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Development in Downtown Denver Continues Despite Office Vacancy Rates Hitting a Five-Year Record Low

The Downtown Denver Partnership released its annual report last week that annalizes the state of downtown. This year’s report suggests that downtown is moving forward after the significant impacts of the pandemic and highlights the exciting opportunities for growth and stabilization in the center city. Among the findings, the report shows that while the city’s leisure travelers are returning, only 50 percent of office workers have returned.

“Our goal is to move forward with astute attention to market conditions and innovative solutions to ensure downtown Denver rises as an international model for resiliency and success,” says Bob Pertierra, senior vice president of economic development at Downtown Denver Partnership.

Employment

Downtown Denver experienced a decade of employment growth, averaging a 3% annual employment increase since 2011. The global pandemic of 2020 disrupted its growth trajectory with about 20,000 jobs lost and a negative 14% growth rate. This was not unique to Denver, as major downtowns in the U.S. and across the globe were impacted by the pandemic. The good news is that Denver has demonstrated resiliency and is positioned for continued growth.

Office Market

Ranked 5th most preferred market in the U.S. for real estate investment, Denver continues to attract investment activity. Due to the increased adoption of hybrid and remote work models by many employers, 21% of office buildings are vacant, which is the highest recorded since 2017. Despite the challenges, Denver continues to attract investment as secondary markets are seen as more attractive than primary markets for many investors.

Talent

The availability of a strong labor force has kept Denver a competitive city across multiple industries. Colorado is one of the top states for educational advancement across the country. Downtown Denver is home to the Auraria Campus at the heart of our center city, boasting two 4-year colleges and one 2-year college, with about 39,000 enrolled students and more than 7,000 graduates over the past academic year. With Denver ranked 2nd best city for recent college graduates, we are investing in our place and in the community to support the influx of people and talent, both locally and nationally.

Development and Investment

Denver continues to attract new development and investment as a top growth market in the U.S. 41 projects have been completed over the past four years in downtown Denver, bringing more than $3.2 billion in investment downtown from 2018 to May 2022. These projects added 6,084 new residential units, 2.8 million square feet of office space, and 1,434 new hotel rooms to our center city, creating opportunities for future growth and innovation. There are currently 14 projects under construction including the 16th St. Mall reconstruction and the Colorado Convention Center expansion.

Mobility

The establishment of hybrid remote-office schedules continues to considerably impact Denver’s mobility system in 2021. According to the 2021 Downtown Denver Travel Survey, telework retained its place as the highest mode share, with 56% of downtown employees working from home at least once per week, compared to only 5% in 2019. Results from the survey suggest that bicycle commuting continued to gain popularity, with nearly 8% of downtown employees invested in a new bicycle since March 2020.

Residential

Downtown’s residential population continues to grow, with ESRI’s population forecast projecting downtown Denver’s annual population growth to outpace that of metro Denver, Colorado, and the U.S. in the next five years. Denver remains a popular destination for millennials, creating vibrancy for our downtown.

Retail & Restaurants

Retail activity in downtown Denver has been gaining momentum, overcoming significant setbacks from the pandemic. After a decade of rising year-over-year growth, retail sales tax fell by 47% in 2020. As downtown welcomed visitors and tourists, sales increased, and retail tax collections grew by 57% in 2021 from 2020. Restaurant activity has increased, with more people dining out on nights and weekends.

Public Realm

One of the most historic and central public spaces in downtown Denver is currently being reconstructed: the 16th Street Mall. This reconstruction will create more space for people to gather in one of the most important public spaces in our city. In 2021, Denver voters passed a General Obligation Bond that allocated $7 million towards the 5280 Trail. This is a visionary effort to connect our downtown neighborhoods through a multimodal linear park designed for people walking and biking.

Tourism

Downtown Denver has benefitted from a recovering leisure travel market with Denver International Airport ranking as one of the nation’s busiest domestic hubs. Conventions and meeting business continues to rebound after a challenging 2020 that effectively shut down those activities across the country. In 2021, Denver welcomed 151,000 meeting attendees, who spent $313 million in more than 400 meetings at the Colorado Convention Center and Denver hotels.

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