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Denver Updates Green Roof Initiative

November 5, 2018



Denver Updates Green Roof Initiative

Denver City Council has approved the reviewed and revised Green Roof Ballot Initiative, which was supported by a majority of Denverites in the November 2017 election. The original version of the initiative required green roofs on all new and existing buildings. A 24-member technical committee formed after the election expanded the number of options available to building owners, as most existing buildings do not have enough loading capacity for a green roof. The revised version gives building owners that need to replace a roof the option to implement a reflective one, along with either renewable energy, support for other forms of green infrastructure, LEED Silver or equivalent, implement higher efficiency measures or provide financial support for offsite green space. New buildings will have eight compliance options, including a green roof, solar array covering 70 percent of the roof, LEED Gold or energy efficiency measures 12 percent greater than the current energy code. “We are very pleased with the outcome of our advocacy efforts in Denver, more than a year and half in the making,” said in prepared remarks Steven Peck, founder & president of Green Roofs for Healthy Cities, the non-profit industry-based association that advocated in support of the original ballot initiative. “Many of our members stepped forward to support this effort, with funding for citizens and technical support. More and more cities are realizing that their rooftops are valuable assets and with new policies, they can deliver stormwater management, reduce the urban heat island, save energy, support biodiversity and contribute to much needed green space,” he added. Denver joins a growing list of cities that are implementing policies and programs that use roof space to support healthier and more sustainable communities. The list of cities includes Cordova, Spain; Toronto; Paris; Washington, D.C.; Portland, Ore., San Francisco, Copenhagen, Tokyo, London and Chicago. New York City and Vancouver, Canada, are currently considering mandatory green roof legislation. (Commercial Property Executive)



How the Denver Tech Center Keeps its Competitive Edge in the Rush for Cool Downtown Digs

What originally began as a technology office park in the 1960s has transformed the Denver Tech Center into a sprawling mecca of big business. In five decades, growth in the center and surrounding areas has been “phenomenal,” says Lynn Myers, senior vice president of the Denver South Economic Development Partnership (Denver South EDP). The original vision of the developers was that the park would attract technology companies. In the 1970s, Hewlett Packard was one of the first companies to plant its flag in DTC. And when IBM moved from 8th Avenue and Grant Street to Belleview Avenue and Interstate 25 in 1979, it was “big news,” as it validated the developers’ vision, said Bruce Johnson, managing principal at Cresa. Then in the late 1970s, when energy was booming in Denver, DTC became a haven for energy companies that were squeezed out of a packed downtown, said Jeff Castleton, executive managing director at Newmark Knight Frank. And while downtown Denver and Boulder have staked their claims as centers of technology, the submarket containing DTC remains a hub for tech tenants, especially telecommunication companies. Concentrated there is one of the largest clusters of employers in the south Denver market, which includes parts of Denver, Arapahoe and Douglas counties. Charter Communications, Comcast and Dish all call DTC home. Comcast is the biggest employer in the submarket, with more than 5,000 employees there, according to Metro Denver Economic Development data. Charter Communications currently occupies about 1.4 million square feet in south Denver, including 320,000 square feet in Spectrum Plaza and 250,000 square feet at Granite Place. Dish Network also employs more than 2,500 employees in south Denver. While downtown Denver is drawing more and more fast-growing tech startups and Bay Area transplants, six of Colorado’s 10 Fortune 500 companies are located in the south Denver market: Newmont Mining, Liberty Media Corp., Qurate Retail, Arrow Electronics, Dish Network and Western Union. Two of those companies are in the tech center: Western Union will soon occupy four floors at One Belleview Station, and Newmont Mining has leased 40 percent of the newly ground-broken 6900 Layton. Oracle is another large employer in the Tech Center, said Dan McGowan, executive vice president at JLL, and he added that insurance and finance are big employers as well. “I would say it’s just as diverse, if not more diverse than downtown,” he said, noting that many DTC tenants are high-level corporate offices. Other major employers include Charles Schwab, Oppenheimer, Jacobs Engineering (formerly CH2M) and Kaiser Permanente. “It’s still not tech-heavy at all like downtown, but you’re starting to see more of the younger generation, younger companies start to at least consider and look down south,” said Ryan Link, vice president at CBRE. One attraction for employers is that cost of space and parking is less expensive in the southeast suburban submarket. The median rental rate for Class A space in the southeast suburban submarket is $27.58 per square foot, per Newmark Knight Frank’s Q3 office data. The downtown rate is $40.52. Class B space has a smaller gap in price: $23.45 in the south market, and $31.29 in downtown. McGowan said those saved real estate costs are an attractive incentive for companies that can apply them to recruiting, attracting and retaining key employees. “It might seem a little backwards, based on what everyone is talking about downtown, but it’s people — it’s talent, it’s being able to recruit and retain employees,” Link said, when asked what one of the big drivers is for companies to head south. “That pretty much goes hand-in-hand with price.” Link said that in many cases, companies see this as a pool of money that they can invest into themselves instead of space — by purchasing new technology, adding culture-focused amenities, hosting company lunches or putting more money into the physical space. That, in turn, can be another strong tool to recruit and retain employees. If a client is looking at a $10 to $12 gap between an option downtown and southeast, not even including parking costs, Link said that many companies see those savings as a big win. And parking plays into the cost factor. Not only is there more parking available in the southeast suburban submarket, but it comes at a cheaper cost for employees. When clients are evaluating both markets, and they are already in the south market, their employees are accustomed to driving to work every day, Frederic de Loizaga, vice president at CBRE said. An average parking ratio in the south is around three spaces per thousand square feet, while downtown is “maybe one space” per thousand feet, or less – and each spot is much more costly. It’s no secret that downtown’s supply is constrained. Castleton said that downtown is about 88.5 percent leased, while the southeast suburban submarket is 88.3 percent leased. According to CBRE data, at the end of Q3, the southeast suburban submarket’s net rentable area (NRA) for office space totaled 36,122,416 square feet. In comparison, downtown Denver’s NRA was 28,341,89 square feet. Downtown is a “different world” than the southeast suburban submarket, said Link. If a client needs space in downtown, they have to act right away. While the submarket is not nearly as competitive as downtown, Link said in general leasing is strong and vacancy has flattened out a bit. Vacancies are relatively similar between the two markets, Link said. But he put it this way – if you look at the “good product” around Union Station and LoDo, it’s all leased. If a company wants to be in that part of downtown, but doesn’t want to fight traffic getting into the Central Business District or Uptown, they don’t have options. Loizaga said that there are a few more big-block spaces available in the south. There is also new construction, particularly with 6900 Layton breaking ground at the transit-oriented Belleview Station development. And so Link poses this question, from the stance of a client: "Why would I go pay $10 more per square foot to be in an area of downtown I really don’t have any interest in, when I could be on light rail, at a cheaper building, pumping that savings back into the business, where employees can park for free or less expensive?" The “No. 1 thing” every company is looking for, depending on where they go, is the ability to attract talent, Myers said. “I tell people, I think we have the whole package,” she said. Great office buildings and jobs are attractions, she said, but a region also needs an “excellent housing stock.” Companies look for million-dollar homes, where many C-Suite execs live, condos near light rail or more planned suburban communities like Highlands Ranch. School systems and amenities are also a plus for south Denver, she said, between bike trails, hiking trails and recreational centers. According to data from JLL, the cost of living in the areas that act as labor pools for the Denver Tech Center is 20 percent less expensive than downtown and Boulder. Scott Churchley, vice president at Cresa, said that the demographic in this submarket attracts a little bit of an older, more mature workforce, as opposed to downtown, which attracts a lot of millennials and younger workers. Loizaga agreed that access to a more experienced labor pool has been a driver for some of his clients looking south. Bret Picciolo, Charter Communications’ senior director of communications, said that the Greenwood Village and Denver Tech Center area is a “tremendous source of highly-skilled talent.” This environment is ideal to support Charter’s growth and the development of its Spectrum products, he added. One challenge for DTC is that many tech firms are choosing to locate in downtown because of the young, talented workforce drawn to the sector and that live in and around the area. Examples include Faction, Vertafore, SendGrid, FullContact and, and most recently, Slack. If a company wants a large majority – 80 to 90 percent – of its workforce to be young, there’s a good chance it will gravitate towards downtown, Loizaga said. But that’s not to say the younger generation is “completely unwilling” to move south. Transit is another big reason many fast-growing, cutting-edge tech firms choose the Central Business District over the Denver Tech Center. It’s more centrally located, so they can pull not only from the Lower Downtown, River North and Capitol Hill talent pools, but also Boulder and communities north of Interstate 70.“Having a multimodal hub like Union Station can bring people from all points of the metro area to downtown from any corner,” Andrew Blaustein said to DBJ, speaking about the growing population of tech firms located in downtown Denver. “In the Tech Center, you’re more limited.” But increased urbanization of the suburbs — the addition of retail, a greater variety of housing and enhanced walkability — is boosting the Tech Center's attractiveness. Belleview Station is creating an urban node in the southeast suburban submarket, Castleton said — residential sitting on top of light rail, with office product and walkable amenities such as retail and restaurants, coffee shops and bars. Myers said that the development around light rail stations has been “fabulous.” She believes south Denver’s example will be used as an example for similar future developments around the country. Jamie Gard, executive managing director at Newmark Knight Frank, said the suburbs are possibly on the beginning of a resurgence, in the sense that they have added features to urbanize and become more appealing. Adding retail, a variety of housing stock and walkable restaurants and services creates those sort of “urban nodes” that Castleton spoke of. Link, like Castleton, pointed out what’s occurring around One Belleview Station – the urbanization of areas. Brian Hutt, a senior associate at Cushman & Wakefield, was one of the brokers representing Newmont Mining on its lease at 6900 Layton, and said the “mini-downtown” that has been created in the area is a big incentive. Looking ahead, local brokers believe there will continue to be development and delivery of more office space in DTC going forward. “It’s not to say that everyone is migrating from downtown to southeast, because that’s certainly not happening, but you’re having more and more conversations with groups at least considering going southeast,” Link said. (Denver Business Journal)



Invesco Real Estate Buys Union Tower West

Portman Holdings sold its Union Tower West office building next to Denver Union Station for $69 million, or $684.67 per square foot, according to Denver County records. The sale to Invesco Real Estate included the 12-story building’s 100,778 square feet of Class A office space. It did not include the 180-key Hotel Indigo, which occupies the building’s lower floors, according to John Winslow of Winslow Property Consultants, who was not involved in the transaction. The price per sf appears to be a record for Denver office product, besting the $676.54 per sf paid for the Triangle Building, also in the Union Station neighborhood. Union Tower West, located at 1801 Wewatta St., is a LEED-certified, Class A building with a glass curtainwall that offers city and mountain views. It also provides 2:1,000 parking. Hensel Phelps completed the building last year. It is leased to Husch Blackwell; Bartlit, Beck, Herman, Palenchar & Scott; and other tenants. The CBRE team of Mike Winn, Tim Richey, Chad Flynn, Jenny Knowlton and Charley Will handled the transaction. (Colorado Real Estate Journal)



U.S. Payrolls Rise More Than Forecast as Wage Gains Hit 3.1%

American workers enjoyed the biggest leap in pay since 2009 as job gains topped forecasts and the unemployment rate held at a 48-year low, a boost for President Donald Trump ahead of next week’s midterm elections and reason for the Federal Reserve to keep raising interest rates. Nonfarm payrolls rose 250,000 after a downwardly revised 118,000 gain, a Labor Department report showed Friday. The median estimate in a Bloomberg survey called for an increase of 200,000 jobs. Average hourly earnings for private workers advanced 3.1 percent from a year earlier and the unemployment rate was unchanged from September at 3.7 percent, both matching projections. The figures give Republicans another economic accomplishment to tout ahead of Tuesday’s midterm elections as they seek to defend control of Congress from what polls indicate will be Democratic gains. The continued hiring and wage increases also reflect a tax-cut boost and reinforce expectations that the central bank will raise interest rates for a fourth time this year in December, though such an outlook may further unsettle investors who just sent U.S. stocks to their worst month since 2011. “The labor market is cookin’, and that’s the bottom line,” said Ward McCarthy, chief financial economist at Jefferies LLC. “What’s really impressive is that the unemployment rate would’ve declined if the participation rate hadn’t risen, and that’s a good thing. You still have more people coming back to the labor market. There’s a lot to like.” U.S. stock futures declined after the report, while the dollar trimmed losses and 10-year Treasury yields were higher. The October data may be less of an indicator of the trend than usual because they reflect distortions from hurricanes both this year and last year. Meanwhile, the U.S. trade war with China poses a risk to further gains and companies may be slowing capital investment. The Labor Department said 198,000 people weren’t at work due to bad weather, reflecting Hurricane Michael’s impact on Florida, following 299,000 in September amid Hurricane Florence. That compares with 36,000 people not at work due to weather in the year-ago period. Michael had “no discernible effect” on national employment and unemployment estimates for October, the Labor Department said. (Bloomberg)