Pedestrian traffic and residential growth show signs of positive movement.
Development, storefronts, pedestrians and residents are slowly returning to Denver’s downtown core at pre-pandemic levels, but one chink in the armor remains ahead of the city’s recovery.
Stubborn downtown office vacancy rates reached a new high in the third quarter at a rate not seen in decades, according to the Downtown Denver Partnership’s 2023 State of Downtown Denver report. That number comes from CoStar data, but CBRE reports the number is closer to 30%.
“The greatest vulnerability that downtown Denver faces today — which is very true of every major metro and every downtown across the country — is commercial office [market],” DDP President and CEO Kourtny Garrett told the Denver Business Journal in an exclusive interview and sneak peek at the report.
Average daily pedestrian counts downtown are at 225,000 people per day, just 25,000 shy of averages in 2019. Big events have drawn up to 300,000, and nights and weekends sometimes exceed 2019 levels.
At the same time, the city center experienced residential growth of 1,000 more people this year and is on track to reach or even surpass a projected 40,000 people by 2028, according to the report. About 3,000 residential units are currently under construction to support growth in that sector.
Having residents and foot traffic has contributed to sustained interest from food and beverage and other businesses in the area, Garrett said. More than 27 new ground-floor businesses opened this year, including 17 new bars and restaurants, and the DDP counts 14 projects under construction at the end of 2023 that total $1.37 billion in development.
Long-term success for the city center, though, means ensuring a holistic and multidimensional downtown, Garrett said. Leaving out the workplace is not an option.
From a recruitment standpoint, Denver and Colorado as a whole continue to be very attractive markets, according to the report. The problem stems not from fewer companies choosing Denver, but choosing to relocate or make any changes to their office space, she said.
“For us, it’s a multipronged approach of business recruitment, business retention,” Garrett said, and finding other creative ways to make downtown a destination.
Adaptive reuse is an option that many in the city continue to explore. Adding residents will ultimately keep more workplaces in the area, Garrett said.
“If we can continue to build this place where people want to live, it will then also be a place where people want to work,” Garrett said. “When you have a strong residential population, it naturally begets really beautiful places.”
Depending on the metrics used, Denver appears to be ahead or in the middle of the pack in its recovery compared to similar cities in the U.S.
DDP’s rankings place Denver’s downtown ahead of many peers in job growth, geographic inclusion and fostering business for women entrepreneurs. The downtown employment base is now just 300 jobs shy of 2019 levels, according to the report.
Tech-related jobs account for a larger share of the area’s worker base, which could work against some efforts to boost weekday traffic as they are more likely to allow for remote work.
Garrett said the DDP also isn’t wearing rose-colored glasses about a tight lending market that could keep a lid on construction.
“You don’t see that type of transformational development happening in a lot of cities,” Garrett said. “There is confidence in the market to say that these projects haven’t fallen by the wayside over the course of the last three years.”