Denver’s Whale sites: Englewood CityCenter Edition

This the eighth in a series on Denver’s “Whale Sites,” defined as extremely prominent and underdeveloped land parcels whose size and location will define Denver’s future growth and development. Examples include the Burnham Yard, Upper Fox, Elitch Gardens, the Broadway Station Area and Denver Design District.

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Introduction and background

Steve Ferris

Steve Ferris, Founder and principal, Real Estate Garage, Denver

The city of Englewood began to grapple with the slow decline and eventual closing of the 1.3 million-square-foot Cinderella City regional mall in the 1990s. The city responded with a public-private planning and redevelopment effort that delivered the first of a new generation of transit-oriented “city centers” on the 55-acre mall site.

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The centerpiece of CityCenter was the new 140,000-sf Englewood Civic Center building, adapted from a former department store. It became home to the city offices, courts and council chambers, as well as the city’s public library and the notable Museum of Outdoor Arts. The Englewood Civic Center also includes a plaza and fountain area at the base of the transit station.

Luckily the plan contemplated future redevelopment, and that time has come. This is due to a combination of factors, including: 1. The intervening full build-out of the Regional Transportation District FasTracks metro area network; 2. The tremendous interest of employers and the real estate industry in Denver area TOD sites; 3. Designation of the CityCenter, and most of Englewood, as a 2017 Tax Act Opportunity Zone; and 4. The surprising recent foreclosure on the three-square-block Weingarten Realty portion of CityCenter by special servicer C-III Asset Management. (C-III ultimately foreclosed and took title through an Arapahoe County Public Trustee’s sale in August with a bid of approximately $35 million. C-III will be marketing the property for sale this spring.)

Unique to many whale sites, the 55-acre Englewood CityCenter enjoys a central metro area location with proximity to both downtown Denver and the Denver Tech Center, strong existing infrastructure and significant land cost advantages.

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In anticipation of the redevelopment opportunities at CityCenter and at other key sites in Englewood, the city hired Dan Poremba in 2018 as its first chief redevelopment officer. He brings expertise developing complex public-private partnership and TOD projects for both public and private-sector sponsors. The city is now poised to capture the current trend toward urbanizing the suburbs, with significant advantages over comparable suburbs.

Englewood backdrop

Immediately adjacent to Denver, the city of Englewood is a classic inner-ring suburb. It is an authentic small town, displaying surprisingly strong attributes and redevelopment opportunities (6.8 square miles in size with a population of 35,000).

It offers a relatively affordable housing stock of smaller single-family homes, prime for renovation and redevelopment. These are being discovered by both first-time millennial and empty-nester, boomer buyers.

Englewood also benefits from a thriving health care district anchored by two growing hospitals (Swedish Medical Center and Craig Hospital) and a locally oriented retail district along the South Broadway corridor.

The city also is home to a surprisingly diverse economy of entrepreneurial manufacturing, assembly, high-tech and maker firms combined with a notable community of artists and art-based businesses. Areas south of CityCenter served by the Oxford light-rail station have the look and feel of RiNo circa 2005.

CityCenter redevelopment opportunities

Per the site plan, there are two major TOD redevelopment scenarios at Englewood CityCenter, which may be combined to create a larger redevelopment. The “C-III Property” covers the former Weingarten property. Its 15.2 gross acres will be marketed by CBRE for sale within the next couple months. It sits on a ground lease from the city of Englewood real estate entity, the Englewood Environmental Foundation, with 57 years remaining.

The site could easily be redeveloped in phases with a range of mixed and higher-density uses. However, any buyer of the C-III Property will need to work with the city to extend and amend the ground lease to support redevelopment. A conversion of the lease to fee simple is not impossible but Poremba pointed out that in any scenario the city will be looking to revitalize CityCenter into a walkable “central place” for the city. It will also seek to generate a new long-term revenue stream for the city, as the current ground lease was fully paid as part of the original redevelopment.

The “City Property” shown on the map above is owned or controlled by the city and/or its real estate entity and totals 11.9 acres.  It includes the 140,000-sf Civic Center building and two-level parking structure located on a high-profile TOD parcel. It could support the addition of substantial development with potential uses including hotel, office and multifamily.

The City Property also includes a 4-acre surface parking lot north of the station that could support additional development, likely multifamily. Shared parking agreements with RTD exist within one-quarter mile of the site and allow for parking to be reconfigured.

The city has engaged Tryba Architects for an initial phase of CityCenter re-visioning and to assess how various combinations of redevelopment can fit on both the C-III and City properties. Given Tryba’s large role in the original redevelopment and experience in densifying similar projects, it brings significant value-add ideas. Its history with the site also means it gets the details about such things as the RTD parking requirements and potential for, say, air rights.

A big-picture possibility is that a quality buyer proposes partnering with the city to plan the redevelopment of both the C-III Property and the City Property. Alternatively, the City Council is considering the adoption of an unsolicited proposal policy and other tools to expedite council consideration of the various redevelopment scenarios, including public-private partnership deal structures. The fact that all of CityCenter sits within a designated opportunity zone should help – it’s unusual to find projects of this scale in urban locations within opportunity zones.

In discussing the CityCenter redevelopment potential, Poremba emphasizes that the Englewood City Council, with ample public input, will drive what happens. He notes that while “the City Council is open to considering all the possibilities, the unique opportunity and the urgency created by the foreclosure must not be overlooked. Concurrently, the council and the community will be engaged in coordinating the timing and phasing of redevelopment in ways that are consistent with Englewood’s character.”

Deeper-dive opportunities

Between the C-III and City properties, two or more multifamily rental projects appear to be immediately feasible. Meanwhile, Englewood is also proving to have strong demand for multifamily condo product and even hotel uses. Office development will offer very competitive pricing to develop and lease compared to downtown Denver, along with proximity to public transit.

Moving along the spine of CityCenter on Englewood Parkway presents some challenges due to the presence of Walmart’s extensive surface parking and, further east, the large, dated retail properties owned by Kimco and Bristol. It’s anticipated that CityCenter redevelopment will involve one or more parking structures and/or shared parking within future vertical developments. Coincidentally, Walmart has recently taken steps nationally to bring more customer experience and small retail opportunities to its parking areas. That direction should help foster a collaborative redevelopment relationship.

The area between CityCenter and Broadway, including two high-rise office building owned by Situs, offers significant future redevelopment opportunities, perhaps even a formal expansion to the defined CityCenter area. This could be facilitated by expanding Englewood Trolley services. The trolley now runs every 20 minutes between Englewood Station and the Hospital District.

Conclusion

The core prospect for Englewood City Center combines cost-effective development sites with economically healthy surroundings, opportunity zone tax advantages and great mobility options. In addition, several options to manage costs exist via adjustments to control of the C-III portion, including combining it with the City Property. Numerous public-private financial arrangements could also make sense, such as creation of a downtown development authority and/or special districts.

Unlike many other whale sites, CityCenter is significantly controlled by a single public entity. With the forthcoming sale of the C-III Property, the city will enjoy a unique opportunity to partner with one or more developers to ride the next generation of mixed-use TODs. The ideal approach will capture the authentic character of Englewood while leveraging the surprisingly strong attributes of the site.

Ferris’ firm, the Real Estate Garage (http://realestategarage.net), focuses on maximizing the production of real estate plans, projects and approvals, including entitlement processing coordination and rezoning. Ferris previously served as an appointee of Denver Mayor Michael B. Hancock, running Development Services for the city of Denver. He also has engaged in $1 billion-plus of feasibility and development management work in the private sector, and served as director of planning and town manager for the town of Telluride. He holds degrees in civil engineering from Marquette University, urban planning from Cornell University and a Master of Business Administration from the University of Denver.

Featured in CREJ’s Feb. 20-March 5, 2019, issue