CREJ

Page 16 — Office & Industrial Quarterly — March 2022 www.crej.com industry already is adapting to current demands with 48% of office projects planned for suburban markets, as opposed to 35% in early 2020. Meanwhile, looking at the top U.S. markets, Denver closed 2021 with one of smallest development pipelines: Just 1.26 million sf of new office space was under construction here, which represents 0.8% of current stock. Those figures remained unchanged in early 2022, with the share of planned projects also remaining at a steady 3.5% of existing stock. n Looking ahead: Flex space to bridge gap into amorphous future. Although some sectors have been bullish on returning to office environments, especially the finance sector, most workers remain firmly in favor of at least partial telecommuting. In a time of record worker shortages, most companies seem to be in favor of accommodating hybrid policies. Nearly one in nine global companies plans to make use of flex space – despite less than 6% of office build- ings in the top 50 markets currently featuring flex space. Moreover, nearly one-third of that can be found in just five markets: Manhattan, NewYork; Los Angeles; Washington, D.C.; Dallas; and Boston. Plus, shifting flex space revenue models will have an impact, with some of the expected changes to include franchising; management partnerships with shared revenues streams; unconventional conversions to flex space; and increased financial pressure for landlords to carry the burden of outfitting spaces in return for a larger revenue share from flex operators. s eliza.theiss@yardi.com Theiss Continued from Page 4 moving to 80,000 sf at 6900 Layton, Belleview Station’s newest tower in the Denver Tech Center. Previously, the company occupied 171,000 sf of space in the CBD. From high real estate taxes to the recent push for buildings with modern amenities, companies are reluctant to renew leases in older product in the CBD. In some instances, companies downsizing their footprint has allowed them to move into higher-quality buildings without sacrificing their budget. Also accelerating this shift is the reduction in community safety from the widespread socioeconomic impacts of COVID-19. For example, in late February, 42 individuals were arrested as part of a single “large-scale enforcement operation” in Union Sta- tion, which is close to LoDo, to curb outstanding warrants and illegal activ- ity, according to Denver Police Depart- ment. This concentration of crime may explain in part why every major build- ing proposal in downtown is planned in uptown River North, with no con- struction happening in LoDo and CBD. Tenants are less eager to ride the light rail and take clients on a sidewalk jaunt in these areas, and they are more willing to take advantage of the trails, walkability and pedestrian-friendly open space that is available in uptown Denver and the southeast. Abundant parking in the southeast market is also at a fraction of the cost of downtown Denver, providing added appeal for office occupiers. s jack.ellis@transwestern.com cheryl.casserly@transwestern.com Ellis Continued from Page 8 early 2022 illustrated a similar pat- tern. Most expressed uncertainty about when commercial office invest- ment would return to pre-pandemic levels while remaining bullish on downtown Denver as a growth mar- ket that will attract continued invest- ment. Investment in the market undoubtedly sends a strong message – downtown Denver is not dead. Even amid the pandemic, down- town saw a number of exciting devel- opments completed in 2021, demon- strating continued investment in our center city. In 2021, a total of 26 proj- ects were under construction or came on line, including notable properties such as McGregor Square, Market Station and Block 162. These projects account for nearly $1 billion in invest- ment. With 50% of these projects being multifamily and 19% commer- cial office, we begin to see the recent shift in investment that paints a pic- ture of a new kind of downtown that offers more experiences for residents, workers and visitors to experience. Patrinely Group’s Block 162 and the proposed Riverside 30-story Class A office tower at 1900 Lawrence St. are powerful signals of this positive mar- ket outlook. There also have been substantial differences in demand for differ- ent classes of office buildings in downtown Denver, with Class A offices leading. The reason is simple: Employees’ return to the office will hinge on the attractiveness of the office space and access to ameni- ties needed for their safety, comfort and entertainment. While Class A office space has a competitive edge due to quality, landlords and property owners for Class B and C properties must expand their current amenities and be creative in the design of their buildings to remain competitive. Though the current office market favors tenants, various incentives offered by landlords mean that busi- nesses that traditionally would not have considered or could not have afforded a downtown location now have the opportunity to tap into the favorable business outlook of down- towns in expanding their market share and profitability. As the number of office workers potentially shifts in the long term, this creates more opportunity for downtown Denver to diversify its mix of downtown users by continuing to add residents. Residents have doubled since 2010 and are projected to grow from 30,000 in 2021 to 35,000 in 2026. Downtown Denver now has double the number of residents of both Aus- tin, Texas, and Nashville, Tennessee. This unique moment in our city’s history provides a window of oppor- tunity for city builders and developers to rethink what downtowns should be and how best to build resiliency and renewed vibrancy into our center cit- ies moving forward. Denver’s culture of collaboration and innovation has left our center city well-positioned for economic growth and building a brighter future for downtown, and the data shows just that. Downtown Denver’s heartbeat is stronger than ever before, and there’s a lot to look forward to on our city’s horizon. s bpertierra@downtowndenver.com Pertierra Continued from Page 12 LET’S CONNECT. Call 303.802.8918 or email us at cerickson@pacwest.com. THE BANK THAT GROWS WITH YOU. We’re more than a bank; we’re an advocate for your vision during challenging times. Pacific Western Bank is committed to serving Colorado with our customized lending solutions, deposit products and treasury management services. Pacific Western Bank is a bank you can trust to meet all your financial needs. RECENT TRANSACTIONS $49,980,000 Build to Rent Housing Brighton, CO $30,680,000 Build to Rent Housing Austin, TX $6,740,000 Office / Apartment Construction Denver, CO $58,920,000 Apartment Construction Denver, CO Pacific Western Bank is an equal opportunity lender. This is not a commitment to lend. All offers of credit are subject to credit approval.