Why Southeast Denver's Boom Still (Probably) Has Legs
The Southeast corridor has been a remarkable success story within the greater success of metro Denver — but what now? The speakers at our third annual Future of Southeast Suburban Denver yesterday said the pace of development and leasing, as well as growth of the area as a distinct place, is arguably going to stay strong. But a few factors (such as a dearth of financing) could upset things.
Denver South Economic Development Partnership CEO Mike Fitzgerald kicked off the event. He said the Denver South region's one of the economic juggernauts of the country, even internationally. The region doesn't have a precise definition, but it's roughly 60 square miles, with a strong focus of activity within a half-mile or mile of I-25, which includes 20,000 businesses and over 20 business parks.
A healthy mix of business sectors are active in the region, including aviation and aerospace, telecom, healthcare, tech, engineering and more. Development is going on at a tremendous clip, with about 46M SF of existing commercial space growing 2% to 4% a year. Some 8M SF is planned along the interstate, mostly to take advantage of the light rail.
The region is still facing challenges, he said. One is providing enough housing affordable to Millennial workers who want to be here. If the region doesn't have that, companies won't keep coming. Also, congestion remains a persistent problem.
Lone Tree Mayor Jackie Millet said her city has been successful for a number of reasons, with one of those being the larger growth environment of Denver South. The city has a strong location, but that isn't all — in its 21 years of existence, there's been a commitment among the local public and private sectors to create a complete community here, which has been key in attracting new businesses and residents. The city's supported the arts, especially the Lone Tree Arts Center, and recreation, parks and open space.
Lone Tree has 14,000 people, with a daytime population of 25,000. In 2015, there was $1.6B of total retail sales in the city, which had 3.6M SF of retail space with 1.6% vacancy. Park Meadows is a tremendous factor in the growth of the city, the mayor said. There's also 3.1M SF of office space, with 11M SF planned, mostly on the east side of I-25, with the light rail line as the catalyst.
Here are Powers Brown Architecture founding principal Jeffrey Brown, Forum Real Estate managing director Don MacKenzie and United Properties SVP Kevin Kelley.
While many workers and the businesses that hire them might want to be in the urban core, many others want to be in the Southeast corridor for the advantages that it provides, such as lower rents, parking and access to large blocks of space, which are more readily available outside the urban core, according to our development panel. The Southeast is especially attractive now that the transit system links the region to the rest of metro Denver.
Suburban office can offer what Millennials want, just like urban space, if it's done right. New suburban buildings can include as many amenities as properties in the city, for one thing. A trickier proposition is to offer an authentic setting. New buildings in the Southeast can take advantage of lower land costs to offer larger floor plates, but they need to work hard to foster urban-like authenticity.
Pictured: Transwestern managing director Brad Cohen, who moderated the New Developments panel, EverWest managing principal Krystal Arceneaux, and Griffis/Blessing president and COO B.J. Hybl Jr.
Transit has been important for leasing space in the region, and it's very popular among Millennials in particular. But our development speakers said Denver is still car-centric, and developments that don't offer enough parking will regret it. For the broader region, that adds to the problem of congestion.
Will the pace of development in the Southeast slow down in the near or mid-term? Financing is getting harder, especially for multifamily development, so there might be a pause — or longer — for that property type. There's also concern about getting new office projects financed and out of the ground.
Here are Innovation Pavilion CEO Vic Ahmed, RTD CEO David Genova, Museum of Outdoor Arts CEO Cynthia Madden Leitner, and Partner Engineering and Science national client manager A.J. Nosek, who moderated the Southeast Scene panel.
A region's success isn't just a matter of real estate or job growth, but also a matter of flourishing hubs of innovation, infrastructure improvements, and the growth of the arts — all of which is happening in Denver South, our Southeast Scene speakers said.
No environment is complete without the arts, Leitner said. The Museum of Outdoor Arts has a collection integrated into commercial development, much of it in the Greenwood Plaza area and in Englewood. Recently the museum completed a $6M renovation of Fiddler's Green Amphitheatre, and has plans to renovate the adjacent three-acre Marjorie Park.
Genova said the Southeast corridor transit lines have been among the most successful in the Denver area in terms of ridership growth, and in driving economic growth. The RTD is at work on building out FasTracks, including the R line, which he called a critical connection for the Southeast, Aurora and DIA.
Ahmed said the Innovation Pavilion in Centennial, a model for nationwide expansion, provides a hub that allows entrepreneurs — established companies to startups — to develop in a collaborative environment that includes co-working space, café and lounge, conference rooms and office.