Trey Warren, left, and Brooke Bansbach Maloy, both with Front Range Land and Development Company, walk near ongoing construction at Belleview Station on Aug. 14, 2023. (Photo by RJ Sangosti/The Denver Post)
The developers of Belleview Station, south of downtown Denver and just west of Interstate 25, have been on both sides of the area’s real estate market.
The family that owns Front Range Land and Development, the company behind the mixed-use project, sold part of its farmland decades ago to the developers of the Denver Technological Center, or DTC. The family sold the land when construction of I-25 split the property between east and west sections.
Now, Front Range Land and Development is building the kind of commercial center considered a successor to large, sprawling business parks like DTC, which is mostly east of I-25. Belleview Station is a high-density mix of housing, office buildings and retail within walking distance. It’s on a light rail stop.
The development, parts of which are still under construction, offers what real estate experts say people want as they wrestle with the post-pandemic quandary of where to work: home, office or a combination. To entice workers back to the office, employers are turning to new buildings with such accommodations as fitness centers, flexible office layouts and nearby restaurants and shopping.
The vacancy rates are higher in the parts of downtown Denver where the buildings are older and the amenities are more sparse. In DTC, where many of the buildings are also older, for-lease signs line some stretches of the parkways and boulevards.
Employees in the tech center typically need to hop in their car to go to a restaurant or store.
“When the tech center was originally developed, the style at the time, or the thought process, was let’s create a business park where we have an office (building) only on big lots that have a lot of landscaping, surface parking and they’re spread out,” said Jim Neenan, president and CEO of Prime West, a development company with projects in Belleview Station.
Places to eat and shop were afterthoughts, Neenan said.
“Now people really want the experience of a mixed-use environment, walkable, easy-to-get-to various options, especially when you think about lunch, grabbing a cup of coffee or meeting somebody,” he added.
Janessa Biller, a broker with the real estate firm JLL, said “people want food, people want amenities” when they return to the office.
“We spend a lot of time talking about gyms, looking at restaurants and figuring out how to get people fed,” Biller said.
The desire to move into new or more modern buildings is called the “flight to quality” in real estate circles. Many of the office buildings in downtown Denver and the DTC are older, dating to the 1980s and ’90s.
Before the pandemic
The trend of people wanting to work in proximity to housing, stores, restaurants, in activity centers, was growing before the coronavirus pandemic, said Tracy Hadden Loh, a fellow with the Brookings Institution who specializes in researching place-making and commercial real estate.
“There’s weakening demand for the single-use product,” Loh said.
In 2015, a Washington Post story referred to suburban office parks as “the new American ghost town,” rattling off the names of metro-area business centers across the country that it said were “hobbled by changing work styles and government shrinkage.”
The Denver Tech Center was founded in 1962 on 40 acres and is located in south Denver and Greenwood Village. The business park is now about 908 acres with a workforce of more than 35,000 and more than 1,000 companies, according to Shea Properties, DTC’s owner.
Loh said similar industrial parks, established in the early 1970s, are being redeveloped to meet companies’ changing demands. Apartment buildings are being added. Grocery stores, restaurants and bars are being built.
“It’s just a heavier lift if you have to create those things from scratch,” Loh said. “There’s just more to infill.”
A part of DTC is undergoing a transformation. Shea Properties is redeveloping the Marina Square Shopping Center along East Bellevue Avenue, which will have housing and retail.
Louis “Dutch” Bansbach, president of Front Range Land and Development, said when George Wallace founded DTC, most of the office buildings and associated businesses were in downtown Denver on the periphery of downtown.
“George was a unique person, but was very creative in some of his thinking and decided to prove that you could have a nice business park southeast of Denver,” Bansbach said.
A history of Greenwood Village on the city’s website recounts a story by a former DTC executive that Wallace, who had a business in Denver, was so angry when somebody parked next to him and dented his car that he asked a real estate agent to find him land in Arapahoe County.
“He started picking up land parcels from various property owners out there,” Bansbach said.
Some of the property belonged to Bansbach’s family, whose farm was split in half when Interstates 25 and 225 were built. The family leased out their land west of I-25 for several years before deciding to build Belleview Station on 35 acres.
“The Denver Tech Center was probably the lead in terms of moving outside of downtown Denver,” Bansbach said.
But the move is now toward areas where people walk from work to lunch at nearby restaurant or to their home, Bansbach added. He thinks more of the older buildings will be torn down eventually and apartments and retail added in areas that now are office-heavy.
Suburbs seeing more action
While office building owners in the south metro area face similar challenges to downtown, the region has advantages, say real estate experts. Downtown Denver’s overall vacancy rate was 28.8% in the second quarter, compared to 21.2% for the suburbs, according to CBRE Group’s Denver office.
The vacancy rate in DTC was 16.7%, or 1.8 million square feet, CBRE said.
“This goes across the country, the suburbs are performing better than urban centers because it’s easier to get to,” said Tim Bourdelais, a JLL managing director. “Most likely, you live close by your office in the suburbs, so the commute times are much less than what they would be going downtown.”
And the parking costs are a fraction, Bourdelais added.
The total office vacancy ticked up a bit to 18.8% in the southeast suburbs in the second quarter, said Frederic de Loizaga, senior vice president at CBRE.
Digging a little deeper, however, de Loizaga said activity is starting to pick up. He is seeing larger deals on office spaces of 20,000 square feet and up.
“That’s really the segment of the market that’s been lacking in activity for the last three years, that’s taken the biggest hit. I see some encouraging signs down here of larger tenant activity picking up,” de Loizaga said.
A 120,000-square-foot Kaiser Permanente office in the southeast metro area had been up for lease, but Kaiser recently renewed the lease, said de Loizaga, adding that JLL wasn’t involved in the transaction. He believes as more people spend more time in the office, building vacancies will decrease.
“It’s very hard to figure out what the right format is because the way we work is never going to be the same, but there has to be some in-between,” de Loizaga said.
Biller with JLL said a popular misconception is that companies are generally downsizing their office space. In the south metro area, about half of the businesses are cutting back space while about half are increasing it.
Th south real estate market never really went through a big decline, Biller added. She said all the for-lease signs can be misleading when it comes to assessing the state of the market.
“A lot of those buildings have small suites, so they’ll always have a for-lease sign,” Biller said.
Kodiak Building Partners is expanding its footprint, from 9,000 square feet to 32,000 square feet. The company will move from Highlands Ranch to the Meridian office campus in the southeast metro area.
Kodiak is renovating an existing building and expects to move in a couple of months, said Steve Swinney, the CEO. The company has 6,000 employees nationwide and roughly 900 in Colorado. About 75 people work at the headquarters.
“We’re in the office most of the time. We’ve gone through a bit of an evolution, like everybody,” Swinney said.
The vast majority of Kodiak’s employees work in warehouses or drive delivery trucks. With that in mind, the executive team returned to in-person work in May 2020.
Going back to the office was optional for others in headquarters until early 2021 when people could work hybrid schedules. Six months ago, employees started working in the office Monday through Thursday with the option of remote work Friday.
“It’s one of the main factors we got a lot bigger space when a lot of people are shrinking spaces right now,” Swinney said. “We outgrew this space awhile ago. We’ve been kind of limping our way along.”
Kodiak decided it was important that employees collaborate and work together, Swinney said. The company is working to make the new office a place employees want to spend time in, Swinney said.
Kodiak considered where employees lived when picking a new building. The new office has a fitness center and walking paths.
“We wanted to have a space we could grow into. We wanted to have a space with a lot of really creative collaborative areas where employees would want to come to each day and where they could really interact and engage with each other,” Swinney said.
Flight to quality
For some companies, a new building is the way to go. Others, more concerned about their budgets, might be willing to lease an older building, said Neenan with Prime West.
“Some of these really old, outdated big-plate office buildings will go away and more dense, multiuse projects will be built. Some of them might warrant renovations,” Neenan said. “But the challenge is you have to put a lot of money into the renovation of the buildings to the degree that you can attract higher-caliber tenants.”
As older buildings fail to attract tenants, owners have looked at converting offices into residences to address the housing shortage. Real estate experts expect more buildings to go into receivership and foreclosures to increase.
Business Den reported that the lender on a 179,000-square-foot building in DTC said in a recent court filing said that the owner, which defaulted on its loan, plans to hand over the title in lieu of foreclosure.
To the west, at Belleview Station, new construction continues. On a recent afternoon, people carrying to-go coffees walked between restaurants and offices and gathered on restaurant patios.
Brooke Bansbach Maloy, vice president of Front Range Land and Development, said Vectra Bank, Western Union and Newmont Mining are among the companies that have located their headquarters there.
Belleview’s master plan calls for a total of 2,500 housing units, the majority of which are for rent. Most of the roughly 1,000 existing units are leased. Maloy said. The zoning provides flexibility to build more or less office and residential buildings, based on market demands.
Trey Warren, a vice president with Front Range Land and Development, said it appears that more workers are returning to the office, based on tracking the company does.
“Tuesday is definitely the work-at-the-office day. That’s when the garages are full,” Warren said. “Thursday is a close second. Mondays and Fridays are not very strong.”
Belleview’s goal is to maintain an environment “that is kind of a welcome refuge from maybe the not-so-nice things happening in downtown,” said Maloy, referring to concerns about crime and the encampments of homeless people on city streets.
Denver South, a public-private partnership that works on economic development and jobs, is also concerned about safety and the lack of affordable housing, said Tom Brook, the organization’s president and CEO.
“It’s clearly a concern citywide, regionwide, nationwide,” Brook said.
As with the changing demands across the economic landscape, communities and businesses are looking at the concerns holistically, Brook added. Affordable housing is a problem across the region, he said.
“I think Denver benefits from a strong region. The region benefits from a strong Denver. And Colorado benefits from a strong Denver and region.”