CREJ

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— Office Properties Quarterly — December 2016

enver’s office market is in

the midst of a construc-

tion boom the likes of

which have not been seen

in the past 25 years – over

5.6-million square feet of office

space development is underway,

according to CBRE Research. While

urban submarkets like Lower Down-

town and the Central Platte Valley

have hosted a large portion of this

growth, Denver’s office space boom

has not been limited to down-

town. Strong construction activity

is occurring in Denver’s suburban

markets as well, driven by robust

demand from key industries and

access to a deep and growing labor

pool.

In fact, construction activity in

suburban submarkets is outpac-

ing the development underway in

downtown Denver. These trends

reflect the same urban revitaliza-

tion efforts and subsequent eco-

nomic developments that have

transformed Denver into one of

the country’s most promising com-

mercial real estate markets over the

course of the last decade. A closer

look at the state of office develop-

ment across Denver’s submarkets

reveals how one of America’s hip-

pest urban cores has maintained

and expanded its unique appeal to

developers and employers alike.

•

Union Station renovation sparks

development.

It’s not uncommon for

urban revitalization to be anchored

by iconic architecture. Union Sta-

tion, located in the heart of LoDo, is

playing such a role by piquing the

interest of devel-

opers evaluating

infill opportunities

in Denver. Origi-

nally constructed

in 1881, Union

Station was once

a major center of

commerce prior to

the decline of pas-

senger trains fol-

lowing the end of

World War II.

Major renova-

tions completed

in 2014 helped put

Union Station back in the spotlight.

Sections of the terminal building’s

upper floors were transformed into

a 112-unit hotel. A light-rail station

and underground bus facility were

added to reposition Union Station

as a transit hub. Additionally, 22,000

sf of ground-level expansion provid-

ed Union Station with more space

to host independent retail stores

and restaurants.

Concurrent with the completion

of Union Station’s renovations, the

LoDo submarket began to experi-

ence an uptick in construction

activity as office developers recog-

nized the economic transforma-

tion taking place in Denver. Today,

almost 2 million sf of mixed-use

office building development is

under construction in LoDo and the

Central Platte Valley district. Major

projects include 1144 Fifteenth

(661,000 sf), 16 Chestnut (428,000 sf),

1401 Lawrence (311,000 sf), Dairy

Block (235,000 sf) and Riverview at

1700 Platte (210,000 sf).

Demand for new construction is

driven by existing Denver compa-

nies placing greater emphasis on

the office environment, meaning-

ful amenities, access and building

identity in order to better recruit

and retain employees. Likewise,

companies new to Colorado are

drawn to the downtown market

because of city’s high quality of life,

innovative culture, economic envi-

ronment and an abundance of top

talent.

•

Office spaces head to the suburbs.

While office development continues

to ramp up in Denver’s downtown

submarkets, this growth actually

was outpaced in 2016 by construc-

tion activity in suburban neighbor-

hoods. Over 2.6 million sf of total

construction activity is underway

in Denver’s suburbs, led by the sub-

markets in the southeast. Major

projects underway include Village

Center Station (306,000 sf), Gran-

ite Place at Village Center (300,000

sf) and INOVA I & II at Dry Creek

(211,000 sf and 235,000 sf).

Several factors encouraged devel-

opers to shift more focus toward

building office spaces in Denver’s

suburbs. Significant demand from

key industry sectors such as finan-

cial services, telecommunications

and health care, reflecting the mar-

ket’s deep and diverse labor pool,

has allowed companies to sup-

port a wide range of business lines

from one location. Additionally, as

a result of improvements made

to public transportation, Denver’s

urban core is better connected to

suburban submarkets, allowing

employers to access the region’s

available talent base of highly edu-

cated millennials.

Suburb construction outpaces city activity

Hilary Barnett

Associate, advisory

& transaction

services, CBRE,

Denver

Market Update

Construction activity in downtown Denver and the surrounding suburbs