Colorado Real Estate Journal - December 2, 2015
Businesses in Cherry Creek North generated about $10 million in retail sales tax revenue for the city and county of Denver last year, which is believed to be a record. And Cherry Creek North is only getting started as far as revving its economic generation engine. “I would say that Cherry Creek North is undergoing its largest redevelopment in 25 years,” said Julie Underdahl, president and CEO of the Cherry Creek North Business Improvement District. “I think it was in the early 1980s that Cherry Creek North experienced this level of redevelopment,” she said. The Cherry Creek North Business Improvement District recently analyzed a great deal of data, including tax revenues and office and retail leasing activity. “Cherry Creek North is experiencing an unprecedented economic upswing and the data clearly indicates that people want to live, work, visit and do business in this thriving neighborhood,” Underdahl said. Restaurants and hotels, the largest category of sales tax collections in Cherry Creek North in 2014, was up 6.4 percent from 2013. Clothing and accessories, the second-largest category, saw revenues jump 9.1 percent. Also, there was a “9.7 percent increase in office employment and almost 400,000 square feet of new office and retail space under construction,” Underdahl said. The average office worker’s annual salary in 2014 was a whopping $142,500. “I don’t know of any place else in Denver, and I suspect very few places in the country, where the average office worker makes $142,000,” Underdahl said. “I think that is something that really stands out and really surprises people,” she said. The retail vacancy rate was a mere 3.9 percent in 2014. It peaked at 14 percent during the Great Recession of 2009. “The vacancy fell while lease rates rose,” Underdahl said. So far this year, 17 new businesses have opened their doors in Cherry Creek North with more announcements being made monthly. These businesses include financial, oil and gas, clothing, food and beverage, health and personal care, and services industries. Several well-known national retail businesses chose Cherry Creek North as the place to open their first stores in the Denver area, Underdahl noted. All told, there is another 250,000 sf of retail and office coming to Cherry Creek North, adding to the base of 1.3 million sf of office space and about 1 million sf of retail space. While Cherry Creek North always has been known as a tony retail destination, one exciting development is that the number of hotel rooms will more than double. There are 519 hotel rooms either underway or planned in three hotel projects. Two of them are being developed by Matt Joblon of BMC Investments, which is based in Cherry Creek. The other hotel is being developed by Navin Dimond of Stonebridge Cos. Currently, there are 230 hotel rooms in Cherry Creek North. “Cherry Creek already is the No. 1 visitor destination in Colorado and these new hotel rooms will give us the ability to stay as the No. 1 destination and create an even stronger tourism and visitor base,” Underdahl said. “I think all of these new hotel rooms will increase Cherry Creek North’s visibility and these tourists and visitors will really support the restaurants and retailers in Cherry Creek North,” she said. Also, there currently are less than 50 residential units in the heart of Cherry Creek North. The 250 Columbine mixed-use project will bring 71 new, high-end condos to Cherry Creek North. And in the greater area, including apartments, the residential base is skyrocketing. “The number being bandied about is that maybe 1,500 new residential units will be opening in the area,” she said. Underdahl thinks there are three main driving forces for the success and growth of the increasingly diverse Cherry Creek North. “When we step back and look at why this is happening, I think it comes back to these reasons: “No. 1, the regulatory framework. The Cherry Creek Area plan has been updated and we have new zoning in place to replace the 20-year-old design guidelines. “No. 2, Denver’s booming economy and its ability to attract millennials and entrepreneurs. We’re benefiting from where we are in the real estate cycle right now, with local players like Matt Joblon making big investments in Cherry Creek North and new investors coming here,” Underdahl said. No. 3 is Cherry Creek’s walk-ability. “The trend in Denver, and nationwide, is that people are being drawn to urban, walk-able areas. In Cherry Creek North, you can park your car and walk to whatever you need, whether it is a great restaurant or a great retailer. “And if you stay in one of our existing or new hotel rooms, you don’t even need a car. You just have to step out of your room and start walking to your destination.” Meanwhile, by the numbers, here is some information gathered by the Cherry Creek North Business Improvement District: Assessed Valuation. The total assessed valuation in 2014 in Cherry Creek North of $159.2 million represents 1.4 percent of the total in the city and county of Denver. Jobs. Businesses in Cherry Creek North employed approximately 6,800 workers in 2014, with 3,350 office workers earning an average annual salary of $142,500 and 3,450 workers in the retail, hospitality and other personal services earning an average salary of $28,800. However, the average annual salary for retail, hospitality and personal service employees does not necessarily represent full-time working status. Real Estate. Cherry Creek North recorded a fourth-quarter retail vacancy rate of 3.9 percent, the lowest level recorded since the start of the data series in the first quarter of 2006. Cherry Creek North vacancy rates were lower than those throughout metro Denver and the city and county of Denver at the end of 2014.