CREJ - Office Properties Quarterly - June 2016
Anyone keeping tabs on the Denver market over the last few years has seen countless articles talking about how Denver has topped the list of best places to live, to attract millennials, to invest in real estate – the list goes on. From a commercial real estate perspective, this rapid growth and continued popularity have created challenges and opportunities for companies looking for office space. Leasing rates are significantly higher than they were a couple years ago. Average lease rates ended 2015 8.8 percent higher than 2014, and the upward trend is expected to continue through 2016. As a result, tenants of all sizes are looking outside of the central business district to find more affordable office space solutions. They don’t have to look far. The area just 20 minutes southeast of downtown has the potential to provide solutions – beyond sticker-shock relief – that many of today’s tenants seek. By addressing several key areas and taking a more holistic approach to development, southeast Denver can capitalize on the growth and popularity of the Denver area, and set the example for what the office of the future should look like. Access. There are 14,237 residents in the Denver Tech Center area and more than 40,658 daytime residents in the business community, according to the Denver Metro Chamber of Commerce. With all of those people communing, proximity to easy and efficient public transit is one of the most important issues facing the area. Unless we drastically change the way we get around, we’re looking at a 213.5 percent increase in vehicle hours of delay by 2035, according to the Reason Foundation’s 2015 study on Denver’s traffic congestion. No one wants to sit in that kind of traffic. If we hope to create a thriving center for business, we have to look at offering a more robust range of mobility choices outside of accommodating single-occupancy vehicles. Recent improvements and additions to light rail are promising. In Greenwood Village, there is access to three light-rail stations. The extension to Denver International Airport now makes it possible to access the airport from the area. There are other alternative transportation solutions available. We started offering our own solutions as tenant amenities. Our bike-share program provides lightweight, foldable bikes, ideal for carrying onto the light rail, and a partnership with Zip Car for car sharing helps cut down on the number of personal-use vehicles on the road. Sustainability. Beyond building more sustainable new developments, one of the best ways to demonstrate a commitment to responsible resource use in southeast Denver is to repurpose or retrofit what we already have for a new generation of tenants. For our part, we are making a concerted effort to buy back properties we developed and sold, like 5700 Quebec Court. The bones are good; we have spent the last four decades focusing on quality materials and design in our properties. By bringing these properties back into the portfolio, we hope to add features and services that will contribute to the long-term vitality of the buildings and tenants. By year-end, for example, we will begin offering a composting option in partnership with Alpine Waste. Wellness. Generally speaking, as developers, we have to do better for the people who use our spaces by making more informed design choices for the built environment. Businesses today are taking a more holistic look at the actual work environment and its impacts on employee health, corporate culture and productivity, so we need to understand what that means for the spaces we offer. With the growing popularity of the WELL building standard and the shifting expectations of the newest generation in the workforce, we have tremendous opportunity to create a more attractive commercial development while also improving the health and happiness of the people who use our spaces. In 2015, a Gensler survey found that 87 percent of U.S. employers believe that wellness programs positively impact work culture, which is up from just 10 percent in 2013. And it’s no wonder: Americans spend an estimated 90 percent of our time indoors. It’s only natural that the environment we spend our time in will impact our sense of well-being. In addition to looking inside the building, our location outside the crowded CBD affords us the ability to provide better outdoor amenities. The American Public Health Association links access to nature to a host of health benefits – from lower levels of illness to stress relief to a greater sense of well-being. From a pure productivity standpoint, when people have green views or spend time outdoors in nature, evidence shows they also perform better on tasks that require focused attention. Happy, healthy employees ultimately can lead to a stronger corporate culture and better outcomes for companies as well as better tenant retention and higher-occupancy rates for property owners. The bottom line is that we must capitalize on our strengths in southeast Denver, with access to transit, sustainable spaces and the latest in well workplace design research being chief among them.