Building at this session.