New light rail routes to the Denver Tech Center (DTC) scheduled to open this year are expected to further boost the desirability of real estate in this robust commercial corridor on Denver’s southern outskirts.
“Commuter rail provides a magnet for transit-oriented development and a reliability factor because rail is pretty impervious to weather,” says Scott Reed, assistant general manager of the Denver Regional Transportation District. “For the DTC, just 25 minutes by rail to Denver’s central business district, this translates into a highly educated workforce for its financial services, legal, healthcare, tech and other growing industries and ensures its financial health.”
Since its birth in the 1970s, DTC has expanded from 40 acres to more than 900 acres.
“The jobs in the DTC now are professional and business services in every field,” says Origin Investments senior associate Jared Friedman. “So while it started life as the Denver Tech Center, today you really have a diverse cross-section of companies in the area.”
The DTC also has some of the best demographics in the Denver area.
“The people who run businesses live around here, so it has a lot of upscale retail, shopping and residences in its boundaries and the contiguous communities,” says Friedman. The combination of thriving businesses, luxury housing and great amenities make the DTC “a very desirable area — probably one of the best, if not the best, in Denver,” he adds.
While the light rail system has long connected the DTC to downtown Denver, two new commuter lines will link it to Denver International Airport (DIA), the fifth-busiest in the nation. Opening in April 2016, one light-rail route will connect DTC to the DIA via the central business district. A more direct commuter-rail link, following the I-225 expressway in Aurora, opens this fall.
“It’s really driving a lot of further demand for office space there because you can just hop on the train and be downtown, or at DIA, in no time,” notes Friedman.
Friedman leads Origin’s investment in Denver Corporate Center I (DCC I), one of the DTC’s first office towers and perhaps the most underappreciated. Built in 1980 for IBM, which remains a tenant, the 11-story building offers direct access not only to surrounding expressways but also to data traffic along high-capacity, fiber-optic cable lines.
More significantly, the Denver Corporate Center is highly geographically desirable thanks to its location across from the 650-room Marriott Denver Tech Center and about a quarter-mile from the rail station.
The new transit links continue the momentum of Denver’s southeast office market. With more than 150,000 jobs, the area has eclipsed downtown as the city’s business hub. The region’s two biggest 2015 lease deals are nearby — 282,800 square feet for AECOM’s URS engineering and construction business and 273,400 square feet for Comcast Corp.’s cable operations — while nearly 60 percent of space is preleased in five office buildings under construction.
DTC has a lower vacancy rate, 9.3 percent, for its 37 office buildings than the broader southeast office market at 10.4 percent and the entire Denver region at 11 percent, according to real estate research firm CoStar Group’s latest Denver market report.
Origin acquired Denver Corporate Center I, which is 83 percent leased, in an off-market transaction with Titan-Hamilton Partners that gives the investment a 15 percent cost-savings advantage over its two twin towers, DCC II and DCC III, which are currently for sale, estimates Friedman.
By adding in-demand amenities, such as conference spaces, Wi-Fi and an onsite fitness center, DCC I will command higher rents, better compete with new construction and take full advantage of its prime location.