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Page 20 — Office Properties Quarterly — September 2017
Market Insights
® Denver’s Name in Commercial
Real Estate Since 1955
Fuller Real Estate, 5300 DTC Pkwy., #100, Greenwood Village, CO 80111 (303) 534-4822
ATTRACTIVE LEASING OPPORTUNITIES
HAMPDEN CENTER OFFICE
730, 750 & 770 W. Hampden Avenue
Lease Rates: $16.00 - $20.00/SF FSG
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FOUR STORY ATRIUM BUILDING
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BERGEN PARK / EVERGREEN OFFICES
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Office & Retail Opportunities in Bergen Park
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7991 Shaffer Pkwy., Littleton
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Call: John Becker or Mike Haley
Lobby exposure, western views.
THE CHANCERY
1120 Lincoln Street, Denver
Lease Rates: $23.50 - $25.000/SF FSG
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Office Leasing Needs? Call (303) 534-4822
M etro Denver should copy-
right the term “crane
watch.” After all, the city
and its suburbs are still
knee-deep in the big
money office building boom. Indeed,
there is over 10 million square
feet of office building construction
underway or planned for this year
alone, which would likely be a record
breaker in most other markets. Here,
not so much.
In fact, the period during which
most office buildings were delivered
across the metro area’s submarkets
was 1980 to 1985, a mark that indus-
try experts admit will be difficult to
eclipse. Most of those buildings are
still around, still functioning and still
quite vital to the area’s overall office
market health. But how can those
aging properties compete with the
sparkling new, state-of-the art prod-
uct coming out of the ground?
“In many cases, they won’t be able
to compete,” said Darrin Revious,
broker with Denver’s NAI Shames
Makovsky. “HVAC and other systems
improvements, aesthetic changes
and common area amenities can
approach what a new building can
offer, but new buildings already have
all those things and more. Of course,
tenants have to pay premium rents
for new product, and many won’t or
can’t do that.”
Clearly, landlords of the aging
inventory have their work cut out
for them. And the competition for
tenants is just as fierce among other
owners of the same building types.
In Denver’s central business dis-
trict alone, owners of most of the
1980s era skyscrapers have ponied
up a combined
$82 million for
capital improve-
ment projects as
of April, according
to research com-
piled by Denver’s
JLL office. That’s
an average project
cost of $4.6 million.
Again, an astound-
ing number, but
clearly indicative
of the requirement
for those buildings
to stay relevant in this vigorous mar-
ket.
“Landlords have to look at the
return on cost,” said Linda Kaboth,
vice president at Englewood’s Rise
Commercial Property Services.
Kaboth notes that one of four fac-
tors must drive the justification
for significant improvements to an
aging building. “It should be able to
increase rental rates, increase occu-
pancy, lower operating expenses or
demand a higher sale price of the
asset,” she said, and adds that com-
binations of those factors are always
in play.
“New, more efficient lighting
might decrease operating costs and
improve the building’s aesthetics,
for example, but the scope and type
of renovations to the ’80s product
requires much more thoughtful
analysis than just improving a lobby,”
she said.
That said, lobbies that do bring
some of the “wow” factor and offer a
range of multipurpose areas can be
the cornerstone of an aging build-
ing’s public area resurgence, if space
will allow and if embedded ameni-
ties match or exceed those of other
properties with similar rental rates.
Those amenities can include fit-
ness areas, locker rooms, bike stor-
age, cafés, Wi-Fi everywhere, or some
kind of outdoor space for both work
and leisure activities. In reality, those
features, or at least a majority of
them, serve only as a baseline from
which most landlords must build
just to stay in the conversation. For
those properties, it’s a perpetual
game of catch-up that never quite
seems to end.
Even when those owners do
dedicate significant funds to wide-
ranging improvements, unforeseen
challenges can and frequently do
complicate retrofit projects.
Building code issues continually
bedevil owners and property manag-
ers, the compliance of which is non-
negotiable. The new energy codes,
for example, require Denver building
owners to scrap existing fluorescent
lights and replace them with more
efficient LED lamps and fixtures. This
is but a single component of the 2017
International Energy Conservation
Code, which mandates an upgrade
to more sustainable lighting and
Jaime Brunner
Senior project
manager, Kieding,
Denver
David M. Budd Photography
A string of new “breakout rooms” and a café in this 1980s building lobby renovation
offers tenants a mix of private and social settings that did not previously exist.