August 2026
Red Tape and Capital.
New York keeps converting while Minneapolis and Denver work building by building, drone delivery gets certified, a governor conditions data center permits on local approval, and 350 acres of Denver's core come into view.
IN THE MARKET
The Conversion Scorecard
A year of results on three cities and three approaches to incentivizing office-to-residential conversions.
Last August we compared three cities’ approaches to office-to-residential conversions: New York paired zoning reform with a new tax incentive; Denver committed targeted DDDA capital while still facing permitting and regulatory constraints; Minneapolis streamlined approvals but lacked a dedicated statewide conversion incentive. Where do they stand today?
MINNEAPOLIS IS STILL (MOSTLY) STALLED
The proposed Minnesota tax credit law has not yet passed, and Downtown Minneapolis has not delivered any residential conversion units since the 216 units were delivered at Northstar Center in 2024. However, select developers have found some success through other financial incentives. Sherman is targeting a construction start this fall on 232 units at the Grain Exchange, supported by TIF, a Metropolitan Council abatement grant and historic tax credits. And Schafer Richardson began work in July on Faber Lofts, a $21 million conversion of three upper office floors into 42 apartments, using state and federal historic tax credits. The city has a long way to go before it’s able to unlock conversions at a more substantial scale, but still nice to see some progress.
DENVER HAS MADE SOME STRIDES
The DDDA has approved financing for several office conversions, but the record is mixed: four conversion projects have received approvals for up to $97.5 million to help fund 1,048 units, while a fifth project awarded $17 million toward 116 units is no longer moving forward. The conversion pipeline remains modest relative to the size of the city, which still has significant potential after identifying roughly 4.3 million square feet as potentially suitable for conversion. But without broader as-of-right incentives, it will be difficult to make a significant dent in the city’s housing shortage (and office surplus).
NEW YORK’S TWO-PART APPROACH IS SUCCEEDING
Last August, more than 10 million square feet was projected to be converted in New York. Starts then went from 1.6 million square feet in 2023 to 3.3 million in 2024 to 5.0 million in 2025, the highest annual total in twenty years. The story got even larger in 2026: Newmark put Manhattan’s active and planned conversions at 18.3 million square feet, including 8.1 million already under construction across 32 buildings. As of this month, Cushman & Wakefield counts 19 Manhattan buildings already started this year and 17 more planned. Their model of tackling both administrative and financial barriers was – and still is – a compelling model for other municipalities to emulate.
WHERE DOES THAT LEAVE US TODAY?
A year later, the ranking has not changed. New York is converting office space at a scale Minneapolis and Denver have not reached because it attacked red tape and the capital stack at the same time. Minneapolis still has one completed downtown conversion and the pipeline projects that advanced needed TIF, historic credits, or other financial incentives on specific buildings. Denver has put real DDDA money behind a few towers, but awards are selective, at least one financed conversion has already fallen out, and remaining capacity will not clear a 39% vacant downtown. Office pricing has opened a window for the right assets but most buildings will still not pencil unless both cities stop treating conversions as one-off exceptions. Minneapolis still needs a standing conversion incentive and Denver still needs more than a finite loan program. The buildings that can and should convert will not wait forever for either city to build what New York already has.
ON OUR MINDS
i. DoorDash skips the traffic.
Drones aren’t delivering our DoorDash burritos just yet, but that day is one step closer. DoorDash has earned Part 135 air carrier certification and is building its own aircraft, and Amazon plans to take Prime Air from 11 sites to nearly 500 cities and towns by year end, each covering about 175 square miles. A transformation is clearly underway that will eventually reshape last mile delivery networks. Beyond these advancements just being genuinely interesting, we’re also continuing to monitor whether these drone hubs could create material new industrial and IOS demand around major cities.
ii. Rebuilding Trust.
Data centers may be the least popular development type in the country right now. The backlash is running in every major paper, and the mistrust driving it runs deep. Many jurisdictions have answered with moratoriums, while Pennsylvania Governor Shapiro's executive order takes a different route, conditioning state permit review on local land use approval and pulling data centers out of the state's fast-track program. It also prohibits nondisclosure agreements on projects under state authority, which addresses the closed-door negotiation that has driven much of the local opposition. We'll be tracking whether conditional approval reframes the discussion and creates a more constructive path forward than the moratoriums implemented elsewhere.
iii. The Denver sports corridor.
The new Broncos stadium at Burnham Yard is a marquee project that many of us in Colorado are excited about. What's more interesting is that it sits in the middle of a much larger transformation. The Broncos' plan covers about 150 acres. A mile northwest, the 80 acres under Empower Field revert to the city after the 2030 season. Past that, Kroenke controls 117 contiguous acres between the Ball Arena parking lots and the Elitch Gardens site, entitled for more than 20 million square feet combined. To the south, the Summit's 14-acre stadium district at Santa Fe Yards is scheduled to begin construction this fall. That is more than 350 acres along one stretch of I-25 and the Platte, with a proposed trail meant to tie the ends together. The timelines run past 2050, which makes this a long-term vision, but very few cities get to redraw this much of their core at once.
We remain grateful for your continued partnership and trust. If any of these topics hit close to home - whether it's a lease decision on the horizon, an acquisition or disposition question, or just a conversation about where the market is headed - we'd welcome the chance to think through it with you.
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