November 3, 2014
Trammell Crow’s Feat: Giving Plant Site a Lift
The long-toxic Asarco smelter site in Globeville, nearing the end of a massive Superfund
cleanup, has landed a major-league developer to kick-start its new life. Trammell Crow Co.
has signed on to redevelop the 77-acre property in a key move to give Globeville a share of
Denver’s urban renaissance. Denver’s largest and highest-profile developer, Trammell Crow
has agreed to buy the smelter site from EnviroFinance Group and build the biggest
industrial park in central metro Denver. At completion, the $85 million Crossroads
Commerce Park will have 12 warehouse, distribution and light-manufacturing buildings
encompassing 1 million square feet. More important to historically downtrodden Globeville,
the project will bring an estimated 800 to 1,500 jobs. “It seems like it will be a real positive
development for the community,” said David Oletski, a native of the gritty neighborhood
that spans both sides of Interstates 70 and 25. “A workforce like that will impact the
neighborhood in positive ways,” said Oletski, whose grandfather worked at Asarco’s Globe
smelter. “We haven’t seen activity like this in years.” The smelter site runs west of
Washington Street between East 51st and 55th avenues, with the southern section in
Denver’s Globeville neighborhood and the larger northern piece in Adams County. That
makes the site central to a broad urban-renewal initiative,
including the rebuilding of I70, redevelopment of the National Western Stock Show complex, new light-rail stations and
improvements along Brighton Boulevard in the booming River North neighborhood. “The
redevelopment of that site represents an important milestone for both the (Globeville)
neighborhood itself and for the city,” said Kelly Leid, executive director of the North Denver
Cornerstone Collaborative, spearhead for the city of Denver’s redevelopment plans. “The
experience that Trammell Crow would bring to that project would be phenomenal.” Dallasbased Trammell Crow has developed $2 billion of Denver-area projects during the past 10
years. The portfolio includes the multimodal transit hub at Denver Union Station, DaVita
Inc.’s headquarters, the History Colorado Center, the Wellington E. Webb Municipal Building
and the Ralph L. Carr Colorado Judicial Center. Denver-based EnviroFinance Group is
redeveloping the old St. Anthony hospital site near Sloan’s Lake in Denver. Trammell Crow
senior managing director Bill Mosher said his firm had been searching for an industrial
development location along I-70 and found the smelter site to be ideal. “It’s a terrific
location today. And given all the investment happening in the area, it’s going to become
really fantastic in a few years,” Mosher said. Trammell Crow senior director Ann Sperling
said she expects strong interest from tenants and buyers because demand for warehouse
and distribution space is high and vacancy rates are low, particularly in central Denver. The
Globe smelter operated for 120 years, from 1886 to 2006. It was declared an EPA
Superfund site in 1993, after regulators determined that the plant had spread lead and
arsenic pollution through parts of a 4.5-square-mile area. Brownfields developer EnviroFinance Group began overseeing site remediation in 2011. Cleanup work is scheduled for
completion by the end of January. EFG will then build roads and infrastructure and sell
finished parcels to Trammell Crow for development of buildings starting next summer.
Plans are underway by Denver and Adams County to enlarge and improve Washington
Street to accommodate expected higher traffic volume. Barry Gore, president and CEO of
Adams County Economic Development, described the Crossroads project as “a once-in-ageneration opportunity for Adams County and Denver.” EFG executive vice president Mary
Hashem said feedback from neighbors has been almost entirely positive. “Bringing jobs and
economic vitality are what the neighborhood is interested in,” she said. “We’ve assured
them that heavy industrial activities will not be coming back to this property.” (Denver
Post)
▪▪▪
LoDo Commands 20% Higher Rents than the Rest of Downtown Denver
It's no secret that LoDo is the most popular part of downtown these days for construction,
real estate deals, new businesses and social activity for thousands of Denverites, including
the highly sought millennial age group. But a new report quantifies just how much people
want to be in LoDo — or lower downtown for newly minted Coloradans — by demonstrating
how much more they'll pay for office space to locate their businesses there compared to
other parts of downtown. Average rents for Class A office space in LoDo were around $40
per square foot for a full-service lease in the second quarter, compared with around $33 per
square foot for office properties in all of downtown combined, making lease rates in LoDo
about 21 percent higher, according to a report published by Los Angeles-based real estate
firm CBRE Group Inc. called "The LoDo Premium." The report uses boundaries for LoDo set
in the 1960s and splits downtown into four "micro-markets." The micro-markets include
LoDo, which reaches from Regional Transportation District's West Line to a historic
demarcation halfway between Market and Larimer streets. Adjacent to LoDo is the Skyline
neighborhood, between the LoDo boundary and Arapahoe Street. Skyline benefits from
being adjacent to LoDo when it comes to getting higher lease rates, outperforming the other
two micro-markets, Mid-Central Business District and Uptown, said Chris Phenicie, senior
vice president at CBRE. In the second quarter, Skyline was able to attract rents of around
$37 per square foot, while Uptown properties got around $35 and Mid-Central Business
District brought in around $32, according to the report. But even with the higher rents in
LoDo, office users are willing to pay the price, as the level of absorption in the area
demonstrates. Since the end of the recession, LoDo has had 1.4 million square feet of
positive net absorption while the rest of downtown recorded flat or slightly negative levels of
net absorption in the years between the second quarter of 2009 and the second quarter of
2014, according to the report. In the wake of the recession, many downtown office users
"right-sized," scaling back the amount of space they needed after shrinking their companies
to survive the downturn. One large example is 1801 California, the 53-story building
formerly occupied entirely by Qwest Communications, Phenicie said. In CenturyLink's
acquisition of Qwest in 2011, 800,000 square feet in 1801 California was vacated, a big hit
to absorption in the Mid-Central Business District. Meanwhile, companies have flocked to
LoDo in search of proximity to transit with the opening of the redeveloped Union Station and
the "cool factor" that LoDo brings, Phenicie said. While Union Station itself has certainly
been a draw, the resulting influx of apartments to the area and large commitments to LoDo
by large companies, such as the 270,000-square-foot headquarters built in 2011 by dialysis
company DaVita Inc. at 1550 Wewatta St., help make the area attractive enough that
businesses will pay the premium price associated with the area. "People are willing to pay
more in rent for the things they deem desirable," Phenicie said. (Denver Business
Journal)
Denver Apartment Vacancy Drops Below 4%
Apartment vacancies in metro Denver in the third quarter dropped almost a full percentage
point to 3.9 percent, according to the latest Denver Metro Area Apartment Vacancy and
Rent Survey. In the second quarter, the vacancy rate was 4.7 percent. From second to
third quarter, the average rent in the metro area rose to $1,145 per month, about a 2
percent increase over the previous quarter when the average rent was $1,117 per month.
The data in the report are compiled quarterly by the University of Denver Daniels College of
Business and Colorado Economic and Management Associates. Net absorption of
apartments in Denver increased quarter-over-quarter, with 4,470 units absorbed in the
third quarter, compared with 3,127 last quarter. "The third quarter absorption yielded
impressive results that exceeded the strong second quarter results, demonstrating the
desirability of the Denver market, supported by an increase of in-migration, a decreasing
unemployment rate, and increased business activity," said Ron Throupe, associate professor
at Daniels College of Business and co-author of the report. "This year's total absorption
count shows the strength of household formations and desirability of Denver. In 2014,
Colorado and Denver have become highly ranked locations by many surveys on business
and lifestyle," Throupe said. (Denver Business Journal)
▪▪▪
Two Strong Quarters in a Row for GDP, but Economy Still a Little Soft
The Federal Reserve's confidence in the economy was rewarded by a better-than-expected
report on economic growth in the third quarter. Gross domestic product increased at an
annual rate of 3.5 percent in the third quarter, according to an initial estimate by the
Bureau of Economic Analysis. We can thank personal consumption, exports, nonresidential
fixed investment and government spending for this jump, according to the bureau. The
strong third quarter followed 4.6 percent GDP growth in the second quarter — the best
back-to-back quarters for the economy since 2003, as Bloomberg notes. So it looks like the
economy was only taking a short winter's nap in the first quarter of the year, when GDP
declined. "The economy has bounced back strongly," said Jason Furman, chairman of
President Barack Obama's Council of Economic Advisers. But, as Obama administration
officials always point out, "more must still be done to boost growth both in the United
States and around the world by investing in infrastructure, manufacturing and innovation;
and to ensure that workers are feeling the benefits of that growth, by pushing to raise the
minimum wage and supporting equal pay," Furman writes. There were "some signs of
softness" in the economy, notes Chad Moutray, chief economist for the National Association
of Manufacturers. "While consumer spending and fixed investments provided a boost in the
third quarter, the pace of growth slowed from the prior quarter, beyond the swing of the
pendulum after such a strong rebound in the second quarter. This included softness in
equipment spending and the housing market, and inventory spending was also a negative."
Manufacturers, however, "remain mostly upbeat about future demand and production,
which bodes well for future quarters," Moutray writes. (Denver Business Journal)
FED TARGET RATE
3 MONTH LIBOR
PRIME RATE
10 YEAR TREASURY
30 YEAR TREASURY
CURRENT
.25
.23
3.25
2.35
3.07
1 MONTH PRIOR
.25
.24
3.25
2.39
3.09
1 YEAR PRIOR
.25
.24
3.25
2.56
3.64