CREJ

Page 12 — Office Properties Quarterly — June 2019 www.crej.com 1125 17th Street, Suite 2540 | Denver, CO 80202 | (303) 515-8000 | h lp.com #1 Denver-Area Commercial Mortgage Company from 2012 -2018 * ON THE MARKET TUSCANY VILLAGE CENTER Office 257,875 SF Greenwood Village, CO CLOSED: APRIL €‚ WESTMOOR ‚ Financing Office 205,000 SF Westminster, CO UNDER CONTRACT ƒ„… „‚ TH STREET Property Sale Office 436,455 SF Denver, CO CLOSED: MAY €‚ PLAZA VISTA Property Sale O“ice 253,720 SF Kansas City, MO CLOSED: APRIL €‚ WESTMOOR PLACE Property Sale O“ice 428,029 SF Westminster, CO CLOSED: MAY €‚ „„ƒƒ FIFTEENTH Financing Office 673,852 SF Denver, CO *by the Denver Business Journal and Mortgage Bankers Association Holliday Fenoglio Fowler, L.P. (“HFF”) a licensed Colorado real estate broker. Denver Highlight R iver North is an emerging office submarket adjacent to Lower Downtown Den- ver. In RiNo exists is a rare opportunity for office devel- opers to be strategic about deliv- ering amenities. Industry Denver, which just celebrated its five-year anniversary in May, is a great work- ing example of a modern office that has successfully matched the demands of a varied workforce and achieved premium rents in RiNo. The lifestyle mark is moving quick- ly, evidenced by food halls, noisy open areas and private penthouse decks becoming passé. RiNo, like East Portland, Downtown LA and Rainey Street in Austin, Texas, has a gradual future of “filling in” with public transit, healthy restaurants and specialty gyms. Until these amenities are established congru- ously in RiNo, and it is safe to walk to them, office developers must continue to solve for RiNo’s current amenities gap. We feel that the shift occurring in RiNo today is like the early 2000s in LoDo; LoDo was a risky alterna- tive to high-rise office buildings in the central business district. Ten- ants were initially concerned about safety in LoDo until it became com- mercialized and sterile. Two ends of a spectrum, “sketchy” and “sterile,” represent 20 years of change in LoDo, whereas we find ourselves in year five of a similar progression in RiNo. To overcome the obstacles of con- struction traffic and negative visi- tor perception, early adapters and industry professionals are introduc- ing their clients to current RiNo tenants who are bullish about the neighborhood. For example, HomeAd- visor’s recent move into Beacon Capital Partners’ The Hub South has caused several auxiliary users to also lease office space in RiNo – there is strength in numbers. From officing among tenants at Industry Denver, we have learned that associates want many “caves” or huddle pods for small meeting space. Young pro- fessionals want to be surrounded by nice people, a customer-centric, empowered building staff who will foster a progressive ecosystem and proactively solve problems with a smile. Entrepreneurs want indi- vidualism, an office interior that inspires and is inclusive of RiNo’s neighborhood character but is not overplayed. In fact, Industry sits quietly back to let tenants be bold and shine. Public relations wants a carbon neutral emotional refuge with a sauna and free-flowing alka- line water. Athletes want outdoor parks with paths and indoor fitness with SoulCycle flair. How can developers possibly meet all these demands? Before a shovel meets dirt, they must decide which intentional design features are feasible. A hefty task to be sure, but the good news is that the tight labor market has made tech com- pensation immaterial. Companies that are willing to offer benefits and a culture that contributes to qual- ity of life will secure talent. Thus, premium rents and the property tax advantages of RiNo are palatable to tech tenants, and there currently are 724 tech companies operating in downtown Denver. For commer- cial projects in RiNo, a developer needs to either pay the equivalent of a luxury tax that goes into an affordable housing fund or offer a community-based program, like a neighborhood grocery store. Ten- ants also want freshly prepared grab-and-go offerings in a compact urban market. Perhaps the biggest challenge facing office developers in RiNo is transportation. A special trip to RiNo for its entertainment options is not the same as a daily commute to the submarket, especially when two-thirds of the downtown work- force is accustomed to commuting via public transit, walking or biking. At Industry RiNo Station, 25% of tenants commute on RTD’s A Line 38th/Blake Station in east RiNo. Despite more than $30 million of improvements on Brighton Boule- vard for pedestrians and cyclists, driving and ride-sharing remains the most viable means of commut- ing in west RiNo. The physical bar- riers of railroad tracks, tunnels, the South Platte River and vacant blocks are formidable. But when parking structures cost $84 per square foot to build, office developers aim to accommodate less parking. To com- promise, developers, owners and tenants should consider a building- Office developers meet amenities gap in RiNo Whitney Hake Senior vice president, Transwestern Please see Hake, Page 21 Transwestern The view from 3615 Delgany St. The shift occurring in River North is like the early 2000s in Lower Downtown, when LoDo was a risky alternative to high-rise office buildings in the central business district. The complete shift in LoDo took about 20 years. RiNo is in year five of a similar transition.