CREJ - Building Dialogue - March 2017
Colorado’s rapid change in development is evidence of our healthy economy and continuing population growth – it’s our very own chicken-and-egg condition. Our vibrant market conditions have changed our development landscape. What’s driving the change? We sat down with developer Jim Neenan, president and COO of Prime West, in his office overlooking lovely mountain views to the west to hear his thoughts about what’s important to companies in our region. He knows because his newest building, One Belleview Station, has seen some of the best companies looking for their new home in the southeast suburban market. JS: What opportunities do you see as important to future Front Range development given our growth and competitive climate companies face regarding workforce attraction and retention? JN: Demand for office space has changed dramatically and so has the user profile. It used do be that a typical floor plate of 25,000 square feet, one that was efficient to plan, with good glass lines, was good looking and had views, was enough for companies. It didn’t matter if it was downtown, southeast or Interlocken – all of these submarkets competed equally in terms of office product. Once companies selected which market, their decision criteria focused on rent structure and views. Employers are now more focused on a broader set of needs beyond rent and views. JS: Enter rapid millennial population growth and light rail. Have companies changed their selection criteria? JN: Today, companies still tend to focus on one submarket. Their new challenge is the future. Beyond the most efficient building and cost, now companies really focus on attraction and retention of talent. Talent is key and attracting new talent is big challenge for them. It comes down to where is the best location for the business and now that decision is highly driven by what is the best location for best for their employees. It costs a ton to recruit, train and integrate talent, so finding what matters most to employees, both new and existing, is more important than ever. Employees have become more discriminating and will move to businesses that more closely meet their needs. Among the top considerations for employees are easy access to multimode transportation, buildings that offer rich common work areas, such as coffee bars, lounges and outdoor patios, plus walkable off-site dining and coffeehouses. Employees want to work in environments rich in options. Work now happens as easily in a coffee bar or lobby as in their space or the lunch room within their space. Employees want more interaction and they want to be as mobile and untethered as they can be. As work today is structured differently, so too is work space design evolving. There’s a push on the bottom line to densify, but highly dense and smaller work areas place greater demand on common areas. Employers are finally beginning to wake up – the lease rate is peanuts in the scheme of labor and operating expenses. Talent trumps lease rate in terms of business performance. JS: What does the future hold for suburban office parks in order to compete in this amenity-rich expectation? JN: Here’s what’s coming: As people enter their 30s and start families, there’s a migration from high-cost urban living to areas that are education-friendly, kid-friendly and that offer a little more space for growing families. Once you have a couple of kids, a 1,200-square-foot house doesn’t fit for families anymore. Families want more for the dollar and are seeking near-urban or suburban neighborhoods, which offer more value in real estate. Commute time and transportation options still remain important to employees. Development is on fire in the southeast market for several strong reasons: Light rail is immediately accessible; affordable housing is nearby; and new housing is being developed within the SES market, too. New amenities that are walkable and within a block have offered new energy for the SES market. More density is the future and there’s a very direct correlation between housing, retail and office. Office development and housing feed retail and restaurants – and after-hours excitement. The housing helps to populate retail and restaurants after hours, creating the neighborhood vibe. Even the most suburban office parks will require redevelopment with new amenities and denser housing to feed vibe-centered movement. JS: While newly developed suburban areas may be the modern nirvana – a mini-urban, walkable neighborhood – is there anything missing in the suburban settings? JN: The piece that’s missing – even Denver doesn’t have as much of it left anymore – is the unique edge of culture, the artists, the arts and on-the-fringe culture integrated into the communities. The suburban developments are really missing that.