John Rebchook is a former Rocky Mountain News reporter with more than 30 years of experience in writing and communications... 
Lower Downtown has more than a million square feet sitting empty in 10 office buildings, either completed or under construction.
That equates to 43.46 percent of the 2.3 million square feet in the buildings available, according to an analysis by InsideRealEstateNews.com, based on information compiled by David Morrison, a senior vice president at Grubb & Ellis. When the single-tenant EPA building at 1595 Wynkoop is included, the buildings have a total value estimated at more than $600 million.
Despite all of the empty space on the market, Morrison, and fellow broker Phil Sweeney, are extremely bullish about LoDo’s prospects.
“LoDo is hot,” Morrison. “It is the hottest submarket in Denver.”
The reason?
For one, the biggest block of space is at 1900 16th St, where the entire 398,190-square-foot building sits empty. But the developer, Kennedy Associates, backed by patient union funds, already has a letter of intent for a law firm for the top floor, Morrison said.
Even more important, there are multiple tenants looking at all of the space at 1900 16th St. Interest from prospective tenants could bring the occupancy rate quickly to 70 percent to 100 percent, Morrison said, reducing the supply of available space by about 40 percent in LoDo.
“They can afford to be choosy,” Morrison said, because there is so much interest in the building designed by Denver architect, David Owen Tryba.
Indeed, that is much the same story for all of the new LoDo buildings, he said.
“There are at least two tenants looking at every empty space in Lodo that I know about,” Morrison said.
One of the most high-profile cases has been DaVita, the California-based company that provides dialysis services for those diagnosed with chronic kidney failure, which is moving its headquarters to Denver.
DaVita appears likely to build its own 150,000-square-foot building at 19th and Wazee Streets, where Arnold Schwarzenegger, before he became California’s governor, once proposed turning the s0-called Stadium Walk blocks into a mixed-use district with a Planet Hollywood, housing and office space. (Editor’s note: I was the first person in Denver he told he was scrapping a proposed movie theater for the site.) Now, Schwarzenegger’s former partner, Grand American, is the sole owner of the property, and the site is the apparent leading contender for DaVita. DaVita also has been looking at several other sites in LoDo,too.
Tenants that already are leasing space in the new buildings include Chipotle, Gallagher Enterprises, McKenna Long Aldredge, Townsend Townsend, Atmos Energy, H+L Architects, EF Education Tours, Hillcrest Private Equity Banks, Jeffrey Villanueva PC, McCarthy Capital, Van Gilder Insurance, Sam Gary Jr. Energy, and many others. Xcel Energy will be leasing about 75 percent of 1800 Larimer, which is under construction, and a division of Comcast, Comcast Spotlight, recently leased about 20,000 square feet at 1899 Wynkoop, Morrison said.
“The only new product build in this last cycle was in LoDo,” Morrison said. “I think that in itself is a testament to how attractive the area is to to landlords and tenants,” with its proximity to sporting, cultural and entertainment venues, such as Coors Field, the Pepsi Center, the Denver Center for the Performing Arts, as well as numerous restaurants, bars and clubs.
And the majority of the new buildings are more energy efficient than those built in the past, he said. Many of them carry, or will have LEED designations.
And Sweeney said LoDo will only become more attractive as FasTracks progresses, which will have its hub at Union Station.
“Within five years, they expect 60,000 a people a day will be coming through LoDo with its transit improvements,” Sweeney said. “That is pretty amazing when you consider that only 110,000 people work downtown.”
“That’s a lot of bodies that will need someplace to eat, shop, and play,” Sweeney added.
LoDo is not over-retailed, Morrison said, which will mean that ground-floor opportunities for retail and restaurants will be gobbled up.
“We receive inquiries from retailers and restaurants every week who want to come to LoDo,” Morrison said.
However, there does appear to be currently enough residential units downtown, with the existing condos and lofts in LoDo and other-close in neighborhoods such as Riverfront, he said.
“Although it’s not my area of expertise, I think with the Spire and Four Seasons coming on line, and with the existing housing, I think there probably is enough housing to serve the demand,” Morrison said. “But I do think all of the new people working in LoDo will also give housing a boost downtown. I think housing in downtown will recover much more quickly than the suburban housing market.”
He said since a number of tenants will be moving from elsewhere in the Central Business District, it is unclear whether the expected activity in LoDo will result in overall net absorption for downtown.
“But again, that speaks to my premise that LoDo is hot,” Morrison said. “It is clearly the place where employees want to be.” Increasingly, it is employees who dictate where companies locate, because a top-notch location in an energy efficient building can help them recruit, he said. That will become increasingly important as the economy improves, he said. Morrison, as well as many economists, expect Denver’s economy to start to bounce back in the second half of next year.
And if that happens, LoDo will be poised to take advantage of the recovery, Morrison said.
Building 1400 Wewatta 1401 Wynkoop Sugar Cubed 1755 Blake Street 1900 16th St. 1515 Wynkoop
Address 1400 Wewatta 1401 Wynkoop 1555 Blake 1755 Blake Street 1900 16th St. 1515 Wynkoop
Status Complete Complete Completed in 2008 Under Construction Under Construction Complete
Square Feet 210,185 106,667 112,274 112,274 398,190 285,217
Square Feet Available 67,259 41,333 41,541 41,541 398,190 142,608
Leased Percentage 68% 80% 23% 73% 0% 40.5%
Owner Crestone Partners LLC Crestone Partners LLC Urban Villages Inc. Haselden/First Century Kennedy Associates Hines
Architect ShearsAdkins ShearsAdkins Kuwabara Payne McKenna RNL Design David Owen Tryba Hartman Cox
Building Name 1800 Larimer 1899 Wynkoop 16 Market Square EPA Building
Address 1800 Larimer St. 1899 Wynkoop St. 1400 18th Street 1595 Wynkoop St.
Status Under Construction Built in 2000 Built in 2000 Built in 2006
Square Footage 496,359 164,958 206,000 276,471 (Occupied by EPA)
Available Square Footage 114,115 15,248 18,540 0
Leased Percentage 75% 95% 91% 100%
Owner Westfield Development Nichols Partnership KBS Denver EPA OC LLC
Architect RNL Development. ShearsAdkins Hartman Cox Zimmer Gunsul Frasca
Source: David Morrison, Grubb & Ellis
Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.
