Everybody has heard about the death of the office in downtown Denver. The pandemic emptied buildings, and it looks like workers are never going to fully return. That’s left the city’s central business district a shell of its former self.
But about 10 minutes away, in the tiny Cherry Creek neighborhood, builders are adding new offices. Developers in the area contend companies are still willing to shell out for office space. It just has to be the right space.
“What we’ve found since COVID, and [with] the changing landscape of office, relative to downtown, it's kind of a tale of two cities,” said Daniel Huml of Magnetic Capital, a real estate company that just broke ground on a 100,000 square-foot project a few minutes from the Cherry Creek mall.
The lot at 2nd Avenue and Adams Street is still just a big patch of dirt. But in a year or so, it’s going to be a shiny new office building. It won’t look like the hulking skyscrapers many people think of when they think of offices. For one thing, it’s just five stories. But that’s not the only difference.
“Since COVID, tenants want the ability to spend more time outside and be in a more open-air environment,” Huml said. “We're going to have a large private terrace for the office tenants on the rooftop that's about 1,200 square feet. The fifth-floor tenant will have its own private corner terrace. We're going to have Juliet balconies on every floor on both sides of the building.”
There’s a big focus on things to do at the office, other than working. There will be two restaurants on the first floor and a rooftop bar and restaurant with views of downtown and the mountains.
Financial firm Bow River Capital has already signed a lease at the property. Despite the dire headlines about the state of the office market, Huml said he’s not worried about filling the rest of the space.
Developers are naturally a pretty optimistic group when they’re talking about their own projects. But the data backs up Huml’s rosy projections.
Roughly one-third of the office space in downtown Denver is sitting empty. In Cherry Creek, just 10 percent of offices are empty. It’s not an apples-to-apples comparison as there is a lot less space to fill in Cherry Creek. Still, it’s notable that there are several office projects under construction in the neighborhood at a time when office construction in much of the city is at a standstill.
In addition to Magnetic’s project, energy company Antero is moving from its current headquarters near Union Station to a building under construction in Cherry Creek. On the mostly empty west end of the mall, one of the groups behind the redevelopment of Union Station a decade ago is planning a 13-acre project that will include all kinds of real estate, including offices.
Downtown boosters maintain that competition from new developments in Cherry Creek is ultimately good for the entire city. Downtown offers different advantages than Cherry Creek, like larger buildings and more transportation options, said Kate Barton, the chief of external affairs for the Downtown Denver Partnership.
“We really believe that in the case of neighborhoods and cities, a rising tide lifts all ships,” Barton said. “A great city has many different thriving neighborhoods.”
Cherry Creek is unique. It’s an affluent area. There are tree-lined streets and manicured lawns, which would be hard to replicate downtown. But there are lessons there for other parts of the city that are struggling to crawl out of the hole.
“For landlords, it’s really thinking about amenities that are provided, and how they can be providing a high-quality experience for their tenants,” Barton said.
Part of the problem downtown is the actual real estate. Many of the buildings are simply past their prime, and that makes them a tough sell in a world where companies are more choosy, according to Howard Schmidt, a commercial property broker with Avison Young who advises companies on leasing office space.
“Some of these buildings are literally falling apart,” Schmidt said. He said he has one tenant that has four elevators, but only one works. “And that one that works only works part of the time.”
But an area’s overall vibe is just as important. Cherry Creek gets a big boost because it feels more open and walkable, and frankly, safer than other parts of Denver, according to Schmidt.
“We kind of joke in our industry that it's almost like the pandemic never happened in Cherry Creek as it did in the other parts of the city,” Schmidt said. “[There’s] a lot of the open-air retail, you've got the cafes, people out having coffee, and restaurants sitting on the sidewalk – that makes people feel like they want to be part of that.”
