Downtown Denver Economic Update April 2013
Downtown Denver Partnership, Inc.
Research Department Research Department • 511 16th Street, Suite 200, Denver, CO 80202 • 303-534-6161 • www.DowntownDenver.com
Executive Summary According to the most recent data, Downtown Denver’s economy continues to perform well and its overall image is positive. Economic indicators show employment gains, increased retail sales and a surging residential real estate market. Despite a small increase in first quarter 2013 office vacancy rates, commercial real estate indicators show healthy office, industrial and retail markets in Downtown Denver. National press and rankings continue to praise Downtown Denver. Denver received high marks in recent rankings for the best cities for young entrepreneurs, most literate cities, cities with emerging downtowns and cities with the best urban forests. Employment increased over-the-year by 3.9% in Downtown Denver and 4.7% in the Business Improvement District (BID) in the third quarter 2012 (the most recent data available). The best performing sector in Downtown Denver was the professional and business services sector, which is also the area’s largest. The natural resources and construction sector and the education and health services sector also performed strongly in the third quarter 2012. Retail sales tax collections were 9.7% higher in Downtown Denver and 7.9% higher in the BID in the fourth quarter 2012 than the previous year, compared to a 4.8% increase in the Metro Denver area. Although a larger than normal tax filing from a single business may be skewing these numbers slightly higher, this trend is consistent with restaurant and hotel sales tax collections. Retail sales tax collections from the largest retail trade category, restaurants, rose over 10% in both the BID and Downtown Denver. Hotel retail sales tax collections, the area’s second largest category, rose 11.4% in Downtown Denver and 8.2% in the BID. Occupancy rates and room rates for Downtown Denver hotels also increased in 2012. The residential real estate market was significantly stronger in the fourth quarter 2012 than the previous year. The number of homes sold in Downtown Denver rose 115% and the number of homes sold in the BID rose 159% overthe-year. Average home sales prices rose 31.7% in the BID and 18.7% in Downtown Denver, pushed higher by 14 properties selling for over $1 million in the BID. Home sales in the City Center Neighborhoods rose 65.3% with the average sales price increasing by 32.4%. Residential development in Downtown Denver and the City Center Neighborhoods continues to thrive with 7,068 rental units and 136 for-sale units under construction as of April 2013. Commercial real estate indicators were mostly positive in the first quarter of 2013. While the vacancy rate for Downtown Denver and the BID increased over-the-year, the average lease rate also increased in both areas. Downtown Denver’s retail market vacancy rate of 2.6% remains well below the Metro Denver average of 6.4%, despite a small increase this past quarter. Direct lease rates for both Downtown Denver and BID retail properties were up slightly in the first quarter 2013. Construction continued on a number of new office, hotel, academic and other non-residential developments through the first quarter 2013.
This report includes the most recent quarterly data available and covers economic conditions in three areas. The first and smallest area is the Downtown Denver Business Improvement District (BID). The second area – which aligns with the 2007 Downtown Area Plan – is referred to as “Downtown” and includes the BID and several surrounding districts. The home sales section of the report also covers the City Center neighborhoods, which include both Downtown and the BID in addition to other neighborhoods. Please see page 11 for a detailed map of the three areas. Metro Denver in this report refers to the seven-county region comprised of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties.
ECONOMIC UPDATE, APRIL 2013 The Downtown economy performed well in the last quarter of 2012. Employment in Downtown increased by 4,400 jobs over the prior year, and unemployment has been declining on a quarterly basis for the past three quarters. Hiring prospects are stronger in 2013 so far, and several business announcements indicate even more jobs will be coming to the Downtown area. The residential real estate market is accelerating at a strong pace, with increased sales and higher prices. Similarly, commercial real estate is picking up as vacancy rates decline and lease rates begin to rise. Downtown Economic Highlights
♦ Mayor Michael Hancock and the Office of Economic Development launched a five-year incentive program
aimed at supporting businesses that invest in growth through capital investment and job creation. The program includes a tax credit provided by the passage of Measure 2A last year. The tax credit is awarded annually through 2017 to local businesses that make qualifying investments in business personal property including machinery, equipment, and furniture. Eligible businesses include Denver businesses that made significant capital investments through a start-up or expansion. Expansion claims must meet one of the following criteria: investment of at least $1 million, increased investment of at least 100 percent of prior capital level, increased employment by at least 10 jobs compared with the prior 12-month average, or increased employment by 10 percent or more compared with the previous 12-month average.
♦ Promontory Financial Group announced that workers in its Denver office were laid off. While a specific number was not announced, a spokesperson for the company said several hundred employees were affected. The announcement followed the federal government settlement with mortgage servicers and the end to the Independent Foreclosure Reviews. Promontory was an independent consultant for three of the servicers and has now ceased review work.
♦ Northwestern Mutual will add 80 financial representatives and 100 financial representative interns to its Den-
ver area workforce in 2013. The hiring announcement comes as part of the company’s effort to grow its products and services to keep pace with rising demand.
♦ On Deck Capital Inc. will be opening a Denver office and creating 200 jobs in the next three years. The financial services company specializes in loans of $150,000 or less to small companies seeking money for expansion. The company has already hired 16 workers and hopes to grow to 60 by the end of 2013.
♦ Halcón Resources Corp., based in Houston, announced that it will be opening an office in Denver and signed a lease for two floors at 1801 California St., which is the former Qwest tower building. The energy company did not announce the number of employees that will be moved or any local hiring that will take place.
♦ Recent notable rankings for Denver and area businesses: • Forbes included Denver on its list of 15 cities with emerging downtowns. The list seeks to identify U.S. cit-
ies that have a young, educated workforce that businesses look for when relocating or expanding. The list noted that Denver is revitalizing its Lower Downtown and the city is expanding efforts to include the entire downtown area. (Forbes, “15 U.S. Cities’ Emerging Downtowns,” March 2013)
• According to the March edition of the Metro Monitor released by the Brookings Institution, Denver ranks
39th of 100 largest metropolitan areas for its performance during the current economic recovery. The ranking is slightly down from its previous ranking of 37th in the last quarterly report. Denver ranked 20th for employment with a 5.3 percent growth from the low point during the recession to its current level. House prices in Denver ranked 22nd, showing 3.9 percent growth from trough-to-current prices. Unemployment was the 76th most improved of the metro areas. (Brookings, “Metro Monitor,” March 2013)
• Forbes ranked Denver as America’s 16th fastest-growing city based on population and economy. It report2
ed that the Denver-Aurora-Broomfield area’s population grew 1.3 percent last year and local job growth was 2.4 percent. The population is expected to keep the same pace in 2013. The top cities on the list were Austin, Houston, and Dallas. (Forbes, “America’s Fastest Growing Cities,” January 23, 2013)
• Fortune released its list of the world’s most admired companies, which includes six Metro Denver companies. DaVita Healthcare Partners Inc. and Chipotle Mexican Grill Inc. are the two Downtown companies named to the list. In addition to being on the overall list, the two companies were also highly ranked on smaller category lists: DaVita was second in the healthcare, medical facilities category, and Chipotle was first in the food services group. (Fortune, “World’s Most Admired Companies,” March 2013)
• Forbes ranked two Downtown companies on its list, “America’s Most Promising Companies.” The list was
based on growth, quality of management and investors, margins, market size, and key partnerships. The two companies were Four Winds Interactive (41st) and Ping Identity was (56th). (Forbes, “America’s Most Promising Companies,” February 2013)
• According to a ranking by Under30CEO.com, Denver ranked as the 8th best city with a population above 500,000 for young entrepreneurs. The rankings were based on readers’ votes on characteristics such as culture, local resources, atmosphere, and overall appeal to 20-somethings. (Under30CEO.com, “Top 30 Cities for Young Entrepreneurs 2013,” March 2013)
• Denver ranked 5th on Central Connecticut State University’s list of the most literate cities in the U.S. The
ranking was five spots higher than last year’s place and is based on factors including newspaper circulation and the number of bookstores. The top-ranked city was Washington, DC, and 76 cities were included on the list. (Central Connecticut State University, “America’s Most Literate Cities 2013,” February 2013)
• Denver was listed among the 10 best cities in the U.S. for urban forests by the conservation organization,
American Forests. Urban forests are ecosystems of trees and other vegetation in the community and vegetation within parks and along public rights of way and water systems. Denver estimates that $18 million in net income can be attributed to tourism of its park system. (American Forests, “The Best Urban Forests,” February 5, 2013)
• According to the 2012 Urban Mobility Report by the Texas A&M Transportation Institute, Denver ranked
15th for total traffic congestion cost of the 101 cities in the study. The report found that the costs of traffic, including idling in congestion and the cost of excess gas burned, led to an additional annual cost of $937 per individual Denver-Aurora commuter. The individual cost rose from $921 in 2011, and the commute time was unchanged for the area, with a 20-minute trip during a non-peak time taking 25.4 minutes during congestion. (Texas A&M Transportation Institute, “Annual Urban Mobility Information,” February 2013)
• Health Grades Inc. released a new report, “America’s Best Hospitals 2013: Navigating Variability in Hos-
pital Quality,” which named the Denver-Aurora-Broomfield MSA as 17th for having a low mortality rate at local hospitals. The mortality rate, 5.45 percent, also tied with the Chicago area. The number one area was Dayton, Ohio with an in-hospital mortality rate of 4.68 percent. (Health Grades, “America’s Best Hospitals,” February 2013)
• U.S. News and World Report released its annual rankings of graduate schools. The University of Colorado Denver’s Business School was ranked 89th for its part-time MBA program. Several of its health-related programs also earned high rankings: the medical school was ranked 5th for primary care and 35th for research, the physician assistant program was ranked 11th, the nursing program earned a number 15 ranking, and the pharmacy program was 24th. (U.S. News and World Report, “Best Graduate Programs,” March, 2013)
• U.S. News and World Report released its rankings of the top online degree programs in the nation. The University of Colorado Denver ranked 35th for graduate business and 54th for graduate education programs. (U.S. News and World Report, “Best Online Programs,” January 14, 2013)
• TripAdvisor released its first-ever TripIndex Room Service rating and found Denver to be the most afford-
able city. The rating is based on a comparison of 15 U.S. cities and the cost of a set basket of goods at top four-star hotels in each city. Denver was the cheapest ($40.40), and Honolulu was the most expensive ($64.90). (TripAdvisor, “TripAdvisor Reveals Denver The Top U.S. City For Hotel Room Service Value,” March 2013)
• Conde Nast Traveler ranked the top 75 U.S. hotel spas based on reader ratings. The three Downtown
hotels on the list were the Four Seasons Denver (33rd), the Oxford Hotel in Denver (41st), and the Brown Palace Hotel in Denver (64th). (Conde Nast Traveler, “Top 100 U.S. Resort Spas,” February 2013)
• The Forbes Travel Guide released its list of the best hotels, restaurants, and spas in the world. No Metro
Denver hotels received the highest five-star rating, but several received a four-star rating. The Brown Palace Hotel, the Ritz-Carlton Denver, and the Four Seasons Hotel Denver were the three Downtown hotels to receive the rating. The restaurant receiving a four-star rating was Restaurant Kevin Taylor. Spas receiving the rating were the Ritz-Carlton Spa in Denver and the Spa at the Brown Palace. (Forbes Travel Guide, “Forbes Travel Guide 2013 Star Award Winners,” February 2013)
• U.S. News and World Report released its hotel rankings for the state of Colorado, showing two Downtown hotels in the top 10. The Four Seasons Hotel Denver ranked 5th and the Ritz-Carlton ranked 9th. (U.S. News and World Report, “Best Hotels in Colorado,” January 2013)
• The 2013 Travelers’ Choice awards by TripAdvisor Inc. named the Embassy Suites Denver Downtown/
Convention Center (22nd) as one of the best 25 hotels in the U.S. (TripAdvisor, “Best Hotels in the United States,” January 2013)
• According to OpenTable, an online service to book restaurant reservations, Palace Arms restaurant at the
Brown Palace is one of the 100 best restaurants in the country for service. The ranking is based on opinions of users of OpenTable. Palace Arms was the only Colorado restaurant on the list and was also singled out as the 10th top restaurant where service was the best. (OpenTable, “Top 100 Restaurants for Best Service – 2013 Diners’ Choice Winners,” March 2013)
♦ The annual benchmark revision to employment data resulted in an upwardly revised growth rate for the Metro Denver area to 2.7 percent for 2012. The growth rate was up from the previously estimated 2.5 percent. On a quarterly basis, employment rose 0.9 percent between the third and fourth quarters of 2012, or 12,200 jobs. Fourth quarter employment was also 2.9 percent higher than the same period in 2011, or 40,100 jobs. Overthe-year, information was the only supersector to show a decrease in employment, posting a loss of 700 jobs (-1.3 percent). The fastest growing supersector was natural resources and construction, which reported an increase in employment of 5.7 percent or 4,300 jobs. The largest supersector in Metro Denver, professional and business services, rose 4.7 percent or 11,600 jobs. Colorado employment grew 2.6 percent (58,600 jobs) in the fourth quarter compared with the year-ago level. U.S. employment grew at a slower rate of 1.6 percent. (Sources: Colorado Department of Labor and Employment, Labor Market Information, Current Employment Statistics (CES); U.S. Bureau of Labor Statistics.)
♦ Covered employment1 in the third quarter of 2012 increased by 4.7 percent in the BID and 3.9 percent in the
Downtown areas. Seven of the eleven supersectors gained jobs in Downtown, leading to a total jobs gain of 4,400. The best-performing sector was the professional and business services sector, which is also the area’s largest. Jobs gained in the sector accounted for 83.7 percent of the total jobs gain (3,681 jobs). The second largest jobs gain was in the natural resources and construction sector, showing an increase of 663 jobs or 15.1 percent of the total gain. Four supersectors lost jobs over-the-year in the third quarter. The largest decline occurred in the information sector, a loss of 599 jobs. Other sectors to report declines were financial activities (-54 jobs), government (-44 jobs), and other services (-34 jobs). The BID area also reported an increase of about 4,400 jobs, with the largest percentage of total jobs gains coming from the professional and business services sector – 86.5 percent or 3,825 jobs. Despite the similar overall increase in the BID area compared with Downtown, more supersectors reported job losses in the BID. Five supersectors lost jobs, the largest occurring in information (-599 jobs). The other supersectors showing losses were financial activities (-53 jobs), manufacturing (-29 jobs), other services (-28 jobs), and government (-1 job). (Sources: Colorado Department of Labor and Employment, Quarterly Census of Employment and Wages (QCEW); Development Research Partners.) Covered Employment Employment
Business Units* (3Q12) Industry
Downtown % ch
Private Sector Natural Resources & Construction Manufacturing Wholesale & Retail Trade Transp., Warehousing & Utilities
Education & Health Services
Leisure & Hospitality
Professional & Business Services
Note: Data covers only those businesses with an address listed in administrative records. Most, but not all, businesses meet this criterion. As a result, changes in the data series over time are not always due to changes in actual employment; some changes are due to differences in address reporting. *The count of business units is generally larger than the count of individual businesses because some businesses have multiple units. Sources: Colorado Department of Labor and Employment, QCEW; Development Research Partners.
♦ The unemployment rate in the City and County of Denver declined further to 8 percent between the third and
fourth quarters of 2012, representing nearly 25,800 residents not working. This was the third consecutive overthe-quarter decline and reflected a 0.3 percentage point drop from the third quarter. Data show an even larger
Jobs covered by unemployment insurance as reported in the QCEW. These positions represent the vast majority of total employment, although the self-employed, some agricultural workers, some domestic workers, and several other categories of workers are excluded. This data series lags the CES series by about six months and is available for the nation, states, MSAs, and counties.
decline compared with the fourth quarter of 2011 when the unemployment rate was 8.6 percent, or about 28,000 residents not working. The City and County of Denver unemployment rate is slightly higher than the larger Metro Denver area, where the rate was 7.2 percent in the fourth quarter of 2012. This rate was also lower than the third quarter rate (7.6 percent) and represented the third consecutive quarterly decrease. The rate was also 0.4 percentage points below the prior year rate of 7.6 percent. Colorado and the U.S. followed the same trend as Metro Denver and the City and County of Denver – the Colorado unemployment rate declined for the third consecutive quarter to 7.4 percent in the fourth quarter of 2012, and the U.S. rate declined to 7.5 percent. Both the U.S. and Colorado showed a 0.8 percentage point drop over-the-year in the fourth quarter. (Sources: Colorado Department of Labor and Employment, Labor Market Information; U.S. Bureau of Labor Statistics.)
♦ The Denver-Aurora-Broomfield Manpower Employment Outlook Survey results suggest hiring is stronger
locally than nationally. The second quarter results show hiring has slowed slightly, with 21 percent of the companies planning to add jobs compared with 23 percent in the previous quarter. However, the percent of companies planning to lay off workers has also decreased two percentage points to 6 percent. The percent of companies planning to hire is 3 percentage points higher than the same period in 2012. Companies that expect no personnel changes (69 percent) increased 3 percentage points over-the-quarter, but decreased 9 percentage points compared with year-ago data. U.S. results for the second quarter show the percent of companies planning to hire compared with first quarter results rose 1 percentage point to 18 percent. Companies planning to decrease personnel levels fell 3 percentage points over-the-quarter to 5 percent and 1 percentage point compared with year-ago results. The survey suggests that fewer companies find it necessary to decrease employee numbers as the economy improves, and more companies are maintaining or increasing their current staffing levels. (Source: Manpower Inc.)
♦ The Conference Board’s U.S. Consumer Confidence Index for March fell 12.3 percent from the February number. Economists attribute the decline to consumers’ lowered expectation of the future due to uncertainty surrounding the recent sequester and loss of confidence. The sharp decline is also shown in a year-over-year comparison, as the March index was 14.1 percent below the March 2012 index.
The Consumer Confidence Index for the Mountain Region, which includes Colorado, declined even more than the national index, dropping 35 percent between February and March. The index was also 46.3 percent lower than the year-ago number. The index was at its lowest point since April 2009. (Source: The Conference Board.)
♦ Retail sales tax collections increased over-the-year in the fourth quarter for both Downtown and the smaller BID
area. Collections were 9.7 percent higher in Downtown and 7.9 percent higher in the BID area. A larger than normal tax filing by a taxpayer in the BID area may be skewing the fourth quarter 2012 results to show a higher than actual number. Sales tax collections in the restaurant retail trade category – the largest retail trade category in both Downtown and the BID area – rose by just over 10 percent in each area between the fourth quarters of 2012 and 2011. Collections in the hotel category – the second largest category for both areas – rose more in Downtown (11.4 percent) than the BID area (8.2 percent). The third largest category, clothing and accessory stores, also increased about 6 percent for both areas. (Source: City and County of Denver, Office of the Controller.)
♦ Metro Denver retail sales – a slightly different, but related measure of consumer activity – rose by 4.8 percent in the fourth quarter of 2012 compared with the same period in 2011. (Source: Colorado Department of Revenue)
RETAIL SALES TAX COLLECTIONS BY INDUSTRY BID Industry Manufacturing
Furniture & Home Furnishings
Electronics & Appliance Stores
Food & Beverage Stores
Health/Personal Care Stores
Sporting Goods/Hobby/Book/Music Stores
Hotel & Other Accommodation Svcs.
Retail Trade Motor Vehicles & Auto Parts
General Merchandise/Warehouse Stores Miscellaneous Stores Information Producers/Distributors Bus. Admin, Support, Waste/Remediation
Other Services Total Retail Sales Tax Collections Yr/Yr % Ch
â™Ś The 2012 occupancy rate for hotels in the Downtown market increased 1.6 percentage points over the 2011 rate to 73.4 percent. Like the occupancy rate, the average room rate also improved during 2012. The average room rate rose to $153.46 from $151.31 in 2011, a 1.4 percent increase. The Downtown market was representative of the trends in the entire Metro Denver hotel industry. The occupancy rate for 2012 increased 1.2 percentage points over 2011 to reach 68 percent. The average room rate also showed an annual increase of 1.7 percent to $111.78. (Source: Colorado Hotel and Lodging Association, Rocky Mountain Lodging Report.) Residential Real Estate
â™Ś The housing market in the BID and Downtown consists almost exclusively of townhomes and condominiums.
Like the Metro Denver region, both submarkets showed higher sales numbers between the fourth quarters of 2011 and 2012. In the BID, the number of homes sold rose 159.1 percent over-the-year, and the average sales price increased 31.7 percent to $676,298. The large sales price increase was due to the fact that 14 properties priced at $1 million or more were sold in the fourth quarter of 2012 compared with one such property in 2011. Most million-dollar properties in 2012 and the single property sold in the fourth quarter of 2011 were in the Four Seasons Luxury Residences. The remaining high-priced home sold in 2012 was in the Spire.
As a larger area that includes the BID, trends in the Downtown housing market were very similar to those in
the BID. The number of homes sold rose 114.5 percent in the fourth quarter of 2012 compared with year-ago data. The average sale price of a home also increased 18.7 percent to $595,012. The 14 homes sold for at least $1 million influenced the price increase as they did in the BID, but one additional such property was sold in Downtown outside of the BID during the fourth quarter of 2011.
♦ The larger City Center Neighborhoods (CCN) area showed positive trends between the fourth quarters of 2011 and 2012. The number of homes sold rose 65.3 percent to 357 in the fourth quarter of 2012. The average selling price of a condominium/townhouse rose more than both the BID and Downtown, increasing 32.4 percent to $445,907. The average selling price of a single-family house also increased over-the-year to $323,620, a 19.6 percent increase.
♦ Homes sales activity throughout Metro Denver has remained strong and rose at a fast pace in the fourth quar-
ter of 2012. Sales increased 26 percent compared with year-ago data, higher than the third quarter increase of 24.2 percent. As sales accelerate, prices continue to increase due to heightened demand. The average sales price of a condominium/townhouse was 18.5 percent higher than the same period in 2011, reaching $204,051. The price also increased 3.6 percent over the third quarter of 2012. The average single-family home price showed a slightly smaller, though still strong, increase of 11 percent to $315,939. The third quarter 2012 price was 1.6 percent higher than the fourth quarter price. (Sources: Colorado Comps; Development Research Partners.) EXISTING HOME SALES BID 4Q12
City Center Neighborhoods
Metro Denver 4Q12
Condominiums/Townhomes Sold During Quarter
Average Sales Price
Ave. Price per Sq. Ft.*
Detached Single-Family Homes Sold During Quarter
Average Sales Price
Ave. Price per Sq. Ft.*
Total Home Sales
*Excludes homes where total square footage was not reported. Note: Data could include a small number of new home sales. Source: Colorado Comps.
♦ Foreclosure filings in the City and County of Denver (588)
decreased significantly between the third and fourth quarters of 2012. The 19.8 percent decline was the largest overthe-quarter decline since the first quarter of 2011. Compared with the same period in 2011, foreclosures declined by 35.4 percent, also the largest decrease since the first quarter of 2011.
Metro Denver foreclosure filings (2,933) showed the same downward trend: fourth quarter filings dropped 21.2 percent compared with the previous quarter and 34.4 percent overthe-year. The decline also put filings at the lowest point since the third quarter of 2004. (Source: Colorado Division of Housing.)
Commercial Real Estate Note: lease rates for industrial, flex, and retail property are triple-net. Office rates are full-service.
♦ The direct office vacancy rate increased over-the-year in the first quarter of 2013 for both the BID and Down-
town areas. The direct vacancy rate in Downtown rose 1.1 percentage points to 12.3 percent, and the rate in the BID increased 1.6 percentage points to 12.7 percent. Wide swings in the vacancy rate are not unusual for smaller markets, as they are susceptible to small arrivals or departures of tenants.
Despite the increase in the vacancy rate, the office market posted an increased average lease rate for the first quarter of 2013. The rate was up 8.2 percent over-the-year to $27.99 per square foot in the BID and 7.4 percent to $27.49 per square foot in Downtown. As a highly desirable place for businesses to locate, the Downtown lease rate is 32.8 percent above the metro-wide lease rate for office space.
Metro Denver showed a different trend in the overall office market, with the vacancy rate decreasing in the first quarter compared with the same period in 2012. The vacancy rate dropped 0.8 percentage points to 11.8 percent, while the average lease rate increased 5.9 percent to $21.07 per square foot. (Source: CoStar)
♦ The Downtown industrial market vacancy rate showed nearly full occupancy in the first quarter of 2013, with
the rate declining 0.3 percentage points to 1.4 percent. The BID area showed a much higher vacancy rate of 25.5 percent. The elevated vacancy rate can be attributed to the vacancy of one of the three industrial buildings in the submarket. The lease rate in Downtown has declined slightly despite the low vacancy rate. The first quarter rate ($12 per square foot) was 14.9 percent lower than the year-ago rate.
Industrial vacancy rates in Metro Denver also declined over-the-year, to a metro-wide rate of 5.3 percent, 1.1 percentage points below the first quarter 2012 rate. The average direct lease rate for industrial space rose 2.2 percent during the first quarter to reach $4.66 per square foot. (Source: CoStar)
♦ The retail market in Downtown is a highly desirable lo-
cation for Metro Denver retailers, which is reflected in its low vacancy rate (2.6 percent). While the rate increased slightly by 0.5 percentage points over-the-year, the rate remains well below the Metro Denver rate of 6.4 percent. The BID area reflected the same vacancy rate as Downtown during the first quarter but was a 0.1 percentage point decrease over the same period in 2012. The average direct lease rate for Downtown retail space ($21.43 per square foot) was up slightly over-the-year by 0.4 percent, while the BID lease rate ($22.79 per square foot) was 1.3 percent higher than the year-ago rate. The vacancy rate in Metro Denver’s retail market (6.4 percent) was nearly 2.5 times greater than the Downtown vacancy rate. The Metro Denver vacancy rate declined 0.7 percentage points compared with the year-ago number. The average direct lease rate also showed improvement, as the lease rate increased 2 percent to $15.10 per square foot. (Source: CoStar)
Commercial Vacancy and Lease Rates by Property Type, FIRST Quarter 2013 Vacancy Average Rates Lease Rate 1Q13 1Q12 1Q13 1Q12 Office BID 12.7% 11.1% $27.99 $25.87 Downtown 12.3% 11.2% $27.49 $25.59 Metro Denver 11.8% 12.6% $21.07 $19.90 Industrial BID* 25.5% 25.5% Downtown 1.4% 1.7% $12.00 $14.10 Metro Denver 5.3% 6.4% $4.66 $4.56 Retail BID 2.6% 2.7% $22.79 $22.49 Downtown 2.6% 2.1% $21.43 $21.35 Metro Denver 6.4% 7.1% $15.10 $14.80 Note: Vacancy and average lease rates are for direct space only (sublet space excluded). Retail and industrial lease rates are triple-net. *The BID contains a total of three industrial properties with a combined 66,200 square feet of space. Only two of the three buildings were occupied, contributing to a higher-than-average vacancy rate. Source: CoStar Realty Information, Inc.
Development Activity Several nonresidential projects are either planned or underway in the City Center neighborhoods area, including:
♦ The University of Colorado Denver broke ground on its largest building project ever. The $65.8 million ac-
ademic and student services building project will be built on a parking lot on Speer Boulevard and Larimer Street and will house the College of Liberal Arts and Sciences and student services.
♦ Construction continues on Denver’s Union Station redevelopment. The project will be a mixed-use, transit-oriented hub and is expected to open in mid-2014. The station will feature 22,000 square feet of ground-floor retail, a 12,000-square-foot “great hall” public area, and a 40,000-square-foot outdoor plaza.
♦ Holland Partners continues construction of a mixed-use building at 16th and Market streets in Downtown,
called 16M, which will include retail and office space, plus luxury apartments on the top floor. The 10-story building could include 130,000 square feet of office space, luxury apartments, a fitness center, 15,000 square feet of retail space, and underground parking. The building could be complete by early 2014.
♦ A new retail space, Broadway Triangle, located on the corner of Broadway and Larimer streets is under construction. The nearly 6,300-square-foot building is expected to be completed this year.
♦ A recently completed retail space on the corner of Colfax and Pearl streets includes a remodeled Office Depot and a restaurant space. The space is just over 7,600 square feet.
♦ A new 76,200-square-foot industrial space on Brighton Boulevard between 31st and 35th streets houses Green Box Self Storage, a LEED Silver certified building with 690 storage units.
Healthy multi-family development continues throughout the City Center Neighborhoods as of April 2013. There were 709 new housing units in seven different developments completed during 2012, the largest of which was the 231-unit 2020 Lawrence development by Zocalo Community Development. Another 44 projects with 7,068 rental and 136 for sale units are either planned or currently under construction. Of the 44 Residential Developments projects, 19 are planned to have at least 200 units, the largest project Planned or Underway as of 4/2013 being South Lincoln Park on West 10th Avenue and Osage Street with Downtown For-Sale Rental plans for 457 units. The Central Platte Valley/Denver Union Station neighNeighborhoods Units Units borhood showed the highest number of residential units (2,473) under Auraria construction or planned to begin construction. Eight of the 10 projects in the neighborhood have more than 200 units planned. The Highlands Ballpark 863 neighborhood was the most active submarket with 12 projects under con- Capitol Hill 222 struction or beginning construction in 2013. There were also 36 proposed Central Business District 422 projects for the entire City Center Neighborhoods area, which includes Central Platte Valley/ 2,473 940 for sale units and 1,622 rental units. Recent residential project highlights include:
♦ Behringer Harvard announced construction had begun on a luxury
apartment complex near 21st and Lawrence called Legacy at 22nd. The 212-unit, 6-story complex is expected to be completed fall 2014.
♦ A $74 million senior living community is planned in Riverfront Park
Denver Union Station
Curtis Park/Five Points Golden Triangle Highland Jefferson Park La Alma/Lincoln Park
27 88 21 136
near downtown Denver. The project is being built by Balfour Senior Lower Downtown Living, based in Louisville, and hopes to cater to upscale seniors Uptown seeking a residence in an urban setting. The community will feature 205 units for independent living, assisted living, and memory care. To Total comply with city policy, 28 units will be affordable. Source: Downtown Denver Partnership
148 809 437 597 745 352 7,068
Business Improvement District (purple), Downtown Denver (purple and yellow), and City Center Neighborhoods (purple, yellow, and blue)
Written in April 2013 by: Development Research Partners, Inc. 10184 West Belleview Ave, Ste.100 â€˘ Littleton, CO 80127 303-991-0070 â€˘ www.developmentresearch.net Cover photos by Ryan Dravitz
Most up-to-date economic indicators for Downtown Denver as of April 2013