Denver's First New Mayor In 12 Years Takes Office With Support Of CRE
Mike Johnston was inaugurated as Denver’s 46th mayor Monday, a move that has some in the commercial real estate community optimistic about the city’s future.
Johnston is taking over from term-limited outgoing Mayor Michael Hancock, who led the city for 12 years. During that time, Hancock helped the city navigate a recession and a pandemic and oversaw its emergence as one of the top destinations in the country.
Now Johnston is expected to continue that momentum by working to solve the city’s homelessness and affordability problems and revitalize the downtown core, which hasn't yet recovered to pre-pandemic levels.
“Our dream of Denver is a city that not only asks what we are building but who we are building it for,” Johnston said in his inauguration speech.
Johnston outlasted candidate Kelly Brough in Denver’s June runoff election after neither candidate was able to amass 50% of the vote during the general election. Johnston won the runoff election with more than 54% of the vote, while Brough garnered 46%.
Campaign finance data suggests that the choice between Brough and Johnston wasn’t as stark as elections from years past when Hancock faced a challenge from someone that the commercial real estate community saw as “extreme,” EXDO CEO and Managing Partner Andrew Feinstein told Bisnow.
Denver had 17 candidates for mayor in the general election, some of whom were supported by political groups like the Democratic Socialists of America and were seen by some in the real estate community as threats to their businesses.
The Johnston campaign collected about $45K from the real estate community, besting Brough’s $28K, campaign finance data shows. However, this data isn't comprehensive and only represents the people who identified themselves as employees in the real estate industry.
Johnston earned the support of heavy hitters such as BMC Investments CEO Matthew Joblon, Cushman & Wakefield Executive Director Jim Capecelatro, and East West Partners founder and Chairman Harry Frampton, campaign documents show.
Brough carried a lot of support from the commercial real estate community in her own right given her background as the CEO of the Denver Metro Chamber of Commerce, where she often advocated for real estate interests at the local and state levels. Commercial real estate professionals like CBRE Senior Vice President Jessica Ostermick, Newmark Executive Managing Director Mike Wafer and Riverside Investment Partners Senior Vice President Chris Payne all donated to Brough’s campaign, according to Denver County campaign finance data.
Since the election, some of Brough's CRE supporters said they are also behind Johnston as he faces Denver's issues.
Feinstein was an early supporter of Brough and spoke of his support for her during Bisnow’s Future of Downtown Denver event in April. But Feinstein said he was happy to support Johnston after the election because Johnston has a solid grasp of how Denver’s delayed permit and zoning review times impact commercial developers.
“If you took a blind taste test between Johnston and Brough’s policies, it would be very difficult to tell them apart,” Feinstein said.
Feinstein said Johnston has engaged with the commercial real estate community to address pressing issues such as property taxes and homelessness. This year, Denver-area property owners experienced sticker shock after their biannual property assessments showed a 35% to 45% increase in property taxes, according to the Denver Assessor’s Office. Similarly, the city’s unsheltered population has increased by 64%, from around 800 in 2016 to more than 1,300 today, according to data from the Metro Denver Homeless Initiative.
Husch Blackwell LLP partner Kevin Kelley is another commercial real estate professional who was an early supporter of Brough but is now optimistic about the Johnston administration. Kelley, who helps his clients navigate public-private partnerships and other commercial development spaces, told Bisnow that Johnston’s support for public safety initiatives is one reason why he won over many people in the business community. Kelley added that Johnston seems eager to revamp Denver’s Department of Community and Planning Development to make the city more business-friendly.
“We’ve developed a bit of a reputation for not being a friendly place to do business in terms of getting projects to market,” Kelley said. “I think Johnston’s platform will go a long way toward solving that problem.”
Despite the optimism, Feinstein and Kelley said they still have some reservations about the Johnston administration. Feinstein said he is concerned about the support Johnston received from the progressive wing of the Democratic party. Feinstein said the faction often has “well-intentioned” policy ideas, such as Denver’s Green Roof Initiative and the affordable housing regulations. However, those policies also make it more expensive to do business in Denver, Feinstein said.
“Is he going to be able to keep that flank at bay? Time will tell,” Feinstein said.
Kelley said the only concern about Johnston’s administration is whether he can execute some of the big ideas that he campaigned on. Johnston has said he will create about 25,000 new affordable housing units within his first four years. Last year, Denver created just 560 affordable units and preserved another 385 affordable homes, according to the Department of Housing Stability’s 2022 annual report.
At the same time, Kelley said Johnston needs to figure out a way to get more people to go to downtown Denver. Otherwise, the city could see a significant reduction in its sales, lodging and property tax collections, which Kelley said could hinder future growth.
“Under Mike, I think the city planning department is going to be much more accepting of new and creative ideas to solve problems,” Kelley said. “They’re not going to be wed to what the code says but are going to look for solutions on a practical level.”
