Denver’s Hyatt Regency dropped in valuation after COVID

Prior to the COVID-19 pandemic, downtown Denver’s Hyatt Regency — one of the city’s largest hotels, with about 1,100 rooms — was valued at nearly $300 million by Denver County.

Now, however, it’s considered to be worth $207 million — 30 percent less.

Denver Assessor Keith Erffmeyer told BusinessDen last March that his office’s overall valuation of commercial property in the city was set to drop for the first time in a decade due to the pandemic, with hotel and retail properties seeing the largest drops. New valuations were released two months later, in May.

Now, data obtained by BusinessDen shows the specific impact on some of the city’s marquee hotel and retail properties.

In addition to the Hyatt Regency, multiple other downtown hotels are considered to be worth tens of millions less than pre-pandemic. And the Westin attached to Denver International Airport saw its valuation drop $29 million.

On the retail side, the largest component of the Cherry Creek Shopping Center, which is divided into multiple parcels, saw its valuation fall 16 percent in the latest cycle, from $283 million to $237 million.

Speaking to BusinessDen last week, Erffmeyer noted that the latest cycle assessed properties between July 1, 2018, and June 30, 2020 — meaning the figures capture a moment still relatively early in the pandemic, when stay-at-home orders were fresh in mind and some businesses were just starting to reopen.

“We had to kind of tackle this a little bit differently this time around,” Erffmeyer said. “The hotel and travel industries were in a state of the unknown. At that point in time, everything was pretty much shut down, especially urban hotels.”

Nick LeMasters, president and CEO of the Cherry Creek North Business Improvement District, said the lower valuations were expected. The BID provides assistance such as street maintenance and promotions to members who are assessed a fee based on property values.

“We were not terribly surprised when we found out about the valuations decreasing, certainly given COVID,” LeMasters said. “It became pretty apparent that was going to affect properties at some time, hotels in particular.”

LeMasters, previously general manager of Cherry Creek Shopping Center for more than two decades, said retailers may see a drop in their rent but not by a lot.

“That could be some benefit to some retailers and some businesses, though I don’t think it’ll be that much,” LeMasters said. “(Landlords) spread the cost to the tenants, and it might drop the charges a few cents a square foot.”

Citywide, the merchandising sector was valued at $1.6 billion during the last valuation period, but dropped to $1.3 billion in the most recent. Lodging properties were valued at nearly $850 million during the previous valuation period, but fell to $775 million during the most recent.

LeMasters said leisure tourism and business travel is starting to return, but he said “group business,” such as conventions, needs to return in a significant way. Once that happens, he said, hotels will be on “very solid ground.”

“I would have every expectation that valuations will go up as business returns,” LeMasters said, adding downtown hotels usually fill up first and then Cherry Creek sees the overflow business. “But certainly, the hotel sector has been adversely impacted, and we need to see our tourism industry come back.”

Here are the top 10 valuations for hotel/lodging and retail properties. Most, but not all, saw their valuation decline. Some properties that might appear to be one unit, such as the Cherry Creek Shopping Center and the downtown Sheraton, are technically multiple parcels, so appear below as such.

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