A Look Beyond LoDo to What Lies Next for Greater Downtown Denver and its Office Market Impact
DENVER (March 24, 2016) – With 15 percent growth over the last five years and a residential population now totaling more than 72,000, there’s no question Downtown Denver is in the midst of a renaissance. While much attention has focused on LoDo and RiNo in the northwest end of the downtown, over the past several years there has also been significant development in Uptown, the Golden Triangle and recently in the core Central Business District —including new residential housing, rapid transit renovations and retail offerings—all of which will impact office site selection strategies for Denver companies in the future.
“LoDo has been the focus of attention for the media and real estate industry, while the significant development of apartments and amenities such as restaurants, fitness and service retail happening in Uptown, Capitol Hill and the Golden Triangle has received much less attention,” said Greg Holm, senior vice president, CBRE Occupier & Advisory Services.
“With the Central Platte Valley almost fully developed, and with only a few sites left in LoDo, the future direction of development for both residential and office development is likely to shift towards the core Central Business District (CBD), particularly toward sites along 14th and 15th Streets and at the upper end of the CBD with access from Broadway / Lincoln, Colfax and Park Avenue. These areas will continue to grow and become even more vibrant and exciting. Arapahoe Square and the areas around 18th / 19th Avenues and Broadway / Lincoln have the greatest availability of development sites, making these areas the likely focus of the next major wave of downtown development,” added Holm.
Residential According to the Downtown Denver Partnership, almost 13,000 residential units were added to Downtown Denver in the last four years. Of those, only 47 units were added in LoDo. The downtown neighborhoods with the largest residential populations include Capital Hill (16,468) and Uptown (8,962).
In the next seven quarters, 1,000 units are set to deliver in the Uptown, Capital Hill, Golden Triangle and CBD neighborhoods alone, including the high-profile SkyHouse Denver (354 units) in Uptown and EVIVA Cherokee in Golden Triangle (274 units).
“Downtown Denver is on the cusp of achieving a true 360-degree residential scene, meaning housing is filling in and providing an accessible labor force from all sides of downtown,” said Holm. “It creates a cyclical impact—residents create demand for restaurants, shopping, entertainment and transit, which in turn attracts employers, which attracts more residents, and so on.”
Automobile Access One of the key drivers of the success of LoDo and the Central Platte Valley was the demolition of the old viaducts and the completion of Auraria Parkway in the late 1980s. Before Auraria Parkway was constructed, Lincoln Street was the primary access to downtown and the preferred office buildings were located at the upper end of downtown. The completion of Auraria Parkway, catalyzed further by the completion of Coors Field in 1995, shifted the focus for downtown office users toward the LoDo end of downtown. The construction of both residential and office projects in LoDo and the Central Platte Valley over the last several years has significantly increased traffic and commute times for employees working in and adjacent to LoDo.
“With commute times between the upper and lower ends of downtown equalizing, attractive ‘walk to work’ residential and entertainment options emerging and lower cost office space available, we anticipate office users looking more closely at the core CBD, especially the upper end of downtown,” said Holm.
Rapid Transit At the south end of the 16th Street Mall, Civic Center Station has served as a major transit hub for more than three decades. The terminal moves 15,000 passengers a day and operates as a turnaround point for the 16th Street Free MallRide. In the fall of 2014, RTD along with the City and County of Denver, the Downtown Denver Partnership and the Denver Business Improvement District initiated plans to renovate the center from an enclosed, concrete vault to an open, sun-filled transportation hub. The renovation will also make up to 20,000 square feet available for new development. Construction is slated to begin this year.
“Just as the transformation of Union Station helped jumpstart LoDo, we anticipate the renovation of Civic Center Station to have a profound impact on the east side of Downtown’s revitalization,” said Holm. “Between Civic Center Station and the D-F-H lines, almost every building in the CBD is within three blocks of rapid transit. As the RTD adds more lines over the next year, including access to the airport, it has the potential to more than double its capacity.”
Retail The residential population growth and rapid transit expansion are both helping to fuel retail development in Uptown and the CBD.
“Established restaurants like Earl’s Kitchen and Bar along the 16th Street Mall have recently undergone renovations to invest in their space, and some of Denver’s most-anticipated eateries have selected the CBD and Uptown for their locations, including Troy Guard’s modern steakhouse, Guard & Grace, located on the ground floor of 1801 California,” said Holm. “Restaurant Row along 17th Avenue in Uptown is now a Denver foodie hotspot, lined with some of the area’s most popular cafes, bars and bistros.”
Denver Pavilions is also experiencing a rebirth as the shopping complex welcomes new tenants, like Japanese clothing store Uniqlo, and undergoes tenant expansion, as in the case of H&M, which is adding 10,000 square feet to feature the H&M Home collection.
“The CBD still has some work to do in terms of reaching its retail potential, but progress is being made,” said Holm.
Impact for Office Market The focus on LoDo has created the impression for some that the core CBD is emptying out as companies relocate to LoDo. In fact the core CBD includes 59.4 percent of all CBD office space, while LoDo includes just 18.9 percent of the total. New construction completions in LoDo have driven the LoDo vacancy rate to 16.2 percent, compared to 13.2 percent for the core CBD. At 4.9 million square feet, the four largest downtown office buildings, all located in the core CBD—Wells Fargo Center, Republic Plaza, 1801 California and Denver Place—are together larger than the entire LoDo office market. The recent renovation of 1801 California, which brought it back to Class AA status, is attracting new office tenants to the CBD, including TransAmerica, which relocated from Southeast Denver to 125,000 square feet at 1801 California last fall.
“1801 is not the only building in the core CBD investing in renovations. Republic Plaza and Wells Fargo Center both just added new amenities centers, and City Center, 1001 17th and Denver Place all recently completed extensive renovation projects,” said Holm. “Owners of older buildings in the core CBD understand they have to invest to compete with trendy areas like LoDo and RiNo. A strength of the downtown office market is its ability to offer a range of office alternatives with image, location and pricing to meet the needs of the wide variety of users in the CBD. These owners are making strategic investments to ensure they are prepared for a boost in office tenant interest as the LoDo boom matures and the next development cycle brings new Class A development to the core CBD.”
The progress ahead for the south and east half of downtown is all part of the greater urban Denver success story.
“At the end of the day, no other Denver office submarket has it ‘all’ to the same degree as downtown—transit, housing, culture, sports, nightlife, retail and restaurants,” added Holm. “LoDo and RiNo will continue to thrive hand-in-hand with growth in Uptown and the Golden Triangle and with the core CBD’s revitalization. A downtown growing as fast and dynamically as Denver’s will continue to flourish in all its micro-markets as it evolves to meet demand from the variety of office users who want and need to be downtown.
About CBRE Group, Inc. CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.