DENVER — June 13, 2017 — This years Denver State of the Market, held at the Denver Marriott City Center on Tuesday, brought the biggest names in Denver CRE, including Koelbel & Co, McWhinney, Zeppelin Development, Sage Hospitality, Confluent Development, Corporex, LC Fulenwider, DIA, Urban Villages & more to answer:
- Why is diversity in leadership important in the industry?
- How did Denver’s past form its present?
- Who are the innovators behind this city and what are their stories of success?
Denver Market Outlook: The State of All Asset Classes
Chad McWhinney, CEO & Co-Founder, McWhinney
Walter Isenberg, Co-Founder, President & CEO, Sage Hospitality
Darryl Jones, Chief Commercial Officer, Denver International Airport
Thomas E. Banta, Managing Director, Corporex
Moderator: Brad Cohen, Managing Director, Transwestern
With Denver being the most requested place to live and work by millennials, the panel talked about the need for the CRE industry to keep ahead of the growth curve.
Partners Chad McWhinney and Walter Isenberg spoke a little about their Dairy Block project which will include Denver’s first activated retail alley — opening this Fall — as one place that will provide satisfaction for the experience-minded.”What we are seeing globally is this whole notion of “experiences” and in our business it’s something we are very focused on,” said Isenberg.
The growing trend toward creative, open-plan, experience-based office space is also likely to continue. According to Isenberg, the focus of office owners has shifted from square footage and rent price, to designing office spaces that will attract and retain employees and include amenity packages, restaurants and gyms. “I think the things that add to worker productivity will continue to be a focus but some of those gimicky things are probably going to fall to the side.”
From an infrastructure standpoint Darryl Jones, chief commercial officer at DIA, believes Denver is not in the best position to handle the city’s growth, “It’s going to take much more of a regional effort and much more collaboration to figure out how to improve water, sewer and roads and pay for that infrastructure,” said Jones. However, thanks to the addition of the A line train to and from DIA, compared to other states of a similar size, Isenberg believes Denver is in an enviable position. McWhinney believes we need to address the issues of our highways to get ahead of the growth curve, “The one thing in Colorado that we really need to get in front of is I25 and I70 because they are getting bad.”
The cost of housing is another potential issue for Denver. “It’s a great place to attract young people to come work but if they can’t afford to live here then it’s going to be an on-going problem,” said Isenberg. “You have rents continuing to grow and unemployment going down and so it feels like we need to create jobs for the people that are here,” said Brad Cohen, managing director of Transwestern.
Property taxes are projected to be another problem on the horizon for the commercial real estate industry that’s going to create significant challenges for office development. “The burden of property taxes is shifting more towards commercial developers and less to residential and that trend is going to continue,” said Isenberg. “Our property taxes in downtown Denver are higher than in downtown Chicago on one of our hotels, which is astonishing.”
New Developments, Next Neighborhoods & the Challenges and Rewards of Being a Woman in Real Estate
Elisa Adam, EVP & CFO, Miller Global Properties
Stina Kayser, Principal & General Counsel, Urban Villages & Bio-Logical Capital
Celeste Tanner, Chief Development Officer, Confluent Development
Heather Paduck, CFO, Northwood Investors
Moderator: Harry Jones, Principal, DCI Engineers
The female panel continued the conversation about the trend in office space, saying that the preference towards a more open plan office space vs the more traditional layout, is dictated by the employees of a company but that there will always be a demand for more traditional office space as well.
Celeste Tanner, chief development officer of Confluent Development has seen a trend in tenants looking for office space across multiple submarkets, not just in a specific trade area such as the airport, central or southeast. “There’s concern over I70 expansion and they are trying to find the best place to locate as that expansion happens over the next five to 10 years,” she said. Tanner also said there is a lot of equilibrium in rates today that you didn’t necessarily see in the past.
Diversity in the CRE industry was another topic of discussion, with all the women agreeing that development has remained a pretty male-dominated segment of the industry. However, Tanner highlighted a very important statistic: While companies that have more than 100 employees and 50M in revenue, have only 17 percent of women in leadership positions, of that 17 percent, those companies average 18 percent higher revenue per employee than at the male led companies. “It’s probably worth cultivating that talent because there is a return on that investment,” said Tanner.
As compared to other cities, in particular London, where Heather Paduck, CFO, Northwood Investors, does a lot of business, there is more diversity in gender and race in the industry, than in the U.S. “I look forward to a day when I can introduce myself as a CFO of an organization and not see that hint of surprise from the man sitting across from me,” said Paduck.
Behind the Scenes with Denver’s Most Prominent Real Estate Families: Generations of Success
Buz Koelbel, Jr., President and Carl Koelbel, VP, Koelbel & Company
Mickey Zeppelin, President, Zeppelin Development
Kyle Zeppelin, Principal, Zeppelin Development
Cal Fulenwider III, President, L.C. Fulenwider, Inc.
Blake Fulenwider, VP, L.C. Fulenwider, Inc.
Moderator: Bryce Hall, Principal, KEPHART
The last group of speakers talked about how keeping business in the family has had a positive impact on their success, with the older generation looking to the younger generation for their perspective on building communities for millenials. The in-migration of young people is the strongest driver in the market the panel said.
The speakers were asked which neighborhoods they predict will see considerable growth over the coming years. South broadway (SOBO) and Globeville were among the neighborhoods mentioned. In particular one panelist has high hopes that the minority groups of areas like Globeville, will see less displacement and that those neighborhoods will fulfill their potential.
The impact of driverless cars will also be an ongoing consideration for the developers. “Im thinking a lot about what shift is going to happen with driverless cars and how we work that into a long term development out at Pena Station and how you approach that from a development and land planning perspective,” said Blake Fulenwider.