March 2016 — Office Properties Quarterly —
Page 17
Market Drivers
access definitely helps.”
Triad at the Orchard station was
built in 1972. But despite being 44
years old, the asset has seen rents
and demand exceed that of its com-
petitive set, which might be 10 or 15
years newer, largely because of its
immediate proximity to light rail.
Baukol also sold Triad in 2012. At
that time, he said there was good
interest, but its light-rail proxim-
ity was merely a bullet point in
the sale. “When we sold it in late
2015, it was the focus of the sale,
the focus of the marketing and the
focus of investors. No question,” he
said.
The sales difference for the same
asset over a three-year period –
$21.3 million – can’t be attributed
solely to it being near light rail.
The interior was updated and the
market was better in 2015 than it
was in 2012, he said. And, it’s worth
noting that the Orchard station was
built before 2012, but the ridership
wasn’t there yet.
“It’s interesting to see over a
three-year time period you had the
same asset and a vastly different
approach,” Baukol said. “I think that
ties in with the growth around the
hub at Union Station and the mul-
tiplying residential population that
live near or directly on light rail.”
Ridership
Light-rail boardings for a
12-month period ending December
2015 were 25.5 million, according to
RTD. For the 12-months prior, the
number was slightly higher – 26.3
million. While downtown Denver
enjoys a wide commuter base,
much of the suburbs continue to
see mainly drive-alone commuters.
According to the Colorado census,
69 percent of all commuters who
live within the metro Denver area
drive alone to work and only 7 per-
cent use public transportation. But,
for people who work in the down-
town area, 40.6 percent use transit
and only 30 percent drive alone,
according to the Downtown Denver
Partnership research.
“People who work in downtown
Denver get to work differently than
the community as a whole, because
we have a multitude of transporta-
tion options and lots of sticks and
carrots,” said McCallum.
Meanwhile, for many SES com-
muters, the number of light-rail rid-
ers is still relatively low, even when
properties are adjacent to transit. “I
would not say as a default the rid-
ership is very high,” said Jeremiah
J. Simpson, parking consultant for
Walker Parking Consultants. “We’ve
seen a 5 or 6 percent mobile split
reduction.”
One of the main reasons for this
is because most suburban offices
still offer free and plentiful park-
ing. The biggest determining factor
for transit use is an economic one,
he said. So where cost of parking is
higher – as it is downtown – there,
generally, is a higher percentage of
transit users, he said.
s
Courtesy CBRE
The southeast lines have the most office density. Space in close proximity to light rail is going quickly, creating a feeling of scarcity.
The employees of United Properties thank
our owners, clients and project partners for
a successful first 100 years. We look forward
to working together as we continue to evolve,
adapt and lead into the next century.
CELEBRATING
A CENTURY
OF SUCCESS
HFF DENVER
| 1125 17th Street, Suite 2540 | Denver, CO 80202 | (303) 515-8000 | hfflp.com
For investment sales, financing, distressed debt/REO, loan sales, equity recapitalization,
restructuring services or advisory services, contact HFF.
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