CREJ - Office Properties Quarterly - June 2016
There is no question that Denver is home to one of the most successful urban cores in the nation. Almost weekly, the center city finds itself topping national rankings ranging from the best place for business and careers to the best place to live. As communities look to downtown Denver as a model, eager to replicate its success, they often are surprised to learn just how strategic the path to building this economic engine has been. “We have built the place, and they are most definitely coming,” said Tami Door, president and CEO of the Downtown Denver Partnership at the partnership’s recent State of Downtown Denver event. “Downtown Denver is a model for what a great city can be.” At the core of the place-based economic development strategy for the center city is the 2007 Downtown Area Plan, the 20-year vision to create an economically healthy, growing and vital downtown. As evidenced by the partnership’s 2016 State of Downtown Denver report, an annual report that offers a comprehensive statistical look at downtown, we are seeing significant success including the areas of development and investment. Development and investment. Developers are responding to increased demand propelled by a strong population and job growth, as well as key public-sector investments. There is $2.5 billion of investment under construction or planned for downtown Denver, on top of more than $634 million of investment in 2015 that included 15 projects to create an additional 511 hotel rooms, 1,901 residential units and 333,000 square feet of office space. Office market and employers. Downtown Denver currently has more than 36 million sf of office space. Office market fundamentals remain strong with a 9.5 percent direct vacancy rate and $33.14 per sf direct average lease rate. In the past 24 months, 24 companies have relocated or expanded and, as of the beginning of 2016, an additional 2.8 million sf of office space was planned or under construction. Over the past 10 years, downtown added more than 2.7 million sf of office space and, in spite of these large increases, the vacancy rate is much lower than some of our national competitors. Seattle, by comparison, has a 12.4 percent vacancy rate compared to downtown’s 9.7 percent. Workforce. More people are working in downtown Denver than ever before, totaling 123,548 at the end of 2015. Employment has increased 13.2 percent since 2010, surpassing the nationwide increase of 8.5 percent. Denver also is the seventh-most educated metro area in the country, with more than 40 percent of residents earning a bachelor’s degree or higher. And 30 percent of downtown jobs are in the professional and business service category, compared to 18.5 percent across metro Denver. Residents. Ranked as the top place to live in the country by U.S. News & World Report, 75,972 people live downtown. Attracted to vibrant, walkable districts and diverse residential amenities, this number is expected to grow by 12.6 percent over the next five years, compared to 3.7 percent nationally. Retail and restaurants. First-to-market and new-to-downtown options create a diverse retail scene, including the second noncoastal location for Uniqlo, which will open a 23,000-sf flagship store later this year. And 53 percent of businesses along the 16th Street Mall are local businesses or local chains, contributing to the $45 million in retail sales tax collections generated in downtown Denver in 2015. Mobility. Companies have expressed the importance of mobility options for their employees. As multimodal transportation options converge, nearly 60 percent of downtown Denver employees commute to work via transit, walk, bike or ride share, and 21 percent of downtown residents don’t own a car. This data, indicative of a changing and younger workforce, is challenging assumptions about the quantity and location of parking needed in the center city. Students and universities. There are 54,000 students who attend public, not-for-profit institutions of higher education in downtown Denver, and more than 10,000 students who attend trade or private institutions. The Auraria Higher Education Center continues to see growth and investment to help ensure businesses are able to recruit qualified employees. Public space and activation. Downtown’s parks and public spaces are an economic asset for the community and help transform an individual’s experience in the center city. In 2015, public spaces were activated for a collective total of 749 days. Events like Meet in the Street, produced by the Downtown Denver Partnership and funded by the Downtown Denver Business Improvement District, resulted in 30 percent more pedestrian traffic on the mall, and 60 percent of people spending more time in the space. Simply put, downtown Denver is thriving as a result of collective strategic, place-based economic development strategy and the long-term vision and commitment of the public and private sector leaders. Equally important is the focus on continuing to drive downtown forward. “We need to continue collaboration and engaging in important dialogue,” said Rob Cohen, CEO of IMA Financial and chair of the Partnership’s Downtown Denver Inc. Board of Directors. “As well as invest in and capitalize on the opportunities we’ve worked so hard for and ensure downtown Denver remains the best place in the entire country to live, work and visit.”