CREJ - Office Properties Quarterly - April 2015

Creative office alternatives found in periphery

Hadley Cox Vice president / Drew Thomas CBRE | Brokerage Services, Denver

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Denver’s growth is changing the city’s culture and energy – a change rivaling the great cities of the world. Within the next few years, downtown will continue attracting people of all ages and companies of all sizes, boosting demand for office space. Recently, many companies decided to relocate or open offices in Denver to access the educated workforce offered in the Mile High City. The central business district is only 11.2 percent vacant, and Lower Downtown and the Central Platte Valley market are even lower at 6 percent direct vacancy. Downtown is tracking 831,005 square feet of new office construction underway with the majority coming in large, traditional office blocks.

Technology, advertising, media and information companies account for a large portion of Denver’s office market. Where are these companies choosing to office and what is driving their decision? It is no secret that LoDo provides TAMI companies with the best of all worlds. LoDo’s proximity to downtown provides great access to public transportation, commerce, entertainment and density of workers.

However, if you are looking to move a business here, these amenities will cost you. The high demand for creative office space coupled with the redevelopment of Union Station drove the vacancy in the area to an all-time low, while rents continue to sky rocket. Does this mean there is no hope for a creative company that does not want to break the budget? The answer is no.

Areas such as River North and South Broadway, made up of predominately infill redevelopment properties, offer perceived value while staying connected to the amenities and culture that TAMI companies cherish. Neighborhoods like Ballpark, Five Points, Curtis Park, Highlands, Lower Highlands, Golden Triangle, Santa Fe Arts District and the Baker Neighborhood are experiencing tremendous growth.

Working with these creative companies every day, our tenant representation team has seen a shift in the type of space companies want to occupy. Companies are now searching for more diverse office space, ranging from quiet, individual work environments to large adhoc collaborative meeting spaces.

Creative space is the intersection of innovation and collaboration, and converted warehouses and renovated office buildings support these types of build-outs.

For instance, the RiNo area has creative office concepts popping up all over the place, turning historically industrial areas into a burgeoning tech environment. Restaurants, breweries and bars are anchoring neighborhoods and providing local flavors that draw a healthy mix of people.

Stepping into the Periphery

In competitive business environments, companies need to attract and maintain a high-quality workforce.

Today’s workers, especially the millennials, demand more than a desk, computer and phone, which drives management to look beyond the status quo to find inspirational spaces with character. Employees want access to amenities that help them create a healthy work-life balance. These amenities include bars, restaurants, yoga studios and proximity to quality housing. Companies are expanding outside traditional markets that offer lower-cost, cutting-edge spaces.

Several companies that have bet on these locations include Mersive (RiNo) and Sprocket Design (Golden Triangle). According to both companies, walkability, lifestyle and access to transportation are key elements to providing their employees with a healthier work-life balance.

Sprocket Design Build Principal Bill Moore said he believes buildings in these areas are blurring lines between traditional classifications of office buildings.

Companies like Mersive, which has a large number of employees who bike to work or ride public transportation, love areas like RiNo because of the proximity to bike paths, bus lines and the highway.

When Sprocket Design Build needed space, it was looking for value in a cutting-edge space.

Moore said he wanted to be near the Golden Triangle and purchased a former nightclub building at Ninth and Lincoln. After modest renovations, the building is a prime example of adaptive reuse.

While these buildings offer character, culture and charm, they are not without drawbacks. Some of these older buildings still have problems, but as long as you can make an informed decision and know how to navigate the realm of a creative office, these types of spaces can offer immense value to companies.

If approached correctly, companies willing to look outside traditional markets can access the lesser-known market of inspirational, creative space in a price range that will not break the bank. While these spaces are not for everyone, they provide ample access to amenities desired by today’s workforce and can provide an added advantage when competing for top talent.