Hines Commences 300 KSF Spec Office Project in Denver
- Jul 22, 2013
Who’s afraid of speculative development? Not Hines. The real estate firm has just broken ground on 1601 Wewatta, a 300,000-square-foot office tower that will sprout up in Denver’s burgeoning Lower Downtown, or LoDo, district. Hines is developing the project in a joint venture with Jordon Perlmutter & Co., owner of the site, and JPMorgan Chase, which recently came aboard as the third-party equity partner.
The 10-story building at 1601 Wewatta will be a premier office destination with such coveted attributes as four levels of parking to accommodate 400 vehicles and LEED Gold certification earned through a bevy of incorporated features, including rooftop solar panels. HOK Architects in onboard the project, having created a design that will, as Hines describes, set a new architectural standard in LoDo.
A design trailblazer for the area or no, it appears that, given market conditions, 1601 Wewatta has the right timing. The vacancy rate is on the downswing in metro Denver and, according to a mid-year report by commercial real estate services firm Transwestern, the figure will continue to decline over the next two years, as demand for space outpaces the pipeline of new supply.
Gordy Stofer, director with Hines, cites Denver’s fast growing population as one of the factors that are driving demand for space in the market, in addition to corporate relocations to the city and Colorado’s strong energy economy, which is spurring growth among energy companies. “We are building on spec and making a bet on all of these things to come,” Stofer told Commercial Property Executive. “Currently, the vacancy level for Denver’s CBD Class A office is 15 percent. In LoDo it is 9 percent. In LoDo, for new construction since 2000, it is below 4 percent.”
Nary a name has laid claim to a spot on the tenant roster at 1601 Wewatta, but there’s a little something called location that can also allay any apprehensions. The building will sit in the Central Platte Valley district of LoDo, just across from the $480 million Union Station redevelopment, an endeavor that will yield an ultra-modern multi-modal transportation center.
“For LoDo, [the office-demand driver] is Union Station and the paradigm shift that is taking place from the historic part of the CBD toward the LoDo/Union Station area,” Stofer said. “The other thing driving demand is the response from the younger workforce who wants to be closer to mass transit, as well as the amenities available in the LoDo area [such as bars and restaurants]. Talent wants to be in LoDo, and it’s a place where young people want to live.” Colorado, he added, is the fastest growing state in the country for 25- to 34-year-olds.
In addition to its 283,000 square feet of Class A office space, 1601 Wewatta will offer 17,000 square feet of ground-level retail. “The key reason [for this amount of retail] is our development’s adjacency to Union Station,” Stofer said. “When it is complete, they are forecasting 100,000 people will be traveling through the station a day. It is the hub for the light rail, bus mass transit, the 16th Street mall shuttle, so all will converge at Union Station and our development is right across the street. [Also] there are 2,000 multi-family residential units coming on line in the next 12-18 months, in addition to an already established residential and office base. So that will create a lot of traffic for the retail as well.”
Hines and partners expect to complete development of 1601 Wewatta in May 2015.