Issuu on Google+

Downtown Denver Economic Update January 2014

Downtown Denver Partnership, Inc.

Research Department Research Department • 511 16th Street, Suite 200, Denver, CO 80202 • 303-534-6161 • www.DowntownDenver.com


EXECUTIVE SUMMARY Various economic indicators show consistent growth in Downtown Denver’s economy. Employment increased for the 11th consecutive quarter. Office vacancy rates declined and average lease rates rose. Existing home sales increased and development activity continued at a brisk pace. Despite rising retail sales tax collections, retail real estate indicators were mixed. Employment increased in Downtown Denver for the 11th consecutive quarter, however, employment decreased slightly in the Business Improvement District (BID), according to the latest employment data from the second quarter 2013. In both areas, the natural resources and construction sector grew the fastest, increasing by 9.7% in Downtown Denver and 8.9% in the BID compared to the previous year. Retail sales tax collections were 4.1% higher than the previous year in Downtown Denver and 2.4% higher in the BID in the third quarter 2013. The largest industry sector by tax collections, restaurants, reported an increase of 4.6%. Tax collections in hotel and other accommodation services, the second largest industry by tax collections, increased almost 10% in Downtown Denver and 7.1% in the BID. Average room rates for Downtown Denver hotels increased almost 5% despite slightly lower occupancy rates. Residential real estate activity accelerated in all areas in and around Downtown Denver in the third quarter of 2013. Existing home sales increased by 14.8% in the BID, 21.7% in Downtown Denver and 51.6% in the City Center Neighborhoods, compared to the third quarter 2012. However, the average price of homes sold decreased in all areas due to a decrease in the number of high-priced homes sold. Residential development activity continues in Downtown and City Center Neighborhoods, with 41 projects and 7,846 units planned or under construction as of January 2014. Commercial real estate indicators from the fourth quarter 2013 showed strengthening office and industrial markets; however, retail indicators were mixed. Office vacancy rates declined to 10.8% in the Downtown Denver market and 11.4% in the BID market, which resulted an approximately 7% increase in average lease rates in both areas. The BID’s retail market showed a slightly higher vacancy rate and a lower average lease rate. In the Downtown Denver retail market, vacancy rates declined slightly; however, average lease rates also declined. Commercial development is thriving in Downtown Denver with over 1,600 additional hotel rooms and over 2 million additional square feet of office space planned or under construction. 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 the last page of the report 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.

1


ECONOMIC UPDATE, JANUARY 2014 The Downtown Denver economy continues to expand. The unemployment rate continued to decline, and several recent accolades suggest Denver will thrive as a destination for job seekers and young professionals. Retail sales tax collections increased during the third quarter, and home sales increased at a brisk pace. Strong development activity in both residential and nonresidential projects revealed that the area is poised for continued expansion throughout 2014. Downtown Economic Highlights ♦ Personal Capital opened an office in Downtown Denver and plans to hire up to 100 employees. The company offers apps that complement its financial advisors’ skills and provides wealth management services to people with a net worth of $100,000 or more. ♦ USI Insurance Services acquired Van Gilder Insurance Corp. of Denver with no plans to lay off the 130 workers as part of the deal. The president of Van Gilder predicts that the office may as much as double its staff over the next five years through organic growth and USI’s future acquisitions. ♦ Wells Fargo announced it will layoff 925 more workers in its mortgage operations. Higher interest rates have hurt the refinancing business, and the company has laid off 6,511 people nationwide since mid-July. It was not announced how many of the positions will be in Denver. ♦ Encana Corp. announced it would cut its workforce by 20 percent and consolidate its office locations in Calgary and Denver. The natural gas company has struggled in the past few years because of the low price of natural gas. The Denver office of the company will no longer be its U.S. headquarters but will remain open. The company did not release a specific number of jobs that will be eliminated. ♦ Recent notable rankings for Denver and area businesses: • Milken Institute’s Best Performing Cities Index for 2013 listed the Denver-Broomfield-Aurora MSA as the 15th-best MSA. The index ranks 375 U.S. metro areas based on job creation and sustainment as well as multiple indicators including wage and technology growth. The attractive business climate, skilled labor force, and strong international ties were Denver’s greatest assets for growth. • A new study by NerdWallet ranked Denver as the fourth best city for job seekers in 2014. The rankings were calculated using four measurements: unemployment rate, population growth, median income, and monthly homeowner costs. The top city was Austin. • TriNet, a California human resources company, released data showing that full-time employees in the Denver-Boulder area are among workers that get the most paid time off in the U.S. The company released findings on the regions where salaried workers of small- to medium-sized companies receive the most time off, including sick and vacation days. The results are based on the analysis of 218,000 employees throughout the nation that have at least one year of tenure between September 2012 and August 2013. The Denver-Boulder area ranked fifth among metropolitan areas. • Forbes released a demographic study showing that Denver ranked eighth among metro areas for its 2


increase in young workers between 2007 and 2012. The study looked at metro areas where Americans aged 15-29 years old in 2007 had moved to by 2012. Denver had a 14.8 percent increase in young workers, while the top area, San Francisco, had a 20.7 percent increase. • Travel + Leisure named two Downtown Denver hotels to its list of the world’s top 500 hotels. Hotel Teatro and the Ritz-Carlton Denver were included on the list. • The Conde Nast Traveler’s 2013 Readers’ Choice Awards included several Downtown Denver resorts. On its list of the best hotels in the West was the Oxford Hotel (second), Hotel Teatro (third), Four Seasons Hotel (sixth), Brown Palace Hotel and Spa (seventh), Ritz-Carlton (eighth), and Hotel Monaco (ninth). • A Harris Poll found the Denver Broncos ranked as the third favorite football team, behind the Dallas Cowboys and Green Bay Packers. The survey was conducted online September 18 – 24, 2013 and consisted of 2,577 adults. The Broncos moved up 14 spots from last year’s survey. • NerdWallet ranked the Denver Nuggets as the sixth most affordable basketball game to attend of the National Basketball Association’s (NBA) 30 teams. The study looked at the affordability of their 2013-14 home games and found that the total cost to attend a Nuggets game for a family of four is $291, 34 percent below the NBA average. The price includes ticket cost, parking, and concessions. The costliest game to attend was a New York Knicks game, which is nearly $900 for a family of four. • An analysis by Bloomberg showed the Colorado Rockies baseball team is ranked 27th out of 30 teams for total value. The Rockies are valued at $580 million, compared with the top-ranked team, the New York Yankees, which is valued at $3.28 billion. The value of a team included many factors such as ticket sales and concession sales. • Draft Magazine named Falling Rock in Denver as one of America’s 100 best beer bars. The rankings are based on the quality of selected beer, trends and tradition, and the atmosphere of the bar. Employment Activity ♦ Covered employment1 in Downtown Denver during the second quarter increased over-the-year for the 11th consecutive quarter. The 0.4 percent increase was driven by a 9.7 percent increase in the natural resources and construction sector, which added 787 jobs during the period. Professional and business services, the largest supersector in Downtown, reported an addition of 305 jobs or a 0.9 percent increase. The second largest supersector, government, declined by 1.5 percent during the period, shedding 356 jobs. Three additional supersectors had lower employment during the second quarter, the largest decline occurring in the information supersector, which fell 16.2 percent or 822 jobs. Employment in education and health services (-14.9 percent) and manufacturing (-2.1 percent) was also lower during the period. The BID area, a smaller subset of Downtown, reported slightly different trends in the second quarter. Compared with the year-ago level, employment fell by 0.7 percent or 643 jobs. The natural resources and construction sector showed the largest increase in employment, rising 8.9 percent or adding 3


709 jobs. The second largest increase was reported in the wholesale and retail trade industry where employment was 6.2 percent higher. The largest sector by employment, professional and business services, showed a decline during the period of 1.7 percent or 563 jobs. Employment in the government sector, the second largest supersector, was 0.1 percent lower or down 31 jobs. (Sources: Colorado Department of Labor and Employment, Quarterly Census of Employment and Wages (QCEW); Development Research Partners.) COVERED EMPLOYMENT1 Business Units* (2Q13) BID

Industry

Downtown

2Q13

BID 2Q12

Employment % ch

Downtown 2Q13 2Q12 % ch

Private Sector Natural Resources & Construction Manufacturing Wholesale & Retail Trade Transp., Warehousing & Utilities

329

354

8,654

7,945

8.9%

8,931

8,144

9.7%

23

41

113

117

-4.0%

859

877

-2.1%

335

442

2,951

2,778

6.2%

3,935

3,588

9.7% 2.2%

29

38

1,351

1,310

3.1%

1,449

1,418

Information

116

151

3,563

4,238

-15.9%

4,243

5,065 -16.2%

Financial Activities

648

752

11,491

11,762

-2.3%

14,435

14,320

0.8%

1,694

2,011

31,623

32,186

-1.7%

35,625

35,320

0.9%

Education & Health Services

123

181

1,581

1,864

-15.2%

2,687

Leisure & Hospitality

307

438

12,782

12,647

1.1%

18,870

18,515

1.9%

Other Services

223

281

2,236

2,109

6.0%

2,743

2,596

5.6%

69

94

20,999

21,030

-0.1%

23,430

23,785

-1.5%

3,896

4,783

97,343

97,987

-0.7% 117,206 116,786

0.4%

Professional & Business Services

Government Total

3,158 -14.9%

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. 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. 1

♦ The unemployment rate in the City and County of Denver was 7 percent during the third quarter, a 1.2 percentage point decline over-the-year. The rate was also an improvement over the second quarter rate of 7.3 percent. Metro Denver’s unemployment rate also declined during the third quarter, dropping 1.2 percentage points to 6.4 percent compared with the third quarter of 2012. The statewide unemployment rate was 1.1 percentage points lower during the period at 6.7 percent. Both Colorado and Metro Denver performed relatively better than the U.S., where the unemployment rate fell 0.8 percentage points to 7.3 percent. (Sources: Colorado Department of Labor and Employment, Labor Market Information; U.S. Bureau of Labor Statistics.) ♦ Third quarter employment in Metro Denver grew by 0.8 percent compared with the second quarter and 4


2.8 percent compared with one year prior. The quarterly growth reflected increases in all but three of the supersectors. The largest over-the-quarter rise was in natural resources and construction, which reported employment was 4.9 percent higher in the third quarter. The largest supersector by employment, professional and business services, reported growth of 1.9 percent during the period. Government (-2.9 percent), other services (-0.5 percent), and education and health services (-0.3 percent) were the three supersectors showing lower employment between the second and third quarters. Compared with the third quarter of 2012, only two supersectors showed a decline: employment in manufacturing fell 0.7 percent and other services employment was 0.2 percent lower. The largest over-the-year growth in the third quarter was reported in the natural resources and construction sector (7.1 percent) followed by professional and business services, which rose 4.9 percent. Employment throughout Colorado was 0.7 percent higher in the third quarter compared with the prior quarter and 2.4 percent above the year-ago level. The U.S. reported slower growth, with employment contracting by 0.1 percent between the second and third quarters and growing 1.7 percent compared with the third quarter of 2012. (Sources: Colorado Department of Labor and Employment, Labor Market Information, Current Employment Statistics (CES); U.S. Bureau of Labor Statistics.) ♌ The first quarter 2014 results from the Manpower Employment Outlook Survey predict hiring will pick up in the Denver-Aurora-Broomfield MSA. The percent of companies hiring rose to 18 percent from 15 percent in the fourth quarter of 2013. However, the number was down 5 percentage points from yearago data. The percent of companies that plan to reduce their staffing levels fell 4 percentage points over-the-quarter to 3 percent. The level was also down from 8 percent one year prior. More companies plan to hold employee levels steady in the first quarter of 2014 (78 percent), up 1 percentage point from the fourth quarter of 2013 and 12 percentage points from the first quarter of 2013.

Hiring throughout the U.S. may slow slightly during the first quarter of 2014, according to survey results. The number of companies that plan to hire workers fell 1 percentage point over-the-quarter to 17 percent. The results were unchanged from year-ago results. Fewer companies also expect to lay off workers, with only 7 percent of companies responding that they will reduce their workforce, down from 8 percent in both the fourth quarter of 2013 and over-the-year. Like the Denver-Aurora-Broomfield MSA, more companies nationally plan to hold staffing levels constant: 73 percent of companies plan no change, up from 72 percent in the first and fourth quarters of 2013. (Source: Manpower Inc.)

Consumer Activity ♌ Consumer confidence dipped in the fourth quarter, falling 8.4 percent over-the-quarter to 74.2 for the U.S. index. Similarly, the Mountain Region index, which includes Colorado, fell 8.5 percent between the third and fourth quarters to 76.8. Despite the quarterly declines, both indexes reported improvement compared to year-ago levels. The U.S. Consumer Confidence index was 5.3 percent higher overthe-year, while the Mountain Region index was up 14.6 percent. (Source: The Conference Board.) ♌ Retail sales tax collections in Downtown were up 4.1 percent in the third quarter compared with the same period last year. Collections increased in 10 of the 17 industries, and increases were reported in the two largest industries by collections. The largest industry, restaurants, had retail sales tax col5


lections that were up 4.6 percent over-the-year, and the second largest industry, hotel and other accommodation services, showed collections increased 9.8 percent. The largest percent increase during the same period was reported in electronics and appliance stores, where collections increased 125.9 percent. The industries reporting the largest declines in the third quarter were general merchandise and warehouse stores (-38.7 percent) and furniture and home furnishings (-38.3 percent). The BID area reported lower growth in retail sales tax collections than Downtown, with an increase of 2.4 percent. Of the 17 industries, six had lower collections over-the-year in the third quarter. The two largest industries by collections, restaurants and hotel and other accommodation services, had increases of 0.6 percent and 7.1 percent, respectively. The largest percent increase was in electronics and appliance stores, which had collections that were 188 percent higher. The furniture and home furnishings industry showed a decline of 70.1 percent, the largest percent decrease of the industries. (Source: City and County of Denver, Office of the Controller.) RETAIL SALES TAX COLLECTIONS BY INDUSTRY BID Industry

Downtown

3Q13

3Q12

3Q13

3Q12

$439,561

$512,038

$526,239

$595,505

Motor Vehicles & Auto Parts

$222,093

$142,363

$405,796

$338,771

Furniture & Home Furnishings

$9,090

$30,391

$36,687

$59,432

Electronics & Appliance Stores

$18,223

$6,327

$21,293

$9,424

Bldg. Materials/Improvement/Nurseries

$16,003

$10,096

$22,325

$17,312

Food & Beverage Stores

$106,044

$97,837

$180,027

$162,603

Health/Personal Care Stores

$101,489

$113,011

$115,953

$122,411

Service Stations

$3,410

$355

$9,496

$6,587

Clothing/Accessory Stores

$756,541

$780,005

$760,706

$784,958

Sporting Goods/Hobby/Book/Music Stores

$128,275

$126,657

$267,274

$270,781

General Merchandise/Warehouse Stores

$4,083

$7,523

$6,996

$11,407

Miscellaneous Stores

$306,931

$247,880

$681,833

$655,742

Information Producers/Distributors

$367,250

$369,461

$368,513

$370,953

Bus. Admin, Support, Waste/Remediation

$71,269

$46,950

$99,248

$62,615

Hotel & Other Accommodation Svcs.

$1,410,875

$1,317,253

$1,607,728

$1,464,004

Restaurants

$3,817,946

$3,793,392

$4,748,677

$4,540,740

Other Services

$5,460

$3,722

$15,237

$12,173

Total Retail Sales Tax Collections

$7,784,543

$7,605,261

$9,874,028

$9,485,418

Yr/Yr % Ch

2.4%

Manufacturing Retail Trade

4.1%

Sources: City and County of Denver, Office of the Controller.

6


♦ Metro Denver retail sales – a slightly different, but related measure of consumer activity – rose by 3.4 percent in the third quarter of 2013 compared with the same period in 2012. (Source: Colorado Department of Revenue.) ♦ The Downtown Denver hotel market reported a lower occupancy rate through the first nine month of 2013. Compared with the same period in 2012, the occupancy rate fell 0.3 percentage points to 75.1 percent. However, the lower occupancy rate did not push down the average room rate, which grew 4.8 percent during the same period to $158.90 per night. Hotels in Metro Denver reported that the occupancy rate through the third quarter increased 2.6 percentage points over-the-year to 73 percent. During the same period, the average room rate increased 3.3 percent to $115.40. (Source: Colorado Hotel and Lodging Association, Rocky Mountain Lodging Report.) Residential Real Estate ♦ Existing home sales in the BID rose 14.8 percent between the third quarters of 2012 and 2013. Home sales in the area consist exclusively of condominiums and townhomes, and sales rose to 101 in the third quarter. The average price of condominiums and townhomes in the BID fell during the period, despite the higher sales. The average price was 40.4 percent lower over-the-year at $414,571. The price decline was due to the large number (24) of high priced homes that sold for at least $1 million during the third quarter of 2012, most of which were located in the now sold-out Four Seasons Private Residences development. Only three homes sold for over $1 million in the third quarter of 2013. Downtown home sales rose 21.7 percent over-the-year to 174 in the third quarter. Like the BID area, the rise in home sales was not enough to push up the average home price, which fell 23.2 percent during the period to $434,671. As a larger region that includes the BID area, the Downtown market also reported significantly more high-priced home sales during the third quarter of 2012. The number of homes sold for at least $1 million was 26 in the third quarter of 2012 and fell to five during the third quarter of 2013. The decline in high-priced home sales caused the lower average price for the third quarter of 2013. ♦ Home sales in the City Center Neighborhoods rose 51.6 percent in the third quarter compared with the same period in 2012. The sale of condominium and townhomes rose to 399, an increase of 49.4 percent compared with the year-ago level. The average price of condominiums and townhomes sold was $316,033 in the third quarter, 23.6 percent below the average price in the third quarter of 2012. Single-family home sales in the area also improved, rising 60.3 percent over-the-year in the third quarter to 109. The rise in sales did have a positive effect on the average price of single-family homes, which increased 28.5 percent to $396,409. ♦ Metro Denver reported a growing residential market during the third quarter. Existing home sales were up 27.9 percent compared with the same period in 2012, with condominium sales increasing 40.9 percent to 4,163 and single-family home sales up 24.3 percent to 13,382. The increase in sales helped boost prices, but the average condominium price did not increase as much as single-family homes. The average condominium price of $201,016 was 2 percent higher over-the-year and the 7


average single-family price rose 8.4 percent to $347,994. (Sources: Colorado Comps; Development Research Partners.) EXISTING HOME SALES BID 3Q13

Downtown

3Q12

% Ch

3Q13

City Center Neighborhoods

3Q12

% Ch

3Q13

3Q12

% Ch

Metro Denver 3Q13

3Q12

% Ch

Condominiums/Townhomes Sold During Quarter

101

88

14.8%

174

143

21.7%

399

267

49.4%

4,163

2,954

40.9%

Average Sales Price

$414,571

$695,889

-40.4%

$434,671

$566,128

-23.2%

$316,033

$413,744

-23.6%

$201,016

$197,053

2.0%

Ave. Price per Sq. Ft.*

$376

$401

-6.1%

$370

$378

-1.9%

$307

$320

-3.9%

$172

$162

6.1%

Detached Single-Family Homes Sold During Quarter

0

0

-

0

0

-

109

68

60.3%

13,382

10,764

24.3%

Average Sales Price

N/A

N/A

N/A

N/A

N/A

N/A

$396,409

$308,526

28.5%

$347,994

$321,095

8.4%

Ave. Price per Sq. Ft.*

N/A

N/A

N/A

N/A

N/A

N/A

$276

$224

23.3%

$190

$172

10.4%

Total Home Sales

101

88

14.8%

174

143

21.7%

508

335

51.6%

17,545

13,718

27.9%

*Excludes homes where total square footage was not reported. Note: Data could include a small number of new home sales. Source: Colorado Comps.

♌ The City and County of Denver reported 448 foreclosure filings in the third quarter. This was an increase of 18.8 percent compared with the 377 filings reported during the second quarter but 38.9 percent lower than the level one year prior. Year-to-date foreclosures through the first three quarters of 2013 were down 47.3 percent compared to the same period in 2012. Throughout Metro Denver, foreclosure filings fell 8.5 percent between the second and third quarters to 1,870. This number was also 49.8 percent lower than the third quarter of 2012. Year-to-date totals show metro wide foreclosures fell 48.6 percent over-the-year through the first three quarters of 2013. (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 BID and Downtown office markets improved during the fourth quarter, with both areas showing lower vacancy rates and higher average lease rates. The BID area had a vacancy rate of 11.4 percent during the fourth quarter, 0.7 percentage points less than the year-ago level. The average lease rate in the area rose 6.5 percent to $29.68 per square foot. The Downtown office market reported a vacancy rate that fell 0.9 percentage points over-the-year to 10.8 percent, pushing up the average lease rate by 7.3 percent to $29.29 per square foot. 8


The Metro Denver office market improved during the fourth quarter, as the vacancy rate fell and the average lease rate increased. Compared with the fourth quarter of 2012, the vacancy rate was down 1 percentage point to 11.1 percent, while the average lease rate rose 5.6 percent to $21.91 per square foot. (Source: CoStar Realty Information, Inc.) ♌ The vacancy rate in the Downtown industrial market fell in the fourth quarter, reaching 1.8 percent, which was 0.3 percentage points below the rate in the fourth quarter of 2012. The improved vacancy rate led to an average lease rate that rose 10.4 percent over the year to $11.04 per square foot. The BID area reported a vacancy rate of 68.1 percent that was unchanged compared with one year prior. The high level of vacancy is due to the fact that the BID area only has two industrial buildings and one is currently vacant.

COMMERCIAL VACANCY AND LEASE RATES BY PROPERTY TYPE, FOURTH QUARTER 2013 Vacancy Average Rates Lease Rate 4Q13 4Q12 4Q13 4Q12 Office BID 11.4% 12.1% $29.68 $27.88 Downtown 10.8% 11.7% $29.29 $27.31 Metro Denver 11.1% 12.1% $21.91 $20.74 Industrial BID* 68.1% 68.1% Downtown 1.8% 2.1% $11.04 $10.00 Metro Denver 3.8% 5.1% $5.05 $4.69 Retail BID 6.2% 5.6% $20.99 $22.32 Downtown 4.1% 4.7% $20.13 $21.18 Metro Denver 6.1% 6.7% $15.21 $14.69 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 two industrial properties with a combined 24,800 square feet of space. Only one of the two buildings was occupied, contributing to a higher-than-average vacancy rate. Source: CoStar Realty Information, Inc.

Data from CoStar Realty shows the Metro Denver industrial market vacancy rate fell to its lowest point since the availability of data beginning in the fourth quarter of 1999. The vacancy rate dropped to 3.8 percent during the fourth quarter, a decrease of 1.3 percentage points compared with the year-ago level. The average lease rate grew as demand for space increased. The average lease rate of $5.05 per square foot was 7.7 percent above the year-ago level.

♌ Compared with the fourth quarter of 2012, the vacancy rate of retail space in the BID area rose 0.6 percentage points to 6.2 percent. The higher vacancy rate pushed down the average lease rate in the fourth quarter to $20.99 per square foot, a decline of 6 percent from the rate one year prior. The larger Downtown area reported a lower vacancy rate during the period, but did not show the same improvement in the average lease rate. The vacancy rate fell 0.6 percentage points to 4.1 percent, while the average lease rate fell 5 percent to $20.13 per square foot. As retail sales continue to improve and consumers spend more money, demand for retail space is growing throughout Metro Denver. The vacancy rate of 6.1 percent in the fourth quarter was 0.6 percentage points lower than the year-ago rate. The lower vacancy did push up the average lease rate of $15.21 per square foot, which was up 3.5 percent over-the-year. (Source: CoStar Realty Information)

9


Development Activity Nonresidential development activity continues at a brisk pace in Downtown Denver. There were about 450 hotel rooms added to the market in 2012 and 2013, and there are over 1,600 additional rooms planned or currently under construction. Further, 372,000 square feet of office space was finished in 2012 and 2013. Looking ahead, an additional 2.9 million square feet of public, office, and retail space is planned or under construction in about 18 different projects. Recent highlights for a few of these projects include: ♦ 16 Wewatta, a nine-story hotel and five-story office building on 16th and Wewatta Streets is expected to be complete in 2015. Continuum Partners is developing the project.

RESIDENTIAL DEVELOPMENTS PLANNED OR UNDERWAY AS OF JANUARY 2014 Downtown Neighborhoods

For-Sale Rental Number of Units Units Projects

Ballpark Capitol Hill Central Business District Central Platte Valley/ Auraria

Denver Union Station

Curtis Park/Five Points Golden Triangle Highland Jefferson Park La Alma/Lincoln Park

♦ Two Tabor located on 17th and Larimer Streets is an office development project by Callahan Capital Part- Lower Downtown ners. The $300 million development will be 31 stories Uptown Total and 620,000 square feet.

44 36 49 129

553 260 422 2,792

4 2 2 11

148 713 536 597 745 292 7,846

5 3 7 4 2 1 41

Source: Downtown Denver Partnership

♦ One Union Station on 16th and Wynkoop Streets is scheduled for completion in 2014. The office development by Union Station Neighborhood Co. will be five stories and 110,000 square feet. Robust multi-family development continued throughout the City Center Neighborhoods. As of January 2014, there were 1,403 new housing units in 18 different developments completed in 2012 and 2013, the largest of which was the 310-unit 2300 Walnut project by Mill Creek Residential Trust. Forty-one projects with 7,058 rental and 129 for-sale units are either planned or currently under construction. Four of these projects consisted of at least 300 units, with the largest project being 457 units planned at South Lincoln Park on West 10th Avenue and Osage Street. The Central Platte Valley/Denver Union Station neighborhood had the most projects planned (11 projects) and reported the largest number of units under construction or planned—2,792 units. In addition to projects currently underway, future construction prospects for the City Center Neighborhoods show 940 for-sale units and 1,622 rental units proposed for the area, not all of which are likely to move forward. Recent highlights regarding some of the current residential projects include: • Pauls Corp. will build a 200-unit high-end apartment complex in Denver’s Golden Triangle neighborhood. The seven-story project will be on the southwest corner of 8th and Lincoln Streets and feature 4,400 square feet of retail space. The project is expected to be completed in 2014. • The 16-story, 224-unit apartment building named EnV will be built at 1000 Speer Boulevard in Denver by the Lynd Company. The building will also include a five-level parking garage and is scheduled for completion in September 2015. The units range from studios to three-bedroom units. 10


Business Improvement District (purple), Downtown Denver (purple and yellow), and City Center Neighborhoods (purple, yellow, and blue)

Written in January 2014 by: Development Research Partners, Inc. 10184 West Belleview Ave, Ste.100 • Littleton, CO 80127 303-991-0070 • www.developmentresearch.net Cover photos by Evan Semón and Ryan Dravitz

10


January 2014 Economic Update