CREJ - Office Properties Quarterly - March 2016
In the past five years, prices for the land surrounding light-rail stations have doubled and, in some areas, tripled on a cost per-square-foot basis. One example is the Village Center Station near the Arapahoe light-rail station. About four years ago, the land was valued around $21 a square foot, and now it’s $60 a sf, said Tim Harrington, executive managing director of Newmark Grubb Knight Frank. At the other end of the line, property downtown within proximity of light rail has skyrocketed. It now ranges from $300 to $600 a sf. “The trend is transit,” said Harrington. “That’s where all these companies want to be. They want to be within close proximity to transit for the purpose of their employees.” In the past, company executives decided an office’s location and the employees would follow, said Tom Lee, executive managing director of Newmark Grubb Knight Frank. This often meant the location was convenient to the executive’s residence. Today, that’s reversed. Companies need to go where employees want to be, and employees want to be urban and they want to be at transit, he said. Not only is it important to tenants and employees, it affects investors as well. “It’s becoming more and more important to investors to be by light rail,” said Geoff Baukol, executive vice president with the CBRE capital markets division. About five years ago, one client told Baukol that rather than looking at the market in two ways – central business district assets and suburban office assets – they had started looking at the market in three ways – CBD, suburban and transit-oriented. This thought process has only escalated since then, he said.