CREJ

Page 22 — Office Properties Quarterly — June 2019 www.crej.com Corral on Wazee Street underwent an extensive renovation that helped attract fitness track app Strava to sign a 20,000-square-foot lease. His- toric charm coupled with modern updates and proximity to restau- rants, retail and the Cherry Creek trail system makes this the ideal Denver office location for the San Francisco-based company’s active employee base. On 17th Street, the former Denver Club building – rebranded to The DC Building following a major renova- tion – is helping reinvigorate the area by offering modern amenities, including a one-of-a-kind bowling alley, updated common spaces and centralized conference rooms. While anticipating and addressing these new demands is important, the biggest differentiator remains the ability to build relationships with tenants. It is important to care for tenants throughout their entire business life cycle – from taking the hassle out of the leasing process to demonstrating engagement as a property manager to support- ing their growth. Taking the time to understand a tenant and going the extra mile to meet their needs goes a long way in a competitive market. V Goodfellow Continued from Page 16 ucts contain fewer harmful chemi- cals and use paper product standards such as chlorine-free paper produc- tion, biodegradability requirements and use of recycled content. Offering recycling services can provide envi- ronmental benefits at a relatively low cost. Property managers certi- fied through LEED often can identify opportunities to reduce the environ- mental impact of an office building. • Financing your building’s comeback. Like a little red Corvette, midlife cri- ses are not cheap. But what is the cost of doing nothing? If not properly maintained, buildings may become obsolete in the market and lead to a “flight to quality,” resulting in lower occupancy, reduced lease rates and decreased asset value. What are the benefits of updat- ing and upgrading a building? First and foremost, you have to stay in the game. You want to attract the strongest and best paying tenants. You can’t do that by looking old and run down. Building upgrades and modernization can, and usually will, result in more energy-efficient opera- tions, lower operating expenses and better operating buildings. Now the biggest challenge: How do you pay for all this? Junk bonds are out. Traditional bank loans are avail- able, but there is a new loan program in Colorado that can make building upgrades almost entirely cost-free. Commercial Property Assessed Clean Energy is a Colorado state program that finances energy-efficiency upgrades for commercial properties through loans paid for by a new mill levy on the property. The increase in property taxes is offset by the reduc- tion in energy costs; sometimes the result is a net decrease in operating expenses. The improvements are financed 100% and the debt does not add to the individual property’s bal- ance sheet. Depending on the lease types, these upgrades can be paid by the tenants through common area maintenance charges. In our firm’s opinion, this is the best approach to finance those desperately needed upgrades to stay competitive in the market. These 30-something buildings face many challenges against their young- er counterparts. Staying abreast of current styles, upgrading to ener- gy-efficient building systems and embracing sustainability will keep the older (and wiser) buildings hip and in the game for decades, just like U2 or Bon Jovi. V Kennedy Continued from Page 18 Perhaps the most important conse- quence here – and most often over- looked – is water. Far too many ten- ants and building owners fail to con- sider what a higher occupancy load and the subsequent code compliance may cost in both time and money. The code calls for a higher occu- pancy load to be offset by more fixtures, like faucets and toilets. It might even require an upgrade to the water line, from 1.5 inches to 2 inches, which is a monumental undertaking for any office building. First there is a stiff fee – in the thou- sands – to the municipality in which the building resides. That does not include anything else, like ripping up the existing lines outside and into the building. The landlord must incur that expense and others, along with the time it takes to schedule and complete the job plus the disruptions to traffic, parking and perhaps even to the building’s tenants. And speak- ing of tenants, the building owner may pass this expense on to one or more tenants for prompting the issue and activating the code compliance in the first place. Even circumstances outside of a building can be directly affected. As tenants move more people into their offices, parking will become an issue. There will not be enough. While Denver’s light rail is superb for any major metro area, it is not always the answer. Neither is the work-at-home option or other job-sharing methods that employers have been using for decades. Again, this may satisfy the challenges for some tenants and some building owners, but not the vast majority. Today’s office culture drives how and where we work, and it is cycli- cal in nature. Heavier occupancy loads must be addressed with build- ing codes designed to ensure life and safety. In turn, developers and architects must continually adjust to those codes in the design process. The bottom line is that metro Den- ver is having growing pains, mostly good ones. And sometimes those growing pains just breed unintended consequences for both landlords and tenants. V Brunner Continued from Page 19 C E L E B R A T I N G Y E A R S C E L E B R A T I N G Y E A R S