Another office-to-apartment conversion project secured a loan from the Denver Downtown Development Authority on Wednesday.

The DDDA Board of Directors approved $14 million in funding for a project to convert 12 floors of the historic Petroleum Building into 178 new apartments. The five-sided office tower is located across the street from the Civic Center Station and next to the former Denver Post office building at 101 W. Colfax Ave.

The development is projected to begin construction in mid-2026.

The building at 110 16th St. will feature a range of apartments from studios to three bedrooms. It’s also set to include a yoga and fitness center, spaces for gardening, a penthouse, dog park and lounge.

Upper Downtown has especially struggled since the pandemic, as office workers stayed home for remote or hybrid options and companies left their leases or downsized. Downtown Denver’s office vacancy is nearly at 38%, according to commercial real estate firm CBRE.

City leaders have touted office conversions as a solution to reduce the supply and turn the Central Business District into a “Central Neighborhood District.”

The Denver Downtown Development Authority, which is a tax-increment funding tool that loans money to investments to be paid back with property and sales tax gains made in the future, recently expanded from Union Station restoration to cover the rest of downtown as the city’s core recovers from the pandemic and 16th Street’s construction.

The board has helped finance new retail leases, Civic Center Park’s revitalization and apartment conversions. It’s also working to finalize its purchase of the Denver Pavilions and two parking lots for the potential of redevelopment.

So far, it’s funded 13 projects totaling more than $165 million of the $570 million available over the next decade.

This is the third office-to-apartment conversion project approved by the DDDA.

In the first wave of loans, the board approved $17 million to convert the historic Symes Building to create 116 apartments and $14.5 million to the historic University Building project to add 120 apartments.

With these three projects, downtown could get more than 400 new apartments with funding support from the DDDA.

“Converting underutilized office buildings in upper downtown is a critical component of revitalizing the heart of Denver,” said Tim Borst, president of Borst & Co. and co-owner of the Petroleum Building.

The DDDA loan will cover up to 20% of the Petroleum Building’s total project costs, the city said in a press release.

The building’s Site Development Plan has already been approved and is currently finalizing building permits. The 14-story modernist office built in 1957 — a five-sided building — is also utilizing historic tax credits to finance the project.

“With the help of DDDA funding, state and federal historic tax credits, and our own investment, as well as strong support from the Mayor’s Office, we are thrilled to bring this mid-century modern icon back to life,” Borst said.