Colorado Real Estate Journal - July 2, 2014
The prime “gateway” parcel to Cherry Creek North at East First Avenue and University Boulevard could be poised for a future redevelopment that would include a new and bigger Whole Foods and eight story buildings. While it is far too early for exact plans to be in place, many observers expect that ultimately the Sears building on the site will be razed and the giant, struggling retailer will not be a player in the rebirth of Clayton Lane. The 7.7-acre site, believed to be the largest single parcel in the area along what is known as Denver’s Rodeo Drive, eventually could be a walkable, mixed-use development with retail, office and residential – but not a hotel. AmCap Inc., the owner of most of Clayton Lane, is seeking to “opt in” to the Cherry Creek North zoning as envisioned under the Cherry Creek Area Plan, which would pave the way for future development. AmCap has hired architect D a v i d Tryba, who designed the original Clayton Lane about 15 years ago for Denver developer Randy Nichols, to not only potentially come up with a new plan for the site, but also to meet with neighbors and seek their input. On July 30, City Councilwoman Jeanne Robb is scheduled to hear a recommendation from a Cherry Creek North task force on whether that portion of Clayton Lane and several other parcels should be allowed to opt in to CCN’s zoning. Robb indicated that a giant surface parking lot around what is arguably Whole Foods’ flagship store in the Denver area is not the best and highest use for the property. “I think if you talked to most urban design specialists, a big parking lot is not an ideal gateway,” Robb said. Tryba and AmCap officials recently gave presentations, including illustrative drawings of what a redevelopment could look like, to Country Club and Cherry Creek North neighborhood organizations. Architect Robert Fuller, a director of the Club Historic Neighborhood association, said the presentation by Tryba was largely well-received. “David Tryba is a great architect and AmCap is a great developer,” Fuller said. “This certainly is a gateway site and thus of great concern and importance to residents of Country Club, as well as people in Cherry Creek North,” Fuller said. He said that “conceptually, I think what they presented was well-received, but as a group, we did not immediately endorse it because we want to receive some binding commitments first.” At the top of the list is to complete the street grid by “pushing Josephine and Columbine” streets from Second Avenue to First Avenue, he said. And while eight-story buildings are certain to be a concern to some, he said the impact could be largely mitigated by a “stairstepping down” of future towers. “The general consensus seems to be the greater heights (eight stories) should be concentrated on the east on the site around Columbine Street,” Fuller said. Lower heights, of five stories or less, should be to the west to Josephine Street, he said. He noted that the nearby 250 Columbine mixed-use development under construction by Western Development is stepping down the height of buildings to assure the tallest buildings are at the most appropriate part. Fuller and others said that the existing Sears building would likely be razed and a new Whole Foods on the site would be about 10,000 square feet larger than the current store of about 53,126 square feet. AmCap, which bought the parcel from Nichols in 2006, does not own the J.W. Marriott nor the Janus building, which also are part of Clayton Lane. In total, Clayton Lane has 334,825 sf of retail. Sears is the largest tenant with 133,493 sf. Many neighbors would like to keep the Sears Automotive center, although that may not be the case if Sears decides to vacate Clatyon Lane. Other tenants at Clayton Lane include Orvis, Crate & Barrel, Wells Fargo, Arhaus, HW Home, Sur La Table, and Antoine Du Chez. As one might expect, the demographics around the site are some of the strongest, if not the strongest, in Denver. There are 17,478 people living in a one-mile radius with an estimated average household income of $154,680, according to Kelly Greene of Urban Legend, a division of Legend Real Estate, the leasing agent for the property. It’s also a high-traffic area, with an average of 55,841 vehicles passing it daily on First Avenue and 54,474 on University Boulevard. Tryba said he is honored to be participating in the possible redevelopment of the site. “We have no specific plans at this time; we are simply asking to opt in to the zoning,” Tryba said. The feedback from neighbors has been extremely helpful, he said. “We have showed numerous neighbors several illustrative drawings on what kind of potential the site could have,” Tryba said. “AmCap is absolutely committed to making this absolutely the best possible place imaginable, with good design and a thoughtful plan that will integrate well with the entire neighborhood,” Tryba said. The redevelopment of the site could transcend that location, he said. “A thoughtful plan that reconnects the grid and replaces the surface parking lot would set a precedent showing the power of how you can connect to the historic fabric of a neighborhood,” he said. He noted that when the late Temple Buell developed the first enclosed malls in the U.S. and he opened the first Cherry Creek Shopping Center in the 1950s, he was bringing a suburban concept into what is now an urban area. Enclosed shopping malls by their nature, he said, tend to be very inward looking. “We want the new Clayton Lane to be very walkable,” he said. “We want better connections to the Cherry Creek shopping center, as well as the bike path along Cherry Creek.” He said Whole Foods wants to stay on the site and wants more parking. The new development would include underground parking and probably expand the spaces lost on the surface parking lot. Tryba said the future development would include residential, office and retail, of course. “But it would not include a hotel,” he said. “Neighbors have told us they have no interest in seeing a hotel. Not only does Clayton Lane already have the J.W. Marriott, but also a hotel is planned for the former post office site that is very close to Clayton Lane.” Mike Kaiser, director of asset management, said it made a lot of sense to hire Tyrba, considering his history with the site. “He was the original architect for Clayton Lane, so it seemed like the logical thing to do,” Kaiser said. Records indicate AmCap paid $97 million for the retail portion of Clayton Lane in 2006. It was not a typical deal for AmCap. “At AmCap, we are in the business of owning groceryanchored shopping centers,” Kaiser said. “This center is like nothing we had ever done before,” he said. However, it was such a rare opportunity to own what many would consider the crown jewel of retail in the city that AmCap decided it couldn’t pass up the opportunity. “We didn’t buy the J.W. Marriott or the Janus building or the residential condos,” he said. “First, we just love the property; we love everything going on in Cherry Creek and Cherry Creek North. And we knew even back in 2006 we had a chance to redevelop it.” If the property is redeveloped, AmCap will develop all of the future buildings itself. And it will not build them to flip them. “We do all of the development,” Kaiser said. “We are long-term holders. We go back in Colorado to 1988, when we bought a portfolio of King Soopers-anchored grocery stores. We still own all of them, but one in Colorado Springs that was condemned to make way for a bridge. We are long-term investors. We have no interest of flipping our holdings. Period.”