In the mid-to-late 1980s, when downtown Denver largely emptied out after 5 p.m., a diminishing influx of workers headed for the outskirts of the city and its burgeoning suburbs for shopping and nightlife amid sprawling new malls.
A recession left skyscrapers with a 30% office vacancy rate. A now-defunct federal agency liquidated one office building for $1, a shocking development that further dampened property values. Unemployment ticked 2% above the national average.
Flash forward to 2020 — six months into a pandemic that shut down restaurants and shops, and kept employees out of office buildings — and it’s impossible to ignore the similarities to the dead zone of four decades ago.
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“In March, April and May the streets were empty,” said Dee Chirafisi, a downtown real estate broker and resident for the past 26 years. “It felt like the early ’90s.”
The heart of the city is slowly reopening, but most companies still keep workers at home instead of filling up the high rises. The sandwich and coffee shops that usually bustle with downtown workers are mostly empty, if not boarded up and closed indefinitely. Even the longstanding McDonald’s at the Broadway end of the 16th Street Mall, a hangout for many who are homeless and the site of frequent police calls, has shut down, its windows and doors layered with protective plywood.
The economic “ecosystem” of downtown doesn’t work without people, and these days, there aren’t enough people to keep it going.
The number of pedestrians along 16th Street Mall is about 25% of normal, according to a tech-based count by the Downtown Denver Partnership.
Just 10% to 20% of the workforce has returned, according to the partnership’s survey of its business members. On the high end, that’s about 28,000 of the 140,000 people who normally work downtown.
It’s not just the coronavirus that has reduced downtown to a shell of its former self and threatened its character. Regular protests over racial injustice, during which police have fired non-lethal bullets and pepper spray and rioters shattered windows and carried guns, caused some to avoid that part of Denver this spring and summer. The homeless camps, including one that grew to nearly 200 tents before it was swept by city authorities last month, quickly changed the vibe around the state Capitol, where just a couple of weeks earlier, lawmakers were still going to work.
The health of downtown affects more than just the normal hum of commerce as business owners sell Colorado T-shirts to tourists, mix lattés for office workers and spill tables of diners onto the sidewalks. Everything from public transportation to commercial and residential real estate to the parks and thoroughfares that give downtown its distinct ambiance has been knocked off kilter by the tumbling dominos of the pandemic.
“Urban centers are living, breathing organizations,” said Tami Door, CEO of the Downtown Denver Partnership. “They are an ecosystem. When you remove one piece of the puzzle, you affect the whole system. Everything feeds on everything else. Ultimately, it comes down to bodies.”
There is no official tally of how many downtown businesses have closed down, either temporarily or permanently, though Door says “the vast majority are still operating, for sure.” Multiple large companies have been working remotely since March, and some have announced that the soonest they would return to their downtown offices is January.
A core group of downtown’s champions — at the Partnership and the mayor’s office — is brainstorming ways to get the center of Denver back in business.
They’re hoping to extend the closed-to-vehicles status on sections of Larimer Street and Glenarm Place, where restaurants have stretched outdoor patios into the roadway to enable social distancing. They’re talking up downtown as the soul of the city, hoping workers who’ve been on their couches and in home offices for the last six months are ready for a change of scenery.
And they’re planning an outdoor “winter festival,” with art, live music and warm drinks, geared toward not just workers but people who have been avoiding downtown.
“Just getting people back is the ticket to our way through this,” Door said.
“It’s dead. But we have rent to pay”
By 3 p.m. on Thursday, only six customers had stopped by Obento, the ramen-bubble tea shop near 16th and California streets. That’s quite a difference from the good ol’ days earlier this year when about 50 people would filter in just during the lunch hour.
Owner Billy Enkh has kept the downtown Denver eatery open for lunch and dinner since coronavirus safety measures went into effect in March. It did close for 10 days during the racial justice demonstrations from late May into June, but otherwise it’s been Enkh or his one employee filling orders for slurpable Tonkotsu ramen bowls or teriyaki bento boxes.
“It’s dead. But we have rent to pay,” said Enkh, who said that his landlord is working with him to help keep things going for both of them. “There’s not enough business. But what do I do? Stay home? I can’t do that. Hopefully it picks up but I don’t think it’s going to anytime soon.”
The lack of a lunchtime office crowd has really cut down on customers who patronize the many restaurants, shops, parking garages and other service-oriented businesses dotting Denver’s downtown. With no conventions and fewer tourists, hotels furloughed thousands of workers.
Foot traffic has picked up since April, but many people are still staying home.
IMA Financial Group is in the minority of downtown companies — most of its employees are back to work in their offices at Union Station.
The financial company, which sells insurance and manages investments, brought 25% of its associates back downtown on May 1. Then it ramped up to 50%, and this month, moved to 75%.
A “return-to-work team” recreated the office space to keep people safe from coronavirus, installing sneeze guards and limiting elevators to two people at a time. Every employee must log into a COVID-19 health-checker app — created in house — to log their temperature and answer questions about potential symptoms.
Company CEO Rob Cohen said the daily check-in has become part of his morning routine — “just like brushing my teeth and shaving.” The virus, not the protests around the state Capitol or homeless encampments, has been foremost on his mind regarding reopening the downtown office.
“I don’t have any other concerns about downtown,” Cohen said.
He is bullish about downtown’s recovery. Denver was just listed by Forbes among the top 10 American cities expected to recover most quickly from the coronavirus, based mainly on the Colorado capital’s pre-pandemic economic health.
“I’m a little more optimistic than most people,” Cohen said. “No, it’s not going to go back exactly the way that it was. There is a new normal that is going to exist.”
McDonald’s on the 16th Street Mall is closed because it’s undergoing upgrades, but is expected to reopen in the fall, said John Ritchey, the establishment’s owner/operator. People can still make to-go orders via “McDelivery and Mobile Order Pay.”
But everywhere, the notable absence of elbow-to-elbow foot traffic conjures the ghosts of a similarly troubled time.
“Downtown Denver was dying. That’s what I walked into.”
In the early ’80s, a rising young politician named Federico Peña challenged the Denver electorate to, in the words of his mayoral campaign, “Imagine a Great City.” At the time, that took some serious imagination — but… challenge accepted.
LoDo, as a neighborhood, was the spark of an idea. A Major League baseball team, much less Coors Field, remained years away. Ditto for the Central Platte Valley. Downtown suffered from the perception that its streets were unsafe, an idea perpetuated by the reality that after dark, they were mostly empty.
In Peña’s first term, oil prices plummeted below $10 a barrel, reversing the oil-and-gas boom cycle that had transformed the city’s skyline in the 1970s and triggering the worst economic bust since the Great Depression in the 1930s. Office vacancies, foreclosures, unemployment. Everything but locusts.
“Downtown Denver was dying,” Peña recalled. “That’s what I walked into.”
By the time Peña began his first term in 1983, his top two priorities were reviving the downtown economy and creating a regional destination shopping center in Cherry Creek to entice the return of retail outlets and recapture the sales tax revenue that had slipped away to the suburbs.
The Downtown Denver Partnership and Metro Denver Chamber of Commerce set up an office to offer small business loans. When John Hickenlooper, then an out-of-work geologist with an idea for something called a “brew pub,” sought to launch the Wynkoop Brewery, what’s now a LoDo landmark opened in part because of a loan from the city’s Office of Economic Development, Peña said.
Once, downtown had been a retail paradise. Department stores like May D&F and The Denver anchored other popular outlets like Montaldo’s, J.C. Penney and Neusteters. Although the city landed Lord & Taylor and Neiman Marcus for Cherry Creek, the narrative of a dying downtown persisted — until Lower Downtown won status as a historic district in 1988 by a narrow vote of the city council, triggering incentives for development that would transform a former skid row into a cluster of high-end lofts and condos that, by 2015, would claim more than 22,000 residents.
Meanwhile, the Colorado Rockies arrived and Coors Field opened in 1995 at 20th and Blake streets. Developers took a gamble on previously moribund chunks of downtown real estate all around it. The Central Platte Valley, then a gritty collection of railroad tracks through 600 undeveloped acres, underwent a massive facelift that included Elitch’s amusement park, and eventually light rail that connected the far reaches of the metro area to Denver Union Station.
“The good news,” Peña said, “was that subsequent mayors, (Wellington) Webb, Hickenlooper and (Michael) Hancock, all followed that vision, and turned the Central Platte Valley into downtown as we know it today.”
In a sense, Denver had little choice but to look inward. In 1973, Freda Poundstone, a conservative activist, lobbyist and eventually mayor of suburban Greenwood Village, rallied the suburbs to rebuff any attempts by Denver to annex land. The so-called Poundstone Amendment, whose advancement also had racial overtones as Denver began court-ordered school busing, halted urban expansion in its tracks.
That made reimagining its current neighborhoods, including downtown, imperative.
“In a sense, it was a blessing,” Peña said of the change to the state constitution. “Had we not had the Poundstone Amendment, Denver would have become a large, sprawling city like Houston. Government then focuses on the outlying areas and sometimes forgets the inner city. The reverse happened to us.”
The crucial ingredient was people. As LoDo and other nearby areas thrived, residential development — and residents — followed.
“We believed that to make Denver a ‘24-hour city’ — that’s the expression we used to use — we had to have people living downtown,” Peña said. “I believe downtowns are a city’s heart and soul.”
“Just sitting there, waiting for a customer”
Bryan Leach, CEO of shopping-app developer Ibotta, realizes how vital his company and others are to downtown’s ecosystem.
About half of the businesses within a five-block radius of Ibotta’s 18th and California streets headquarters are closed, either permanently or temporarily, he said.
Ibotta’s staff will work remotely through at least January, but Leach said he is looking for ways to support local businesses. At its company-wide town hall Thursday, Ibotta purchased tea cakes from Miss Peabody’s Southern Tea Cakes in Denver and had them delivered to every full-time employee’s home.
“We’re trying to keep as many small businesses in business as we can,” said Leach, whose company relies on the success of retailers. “There’s no question that, yeah, we’re part of the devastation that’s happening and nobody’s very excited about that. I think we all would love to be (downtown) and be supportive. I do go in from time to time and I see the guy at Ink (coffee shop) just sitting there, waiting for a customer. It’s pretty tough to see.”
Leach estimated that about 90% of downtown companies are “still fully remote with the exception that you can voluntarily come in.” Since March, he has met regularly with a group of executives to strategize how to run a business during COVID-19. The group represents about 100 businesses, mostly with downtown offices. “But I’m not really aware of any tech company in the Front Range that can do their work remotely that has more than 5% of people back in the office.”
Ibotta was among the first companies in Denver to send its workers home in March, more than a week before Gov. Jared Polis signed a stay-at-home order on March 25 preventing non-essential office workers from going to the office. That’s 750 full-time and part-time employees, most who work in the downtown office.
There’s no official count of how many downtown restaurants have closed, but a survey by the Colorado Restaurant Association in June found that 56% of its restaurant members statewide fear that if coronavirus conditions don’t improve, they’ll permanently shut down within three months.
Many people are still choosing to eat at home or gather for backyard happy hours rather than eat at restaurants, said Sonia Riggs, the Colorado Restaurant Association’s CEO.
With the restrictions to limit indoor capacity and alcohol service, “restaurants on average say their sales are 40% lower than this time last year,” she said. For those that reopened, it was costly — the average amount spent by a restaurant on new safety precautions was $4,500, according to the association.
Denver lawyers at Messner Reeves LLC began offering free legal help to struggling restaurants since the COVID outbreak began. A couple hundred have taken them up on the offer to get rent deferments or negotiate leases due to lower sales, said Valerie Bromley, a partner at Messner Reeves specializing in real estate. But, she added, landlords are stuck too.
“Some of them have been able to apply for federal funding, which doesn’t pay their tenants’ rent but helps them in other ways,” she said. “But their hands are tied to some extent with their lenders because they still have to make loan payments and may not be getting any reprieve (from the bank) on those.”
In a stay-at-home world, bigger is better
Dee Chirafisi, founder of Kentwood City Properties, has for years specialized in putting people into the lofts, condos and luxury residences of downtown Denver. Since the coronavirus shutdown and work-at-home ethic reshaped residential life, her phone has been ringing with folks in search of something larger after discovering that it isn’t easy to both live and work in 600 square feet.
Oh, and they need a balcony.
“Mostly,” she said, “I’ve gotten a lot of calls saying, ‘Dee, do you have a good designer? I want to redo my loft.’”
Among her clients, she hasn’t seen any indication that they’re ready to abandon the active downtown atmosphere that people like Federico Peña could only imagine 40 years ago. But COVID-19 has given people pause, she notes, evidenced by what she describes as a lull in residential movement as they evaluate their needs in a post-coronavirus world that promises to retain some of its new conventions.
Some have decided to trade the vertical lifestyle for a house and a yard where they can really spread out. But not many.
“I feel like there’s a commitment of people who are already downtown to stay,” Chirafisi said. “They might redo their unit or move to a bigger unit. I’ve definitely seen that — sort of musical chairs.”
But she’s also seen the flipside of the work-from-home philosophy. She recently sold a unit to a couple that used to live in Denver but left to pursue jobs in another city. Now, they’re returning — without giving up the out-of-town jobs — “because they can work from wherever.” Fond memories of the downtown Denver lifestyle steered them back.
“But I haven’t felt anybody has given up on downtown, saying they want to sell because sports and the theater are closed,” she said. “People know it’s temporary. Sellers call me and say, ‘What should we do?’ If you don’t have to sell, why would you? Wait till things are back open and come to life.
“It’s a puzzle, put it that way.”
Through the more than two decades she has lived downtown, Chirafisi remembers during the Great Recession in 2008 people thought downtown real estate “would be in the tank forever.” More recently, she recalls the construction defects controversy in the legislature, when nobody was building condominiums over liability fears. That, too, passed.
“This is different,” she allowed, “but it’s another hiccup that downtown is dealing with. It’s certainly going to be a transformative time, but that’s not necessarily bad. Some of my favorite restaurants are doing amazing takeout.”
Subleases are on the rise. Are companies leaving downtown?
Downtown office leases often run five, 10 and 15 years, so there has been no surge in lease cancellations, if any, since workers were sent home in the spring, according to data from commercial real estate firm CBRE.
But the coronavirus impact accelerated trends that already existed in the downtown office market.
Oil and gas companies had been consolidating for years and unloading unneeded office space. The increase in subleases may have been inspired by people driving less and oil prices plummeting during the pandemic. There’s also an additional 1.1 million square feet of new office space that is under construction and will hit the downtown market within a year.
The number of subleases is continuing to rise during the pandemic, but it’s hard to sort out whether those are COVID-related.
“We had a 35% increase in sublease space between March and the end of July,” said Pete Schippits, division president of CBRE’s Mountain-Northwest Advisory Services. “That is certainly meaningful, but there’s always a base level of sublease space available in the market. The bigger jump is more on an annual basis. We’ve basically doubled our sublease availability in the last year.”
He’s not worried about the new buildings with the latest HVAC systems and upgraded spaces to support social distancing measures. It’s the older buildings that are already seeing a change, especially among tenants giving up their space.
No one has done an exhaustive survey of how many downtown companies are still working remotely. But anecdotally, Schippits said, in the large office towers he’s heard of ranges between a low of 3% to a high of 20% of the building’s tenants stopping by their offices daily.
“Most companies are not anywhere near their capacity. Most companies aren’t even hitting that (state mandated limit),” Schippits said. “You certainly see retail reacting to the fact that one of their main demand drivers is missing. They don’t have that supply of customers coming in.”
Office life isn’t over
Mayor Michael Hancock’s office is “not encouraging nor discouraging” businesses to return employees downtown, only offering guidance on current public health orders and best practices, said Leesly Leon, spokeswoman for the city’s Economic Development and Opportunity office.
Businesses downtown have not only been impacted by the pandemic, but “bear the brunt of the negative effects of the civil unrest that our city has seen in the last months, as well as being on the front end of witnessing and experiencing the effects of people experiencing homelessless,” she said.
The city has provided $7 million in grants to 1,100 small businesses from its emergency relief fund, and created the “temporary outdoor patio expansion” policy for restaurants that want to take up street and sidewalk space for tables.
Few companies have followed the route of Twitter, which announced in May that employees can work from home forever. Many, like Ibotta, Facebook and others, expect to be back and project a 2021 return to the office at the earliest.
Many can’t wait to get back to their downtown digs. And that includes Vertafore, a Denver-based insurance technology company acquired this month for $5.35 billion by Roper Technologies in Florida. Vertafore plans to stay downtown and bring its employees back to the office when it makes sense, said Jayne Rothman, the company’s general counsel.
“Our team had a smooth and successful transition to remote work, but we also love our office culture and unique office space in the heart of downtown Denver,” Rothman said in an email. “We are continuously assessing the guidelines and recommendations for in-person work, as well as the needs of our employees, and we’re looking forward to returning to our office when it’s safe, practical and feasible for our team.”
While working from home has proven to be effective for so many companies, there’s something about human interaction that many miss, said Kelly Brough, CEO of the Denver Metro Chamber of Commerce, which has 3,000 members representing 400,000 employees in the city.
“Even employees are like, ‘I kind of miss that energy and the exchanging of ideas,’” Brough said. “I mentioned this because what our companies recognize is there is a real upside of being physically together as well. We have not heard anybody talking about (no longer) needing space at all. I do think people are trying to explore, ‘Do I have the right amount of space?’ I don’t think anybody feels like they have enough information to make that decision yet.”
But there are conversations going on in offices nationwide about the evolution of the downtown office, said Brad Segal, president of Progressive Urban Management Associates. Segal worked for Downtown Denver Partnership in the early 1990s and now helps cities nationwide strategize their urban centers.
“We do think the five-day-a-week-in-the-office pattern is probably over. But we don’t think the office is over. We think people are going to be back in their offices,” Segal said. “If you have a business that needs teamwork, if you have a business that needs creativity or, importantly, if you’re entry-level or mid-level and you want to advance in a firm, we don’t know how you do that on a screen.”
Ibotta, meanwhile, has resumed hiring. It’s hoping to add 50 more people by the end of the year. Getting workers back to the downtown headquarters could mean closing up its open floor plan, or adding a hotel-type booking system where employees book a desk for a day or a few hours. But Leach said it’s too early to decide that.
“What is clear to me is that in-person experiences are very important to building a sense of shared mission and collegiality,” Leach said. “We’re committed to Denver, that’s for sure. And we’re also committed to having an in-person component to our experience when it’s safe to do so.”
Shared metro-area challenges
Peña, who went on to serve as secretary of transportation, and later, secretary of energy in the Clinton Administration, notes that the great city he imagined in the 1980s has been far surpassed by reality. He sees opportunities for downtown to not only adapt, but improve — though he adds that the solutions to downtown’s current challenges don’t lie in Denver alone.
He imagines the Regional Transportation District considering new approaches to moving people, especially if work-at-home protocols significantly curtail commuting. Could big, lumbering buses in some instances be replaced by more efficient, smaller-capacity shuttles?
The issue of homelessness, which has vexed multiple city administrations, can’t continue to fester as it has from the domino effect of the pandemic. Peña points to Austin, Texas, as a city that already took a different approach of dedicating a large parcel of land to provide not only temporary housing, but medical services and job training.
“We need to look at approaches like that,” he said. “We can’t continue with the homeless problem like we do today. We’re going to have to look at the issue as a metropolitan issue. It can’t be just Denver’s responsibility.”
Eventually, he said, economic stability will return.
“Will we have ebbs and flows? Yes, but you won’t see the high booms and the low busts as much as we’ve seen in the past,” he said. “The coronavirus has hit everybody around the country. As we grow out of it, our economy will come back. Companies will still want to move to Colorado and the metro area for all the reasons we know.
“That’s not going to go away.”