Denver Mayor Mike Johnston announced the plan for the DDA to acquire the Pavilions mall on Tuesday. (Matt Geiger/BusinessDen)
Denver’s Downtown Development Authority wants to buy the struggling Denver Pavilions mall, which defaulted on an $85 million loan earlier this year and has shed tenants in the wake of the pandemic and construction on the neighboring 16th Street Mall.
The DDA’s board voted unanimously Tuesday afternoon to pay $37 million, or about $105 a square foot, for the 350,000-square-foot mall spanning two blocks in the city’s struggling Upper Downtown.
The DDA also wants to spend an additional $8 million on renovations and items related to leasing.
The DDA previously voted, in July, to spend $23 million to buy the parking lots along 15th Street behind the mall from the real estate giant Brookfield.
“We will open up for proposals and bids from partners who have a vision for what Denver could dream in this space. We’ll look at all of those options, and the board will make a decision on what they think is the best investment and the best future for this site,” Denver Mayor Mike Johnston said at a news conference announcing the deal.
Denver chief projects officer Bill Mosher said he wants the mall to become “the Union Station of Upper Downtown.”
Both deals still need approval by the Denver City Council. The DDA is separate from the city, but city staff members process applications for its funds and recommend specific projects, making the distinction often a technicality.
Mosher said the DDA would buy the mall from its current ownership group, which is led by Denver-based Gart Properties.
The mall opened in 1998. Gart Properties purchased it in July 2008 alongside ING Clarion Partners for $94 million. Clarion sold its stake in June 2015 to MetLife Real Estate Investors. Ownership took out the $85 million loan from Massachusetts Mutual Life Insurance Co. at the same time, records show.
That loan came due in July but was not paid off. Four months earlier, in March, Gart President Mark Sidell told BusinessDen that the property was “in a tenuous situation” and that he could not rule out foreclosure or a deed-in-lieu of foreclosure.
Mosher said the mall would go to the lender if the DDA’s deal doesn’t happen, which was a major reason the DDA opted to buy it. Gart initiated the discussions that led to the sale.
“We could send it back to the lender, and then they would put it out to the market for the next year and see which private developers would want to buy it. And one of those private developers might come to us and say, ‘Can you give us a $20 million loan?’ We just thought for the amount of money that we’re doing with this positioning, let’s buy it,” Mosher said.
The mall and the parking lots behind it have never had the same owner, he added.
Two people stroll through Denver Pavilions mall in downtown Denver on March 10, 2025. (BusinessDen file)
Sidell told BusinessDen on Tuesday he expects that the DDA “will own (Denver Pavilions) long enough to reverse what has been a negative momentum in Upper Downtown.” He said he hopes Gart Properties will “help it realize its potential,” although nothing has been signed at this point that gives the company a management role after the sale.
“This is the best path forward for the asset, the tenants, for downtown — and I think for the people of Denver,” Sidell said.
Denver Pavilions is 68% leased and 61% occupied with 20 active tenants, according to Mosher, who told the DDA board that figure has dropped 30 percentage points over the past few years. Tenants that have left include Hard Rock Cafe, Sephora and Banana Republic.
Denver’s DDA was established in 2008 in connection with the redevelopment of Union Station. For years, it was a little-known taxing authority that captured a portion of property and sales taxes collected in that area and on the city block formerly home to the Regional Transportation District’s Market Street Station.
But last November — after a push by Johnston — property owners, residents and tenant businesses in that small area voted to expand the boundaries to include essentially the entire downtown and to authorize $570 million in bonds to finance projects.
The proposed Denver Pavilions purchase is the first proposed DDA spending to be announced since July, when the organization’s board voted to spend $100 million across 10 projects. That included two office-to-residential conversions, improvements to Civic Center and Skyline parks and financing for individual retailers, including an ice cream shop across the street from Denver Pavilions. Much of the financing is coming in the form of low-interest loans.
The City Council has to approve all DDA deals of at least $500,000 — a category that includes all but one deal announced so far. None of the deals has gone up for a vote.
BusinessDen staffer Matt Geiger contributed reporting.
