A Houston-based developer wants to build the tallest high-rise Denver has seen in 15 years on the fringes of Lower Downtown.
The Hines company on Wednesday unveiled plans for a 40-story building – the size of the Qwest Tower – on 15th Street between Lawrence and Arapahoe streets.
Construction could begin next year and be complete by 2003, Hines officials said. The company won’t start the project until it pre-leases 25 percent to 35 percent of the space.
“The timing is right,” said Charlie Baughn, senior vice president for Hines based in Houston. “Rents are stronger, vacancies are lower – there’s really demand for some high-quality office space.”
In some luxury office buildings, rents have topped $35 a square foot – a price that justifies new construction, Baughn said.
Hines plans to build the tower with Global Pacific Properties, the Denver-based firm that owns the land. Phil Ruschmeyer and Nathan Johnson, brokers at Frederick Ross, will handle leasing for the new Hines building. Pickard Chilton Architects of New Haven, Conn., and the Gensler architectural firm also have been hired.
Hines is one of several developers that have revealed plans for high-rise office towers Downtown in the last several years.
So far, none has started construction, even as three small office buildings being built in LoDo are nearly 100 percent leased.
Business leaders and real estate experts said the space is needed, with a 4 percent office vacancy rate Downtown.
“Today, and in the foreseeable future, the demand will be strong,” said Doug Wulf, a broker at Fuller and Co. “There’s no new product coming on the market for at least the next two years.” The development also will boost the profile of 15th Street, which has been overshadowed by the 16th Street Mall and the 17th Street financial district.
“I think it’s great for 15th Street,” said Anne Warhover, president of the Downtown Denver Partnership, noting that 15th also will benefit from a planned Marriott convention center hotel.
The lack of office space Downtown has worried business leaders.
“We certainly have had a concern about whether we could respond to office space needs because the other three office buildings under construction are almost fully leased,” Warhover said.
Hines has been trying to break back into the Downtown Denver market in the last few years. The development firm recently finished the first high-rise built in the southeast suburbs in more than a decade – a 13-story luxury tower on the northern edge of the Denver Tech Center.
The company is known for building the 52-story One Norwest Center – the most distinctive tower on the Denver skyline because of its cash-register shape.
In 1996, Hines sold its ownership stake in the building to its partner, Cornerstone Properties Inc., and later tried to buy it back. But the building was sold to Commonwealth Partners last year for $208.5 million.
Hines also recently tried to buy 17th Street Plaza, which was purchased by J.P. Morgan Investment Management for $135.5 million.
“We’re pretty optimistic about Downtown Denver,”
Baughn said. “We think we’ve got a great location next to LoDo, great views, good access.”
Only a handful of buildings Downtown are taller than what Hines plans, including the 42-story MCI Tower at 707 17th St.; the 43-story 1999 Broadway building; One Norwest and 1801 California Building (US West), which are both 52 stories; and the 56-story Republic Plaza, 370 17th St.
The last high-rise office building built in Downtown Denver was 1999 Broadway in 1985.
Three developers, including Hines, have been jockeying to build the next skyscraper.
Brookfield, which owns Republic Plaza and the World Trade Center towers, has proposed building a 25-story tower on land behind the Denver Pavilions entertainment and retail center. The plan was to start construction after half of the building had been preleased.
Brookfield has talked with tenants who could lease 175,000 square feet, officials have said. They could not be reached for comment Wednesday.
On the other side of the 16th Street Mall, a twin Tabor Center office tower has been contemplated since the 1980s, but no formal proposals have emerged.
Real estate sources have said Equity Office, owner of the tower, and Miller Global, a development company, are talking about building a mix of residential, office and hotel space in the second tower.
Equity officials would not comment on the Tabor project, said Terry Holt, a spokeswoman for the company.
“We wish them all the best with their project,” Holt said. “Hines is a terrific company.”
Brokers have pitched a handful of other sites Downtown for high-rise sites – fewer than a dozen are available. The Bank of Denver property, for example, on California Street between the Colorado Convention Center and the 16th Street Mall, is listed for $9 million and could suit a high-rise.