River North is an emerging office submarket adjacent to Lower Downtown Denver. In RiNo exists is a rare opportunity for office developers to be strategic about delivering amenities. Industry Denver, which just celebrated its five-year anniversary in May, is a great working example of a modern office that has successfully matched the demands of a varied workforce and achieved premium rents in RiNo. The lifestyle mark is moving quickly, evidenced by food halls, noisy open areas and private penthouse decks becoming passé. RiNo, like East Portland, Downtown LA and Rainey Street in Austin, Texas, has a gradual future of “filling in” with public transit, healthy restaurants and specialty gyms. Until these amenities are established congruously in RiNo, and it is safe to walk to them, office developers must continue to solve for RiNo’s current amenities gap.
We feel that the shift occurring in RiNo today is like the early 2000s in LoDo; LoDo was a risky alternative to high-rise office buildings in the central business district. Tenants were initially concerned about safety in LoDo until it became commercialized and sterile. Two ends of a spectrum, “sketchy” and “sterile,” represent 20 years of change in LoDo, whereas we find ourselves in year five of a similar progression in RiNo.
To overcome the obstacles of construction traffic and negative visitor perception, early adapters and industry professionals are introducing their clients to current RiNo tenants who are bullish about the neighborhood. For example, HomeAdvisor’s recent move into Beacon Capital Partners’ The Hub South has caused several auxiliary users to also lease office space in RiNo – there is strength in numbers.
From officing among tenants at Industry Denver, we have learned that associates want many “caves” or huddle pods for small meeting space. Young professionals want to be surrounded by nice people, a customer-centric, empowered building staff who will foster a progressive ecosystem and proactively solve problems with a smile. Entrepreneurs want individualism, an office interior that inspires and is inclusive of RiNo’s neighborhood character but is not overplayed. In fact, Industry sits quietly back to let tenants be bold and shine. Public relations wants a carbon neutral emotional refuge with a sauna and free-flowing alkaline water. Athletes want outdoor parks with paths and indoor fitness with SoulCycle flair.
How can developers possibly meet all these demands? Before a shovel meets dirt, they must decide which intentional design features are feasible. A hefty task to be sure, but the good news is that the tight labor market has made tech compensation immaterial. Companies that are willing to offer benefits and a culture that contributes to quality of life will secure talent. Thus, premium rents and the property tax advantages of RiNo are palatable to tech tenants, and there currently are 724 tech companies operating in downtown Denver. For commercial projects in RiNo, a developer needs to either pay the equivalent of a luxury tax that goes into an affordable housing fund or offer a community-based program, like a neighborhood grocery store. Tenants also want freshly prepared grab-and-go offerings in a compact urban market.
Perhaps the biggest challenge facing office developers in RiNo is transportation. A special trip to RiNo for its entertainment options is not the same as a daily commute to the submarket, especially when two-thirds of the downtown workforce is accustomed to commuting via public transit, walking or biking. At Industry RiNo Station, 25% of tenants commute on RTD’s A Line 38th/Blake Station in east RiNo.
Despite more than $30 million of improvements on Brighton Boulevard for pedestrians and cyclists, driving and ride-sharing remains the most viable means of commuting in west RiNo. The physical barriers of railroad tracks, tunnels, the South Platte River and vacant blocks are formidable. But when parking structures cost $84 per square foot to build, office developers aim to accommodate less parking. To compromise, developers, owners and tenants should consider a building sponsored pedal hopper or Sprinter van, Lyft ride credits or telecommuting. Many RiNo companies have flexible work-from-home policies two to three days per week, especially for traveling employees and around the holidays.
Every vibrant office submarket has a rich history. River North served as the former industrial hub of Denver. During the turn of the nineteenth century the area was home to grocery, dairy, foundries, pattern shops and industrial uses that helped drive the economic success of Denver. In the 1990s, the corridor was left with many vacant warehouses and a failing infrastructure as the industries moved out of the city’s core. By bringing new businesses and people back into the RiNo neighborhood, life has returned, the streets are bustling and culture has awoken.
There’s no doubt the RiNo office market is on the upswing. It has plenty of potential, but at present is lacking many of the creature comforts desired by today’s tenants. By 2021, Beacon Capital Partners, Hines, Koelbel & Co., Revolution 360 LLC, Schnitzer West and Westfield will collectively deliver almost 1 million square feet of office supply in RiNo. For those developers who can be creative in filling that amenities gap, the RiNo market presents a ripe opportunity that can pay handsome rewards down the line. The future of amenities and the future of RiNo are unfolding simultaneously, and we are excited to be in the middle of the action.