Is Downtown Denver dead? Foot traffic, restaurants and retail sales bounce back but slow return of office workers

Not dead, just waking up after an extended, fitful nap.

That’s the picture economic development officials, real estate brokers, business owners and some urban dwellers want to paint of downtown Denver as the city seeks to turn the corner on the COVID-19 pandemic.

Those boosters are pushing back on the perception that has grown during the pandemic that the streets below Denver’s skyscrapers are lawless, desolate places. As City Councilman Kevin Flynn put it earlier this year, some people in his district in the far southwest corner of the city think of life downtown as a scene out of the post-apocalyptic movie series “Mad Max” — even if that is far from the daily reality.

Things are in motion in the city’s Central Business District and Union Station neighborhoods that back up the comeback narrative.

Foot traffic along the 16th Street Mall is climbing and crews will get to work on the mall’s long-talked-about upgrade this spring. Some downtown retailers are already daydreaming about the throngs of tourists and business travelers they hope will walk into their shops as the weather warms. After big losses in 2020, sales tax collections downtown shot up almost 15% last year. Arrests are up around Union Station but that’s a positive sign for some downtown residents who only a few months ago were sounding the alarm about safety in the area. Downtown office space is being soaked up at rates not seen since before COVID-19 was just an ominous warning on the evening news.

Despite the activity and the positive trend lines, some remain skeptical about downtown’s ability to regain its pre-pandemic luster. For some workers returning to office buildings they streamed out of in March 2020, the heart of the city is a different place today than when they left.

“I used to walk around and I could be downtown by myself and I felt OK before. It’s actually kind of scary to me now,” said Lisa King, a 57-year-old Lakewood resident who works in a law office in Denver’s Central Business District. “Because it’s dirty and there’s trash and I had to step over someone on the sidewalk this morning. It’s like what is happening?”

For downtown, it’s a numbers game. More people returning to the office means more customers for downtown shops and restaurants. More money being spent at existing businesses should mean more interest in vacant real estate. More eyes and ears on the street should equate with more safety. After the global pandemic, though, will downtown Denver ever be the same?

“What is happening here in Denver is no different than what is happening in every major downtown across the country,” said Kourtny Garrett, who took over earlier this year as the Downtown Denver Partnership’s president and CEO. She emphasized, “downtown Denver is set up only to succeed.”

Foot traffic has improved but not fully returned

The partnership, downtown’s chief economic development organization, has been tracking foot traffic along the 16th Street Mall since before the virus came along.

The early numbers tell the story of a city center being hollowed out. More than 328,000 spent time on the mall on Monday, March 9, 2020. That number dropped to fewer than 49,000 people three weeks later on Monday, March 30.

Since vaccines became widely available last spring, foot traffic numbers downtown have had a clear upward trajectory even if the emergence of the virus’ delta and omicron variants created some troughs in the trend line.

On Saturday, Feb. 19, the partnership counted more than 245,000 people downtown. That’s one of the highest totals not boosted by special holiday events since the pandemic began. From March 12 through March 18 this year, roughly 197,000 people walked along the mall on average each day. That’s still below the 257,000 person average seen over the first week of March 2020 but inching closer.

One segment of the downtown population remains stubbornly absent.

When bars, restaurants and offices shuttered due to public health orders, the number of employees that were tracked walking along the mall plummeted, falling from nearly 96,000 on March 9, 2020, to fewer than 20,000 on March 30. Weekday employees counts over the first week of March this year averaged around 37,000 people. It’s an improvement but still down more than 61% compared to the number of workers filling the city’s high-rise office towers, riding its trains and busses and frequenting its coffee shops and taverns in the first week of March 2020.

That exodus of people coming to work has both economic and psychological impacts, residents and business owners say. It sucks the energy from the neighborhoods while making challenges like unsheltered homelessness more visible.

“When we look at the impact of the pandemic on downtown, it’s really important to consider the impact of daytime population,” Garrett said. “When you lose 100,000 people in a matter of the 24 to 48 hours, that has a perceived and real impact for a short amount of time.”

Some employers are calling people back to their offices. Bank of America is summoning around 400 employees back to work downtown in its office in the Republic Plaza tower this month. The City of Denver, with a large office presence on the southeast side of downtown, will be requiring most employees to report to their workplaces at least two days per week starting on April 4. That, among other developments, gives Garrett confidence a turnaround is on the horizon.

Will offices fill again as work-from-home era remains?

Denver is not alone in its struggle to keep a downtown that is highly reliant on office real estate vibrant in the pandemic-driven age of hybrid work.

Tracy Hadden Loh is a fellow with the Brookings Institution focused on studying placemaking and commercial real estate. Washington D.C. and Chicago immediately come to mind for her as big cities with office real estate markets that have taken similarly painful hits. In a report published last spring, Loh highlighted that the daytime population in the nation’s capital fell 82% from February 2020 to February 2021.

Meanwhile, other cities have outperformed Denver through the pandemic, Loh said. Those include Minneapolis, where despite having slightly more office square footage than the Denver metro area in total, the office vacancy rate was almost 5% lower last spring.

Denver’s struggles, particularly downtown, can be attributed, in part to the fact that the city has a high concentration of people in office jobs. Roughly 57% of Denver workers are in fields traditionally tied to office space according to Loh’s research. That trailed only a handful of cities including Washington D.C., and Bay Area tech hubs San Francisco and San Jose, California. That means a market very much at the whim of disruptions like COVID-19.

“Denver is pretty out there on the fringe,” Loh said. “I would definitely list it as one of the five most exposed office markets in the country in terms of vulnerability to office market shifts.”

In downtown Denver specifically, 24% of office space was vacant at the end of 2021 when offices listed on the sublease market were factored in, according to real estate services company CBRE.

Some companies may end up with smaller footprints, either because a portion of the staff works remotely or because they have just adapted to more efficient floor plans, Loh said. While the downtown vacancy rate is high now, Loh does expect Denver to bounce back. The city is still growing and remains attractive to companies in key sectors of the knowledge economy like tech and legal, Loh said.

“I don’t have long-term concerns about that relatively high vacancy because new demand will absorb that vacancy,” Loh said of the downtown Denver market. But, she added, “we’re not going to be measuring this in months. We’re definitely going to be measuring this in years.”

Real estate professionals working downtown point to recent numbers that indicate the bounceback is underway.

Conventions, corporate meeting bookings return

Visit Denver, the city’s convention and tourism bureau, is also preaching cautious optimism for the rest of the year. The organization, which books events for the Colorado Convention Center, was excited about 2022 before the delta and omicron variants wiped out some major convention center and hotel meeting business in the first quarter of the year.

Now Visit Denver’s president and CEO Richard Scharf is hanging his hat on an uptick in small and midsized corporate meetings coming back. The pandemic has already cost the city and state roughly $1.4 billion in convention-related spending to date, Scharf estimates. This year may finally be the year the bleeding stops and things normalize.

Like office workers downtown, business travel remains a missing piece of the city’s visitor puzzle since COVID came along. The economy, weighed down by inflation and rising gas prices, could drag down business travel demand despite easing COVID restrictions. Add in the popularity of hybrid in-person and online meetings and you have a recipe for uncertainty. One meeting client recently told Scharf attendance at an event they have booked for Denver this year could be up 40% or down 40%, the CEO said.

But hotel occupancy rates over the first two months of the year provide a glimmer of hope in spite of those challenges. Downtown Denver hotels saw 48.9% of their rooms booked over the first two months of the year, according to a report provided by Visit Denver. Hardly stellar, but still a major increase over 30.2% occupancy rate downtown hotels experienced over the first two months of 2021.

“Overall in ’22, we’re still a little bit in transition but we’re excited about the way at least the convention and meeting side is going and I think you’re going to see another strong summer of leisure travel,” Scharf said.

Downtown, police combat crime and perception

A good number of travelers into the city, both business and leisure will be coming through Union Station. The transit hub became a focus for law enforcement at the end of 2021. A shutdown of Civic Center Park contributed to funneling drug activity, harassment and other unwanted behavior to the area, especially in and around the underground bus terminal. The conditions drove public outcry from groups including Regional Transportation District workers and residents of nearby condo buildings.

In response, the Denver Police Department stepped up enforcement around the station. The department touted making 42 arrests on Feb. 23 alone. Between Jan. 1 and Feb. 23, DPD made more than 500 arrests on the station grounds, department officials said.

“The Denver Police Department, Mayor Hancock and city partners have vowed to address illegal activity and other challenges at this vital transportation and business hub, and yesterday’s arrests demonstrate our commitment to curbing crime and making this space safe for everyone,” Denver Police chief Paul Pazen said in a statement on Feb. 24, vowing to continue the focus on the area.

Crime rates downtown fell when the pandemic set in in 2020 and there were fewer people in the area. But they rose again last year, surpassing pre-pandemic levels.

In 2019, the Central Business District and Union Station saw a combined 5,155 reported criminal offenses, according to Denver Police Department statistics. In 2020, the number of offenses fell to 4,366, a 15% decrease. Last year, the total was 5,551, up more than 7.5% over 2019.

In each of those years, violent crimes made up a small portion of total offenses but the number of violent crimes has been slowly rising downtown, statistics show.

Cops are cracking down at Union Station and many neighbors are big fans

If the first two and a half months of 2022 are an indication, crime statistics will be much higher than 2021. Denver police have already recorded 1,421 offenses in Union Station and the Central Business District as of March 14. That includes 385 drug and alcohol-related offenses in the Union Station area alone.

Those numbers reflect the Denver Police Department’s targetted crackdown in the area. On a per-square-mile basis, people are being arrested for drug and alcohol offenses in the Union Station area at a rate that is 17 times higher than any other neighborhood in the city this year.

That heavy-handed response is welcomed by some downtown residents.

Marc Spritzer lives in the Coloradan condo building that overlooks the Union Station bus terminal. He and neighbor Billy Kurz last year launched the Safe, Clean and Compassionate Committee, a wing of the Lower Downtown Neighborhood Association dedicated to cleaning up trash in the Union Station area and also inviting people out for coffee meet-ups and dog walking events — things they hope help make downtown feel safer and more inviting. So far, around 2,600 people have interacted with the group either online or in person, Kurz said earlier this month.

The police presence around Union Station is starting to turn things around, Spritzer said, even though he laments how quickly people who get arrested are released on what he feels are inappropriately low bond amounts.

“I think the idea downtown is dead is slowly changing,” Spritzer said, pointing to nearby restaurants like Three Saints Revival and Ghost Donkey (inside the Coloradan building) that are often full these days. “Things are definitely not dead.”

The number of diners in seats isn’t the full story of the downtown restaurants scene

Spritzer and Kurz highlighted busy restaurants as a positive sign for downtown life in the months ahead. The Downtown Denver Partnership has also touted the scarcity of reservations at downtown hot spots in recent months.

But the Colorado Restaurants Association says the industry’s bounceback — both downtown and across the state — has not been as potent as chefs, waitstaff and dishwashers need it to be. The industry’s recovery has been marred by labor shortages, rising food costs, debts accumulated during the pandemic, and recent spikes in COVID-19 infections. More than half of restaurants in the state are considering closing permanently within the next year, according to the association.

Data collected by restaurant reservation platform Open Table shows that Denver’s restaurant scene — downtown and in every other neighborhood — is rebounding better than those of some other major American cities.

From Feb. 24 through March 9, the number of people sitting down for meals in restaurants that use Open Table swung significantly on a day-to-day basis. But on average, the number of seated diners in Denver eateries over that two-week period was down less than 2% compared to business levels three years ago.

By comparison, the average number of seated diners at restaurants in Atlanta during that period was down more than 15% compared to 2019. In Chicago, it was down more than 32%, according to the Open Table data.

That data doesn’t mesh with Alex Seidel’s experience running his Mercantile Dining & Provision inside Union Station.

The award-winning chef opened Mercantile in 2014 as one of the debut tenants in the just-renovated transit hub. The restaurant has room for 120 people inside and 80 or so more on its patio, said Seidel.

He estimated business is between 50 and 60% of where it was in 2019. A big reason for that is it is not open on Sundays or Mondays right now. The number of diners isn’t there to justify it, he said.

“Mercantile is a pretty large result so you have to be careful in how you operate it,” he said. “When your payroll is what it is to be able to staff it, do you open on a Sunday or Monday when there’s not a lot going on?”

It’s a different experience with his much smaller Fruition Restuarant, located on East Sixth Avenue on the northern end of the city’s Country Club neighborhood. The 48-seat establishment was occasionally bringing in more revenue than Mechantile during the peak of the omicron wave in January. Seidel called it “the worst month that I can remember running a restaurant.”

There are reasons to be hopeful about downtown, Seidel said. The city’s efforts to crack down on crime outside Union Station and a new, more vigilant security company working inside the building have made an impact. With the omicron wave in the rearview mirror, Seidel noted his wife is returning to her work at an office in the Denver Tech Center. She’s excited after two years away. He’s hoping people who work downtown will feel the same if their companies call them back to their offices.

“Any downtown with no people has zero energy, and we’ve experienced that,” Seidel said. “We’re hoping for a strong, busy summer.”

Office space vacancy surged in 2020

The downtown office market got the wind knocked out of it in 2020. The amount of rented space available for sublease jumped 33% between March and June of that year, from roughly 1.2 million square feet to more than 1.6 million square feet, according to figures collected by real estate firm CBRE.

That wave crested in the middle of 2021 when just shy of 1.96 million square feet of space was available for sublease.

Anthony Albanese, a senior vice president based out of CBRE’s Denver office, said part of the glut of sublease space hitting the market over the last two years could be pinned on consolidation in the oil and gas industry, not a broader rush to vacate space in the wake of the pandemic.

That industry roll-up included moves like Denver-based Bonanza Creek Energy and Extraction Oil and Gas Inc. merging to form one company, and then that company, Civitas Resources, buying Denver-based Crestone Peak Resources a month later last spring.

Whatever the reason behind the mass emptying, some big chunks of sublease space downtown have recently been scooped up, Albanese said. As of the end of 2021, sublease availability downtown had fallen to 1.53 million square feet, CBRE’s numbers show.

Overall leasing activity is picking up steam. During the final three months of 2021, companies inked deals for more than 700,000 square feet of office space in the market, the largest total claimed since the third quarter of 2019, according to CBRE’s year-end report.

The biggest lease of the quarter came on the east side of Broadway, where the Colorado Department of Health Care Policy & Financing took on 135,000 square feet in the building at 303 E. 17th Avenue. But the Central Business District saw some big leases too. Clinical research company Medpace signed a deal to sublease 47,000 square feet of space in the City Center tower at 717 17th St. Asking lease rates were higher at the end of the year than they were pre-pandemic, according to the CBRE’s research.

Office leasing is rebounding as companies, young workers still flock to Denver

On a Friday afternoon in early March, temperatures hovering in the 60s, a busker played cover tunes on guitar on the 16th Street Mall as couples ate on nearby patios and families walked by with shopping bags.

Isabela Taylor was among the crowd, carrying some merchandise she picked up from fast-fashion retailer H&M. The 24-year-old moved to Denver from San Diego in February to take a sales job with a tech company. She spent much of her first week in Denver exploring the Central Business District, where her new office is located.

“I just love the city vibe of it,” Taylor said. “It kinda looks like a smaller version of New York.”

Urban centers across North America suffered during the pandemic, Albanese said, but he feels Denver is positioned for a strong rebound because it still offers the quality of life that attracts young, educated workers like Taylor. Employers tend to follow that talent.

“We’re still looking at a lot of coastal companies, companies from California, Chicago or New York, looking at adding or expanding their presence in Denver,” he said. “If you do a demographic map of Denver and you’re looking for optimal commute access for access to highly skilled labor there really is no better location than downtown still.”

It may be easier for new arrivals like Taylor to adjust to the city than long-time workers returning to downtown after a long hiatus in Albanese’s estimation.

“There is no doubt perception is a big piece of the equation,” he said. “There are people that used to come downtown every day that haven’t been down there for two years. Maybe they came down once to collect stuff from their offices and that was before the city really started to lay out its plan for making sure downtown feels as comfortable as it did pre-pandemic.”

Albanese also noted there is a chicken-and-the-egg relationship between office space and retail downtown. Companies want to locate their offices in places near coffee shops and other things that will support their workers and make them want to come downtown but shops need customers to make it worth their while to open.

Ultimately, retailers are waiting for office to come back in certain parts of downtown but it is hindering those offices from coming back until the retail is open,” he said. 

New solutions emerging for breathing life into downtown retail

The Downtown Denver Partnership’s Garrett points to big projects on the horizon that could rev up the energy and economic activity downtown.

Some, like The 5280 Trail around downtown, are likely years away from fruition but the overhaul of the 16th Street Mall will finally get underway this spring. Construction fencing will be going up around some blocks in April, officials said. By the end of 2024, the mall, the backbone of downtown, will sport a new layout and more trees aimed at making it more comfortable and safer. 

The project is viewed as key to the mall’s future but will bring disruptions of its own just as downtown businesses struggle to regain their footing. 

The Popup Denver program, also launching this spring, was created to counteract the impacts of that project, the economic blows dealt by the pandemic and the broader struggles of brick-and-mortar retail in an increasingly online world, according to the program’s state goals.

A joint effort between the partnership, city and commercial landlords downtown, Popup Denver is making five Central Business District storefronts available to local businesses and artists on short-term leases with free base rent. They will be awarded $20,000 in grant money to pay to help get their stores off the ground. Those five businesses could be open by June, according to  Bob Pertierra, the partnership’s head of economic development.

“Obviously, coming out (of the pandemic) we want to activate the street as much as we can,” Pertierra said. The program’s focus is on bringing in “local small businesses that reflect what Denver and Colorado are all about,” he added.

Officials with partnership insist Popup Denver is not evidence that there is weak demand for storefronts downtown. The first phase of the program was supposed to include more locations but some landlords pulled back believing they could find market-rate tenants, they say.

Just under 7% of all the retail space in the Denver metro area was vacant at the end of 2021, according to CBRE data. But the central Denver submarket — which includes downtown — had a 9.3% vacancy rate at the end of the year.

City sales tax receipts show that downtown retailers had slower years than their counterparts in other sections of Denver in 2021. Clothing and accessory stores citywide brought in more than $29.2 million in tax revenue last year, up 7% over 2019, according to data provided by the city’s department of finance. Zooming in on the 80202 ZIP code that covers the Central Business District and Union Station, sales tax collections from retail stores hit $5.1 million last year. That’s better than the $4.4 million collected in 2020, but still down nearly 14% compared to 2019.

At Mt. Everest Imports of Himalaya, owner Shyam Shrestha is looking forward to summer just like Seidel. The shop, which specializes in jewelry, clothing, and other items from India, Nepal and Tibet, has been welcoming customers on the 16th Street Mall for more than 25 years.

The summer of 2020, when the George Floyd protests resulted in looting and vandalism along portions of the mall, was a hard time for the store. Without the Paycheck Protection Program, the business would not have survived, Shrestha said. Last summer, things bounced back. Heading into what he hopes is a strong convention and tourism season, Shrestha said he is bringing in new inventory this year.

“My business is doing good,” he said. “We are very, very optimistic.”

Some negative perceptions of downtown persist — and maybe always will

For some in the suburbs, the prevailing sentiment is that the heart of Denver is a place to avoid. Shoppers in Lakewood’s Belmar earlier this month threw out words like dirty and dangerous when asked what they thought of downtown.

Crime was one of the first things that popped into Tiffany Wells’ head. The 33-year-old is a former resident of the Capitol Hill neighborhood and increased crime is just one thing that makes downtown less appealing to her than it was when she lived nearby 15 years ago. The highly visible gulf between the haves and have not is also a factor.

“It has changed a lot,” Wells said. “It used to be punk kid-friendly. Now it’s snooty and hipster.”

Wells still visits downtown occasionally with her boyfriend, mostly to check out museums, she said. The Navy veteran would much rather enjoy whiskey and a movie at home than spend hundreds of dollars at bars and restaurants in LoDo these days. Her last visit to Union Station was memorable for the wrong reasons.

“I saw people using meth right off the stop,” she said. “That was something I never used to see. People would walk down the street with joints and no one would care. This was smoking meth right in what’s supposed to be a fancy train station.”

Terry Hildebrandt has been advocating for stricter enforcement of drug laws and the city’s urban camping ban in recent months, regularly signing up to speak as part of the Denver City Council’s weekly public comment period.

An executive coach and business consultant, Hildebrandt lives and works in the Golden Triangle neighborhood just south of Civic Center Park and the Central Business District. He said he was considering selling his condo and leaving Denver last year because of the amount of illegal camping and open drug activity in his neighborhood but instead joined with others concerned with the state of the city to form the group Citizens for a Safe and Clean Denver.

He feels the increased police activity downtown is having a positive impact. He’s hoping it lasts but isn’t counting on it.

“My main concern is that as warmer weather approaches this spring and summer, we will see a dramatic increase in illegal street tents, public drug use, and the associated drug dealing and other crime that comes with it,” he said.

Unsheltered homelessness is a reality in many major cities across the country and around the world.

Loh, the Brookings Institution fellow, said that COVID-19 operated like water in a crack, pouring into America’s existing issues with income inequality and housing instability and making them worse. At the same time, it made traditional solutions for people facing homelessness like group shelters less safe.

“People experiencing homelessness, especially those that are unsheltered, they congregate in downtowns because they are in a survival situation where they need really good access to the things they need to survive,” Loh said, listing things like access to information, services and security. “There is a distinction between people who have problems and people who are problems and it’s really important not to confuse the two. People who are experiencing unsheltered homelessness are far more likely to be victims of a crime than to commit a crime.”

There is nothing wrong with downtown, as is, some say

Over the years, chef José Avila has had opportunities to open restaurants in Denver’s burgeoning suburbs. Those places have never really appealed to the Mexico City native. He likes the romance of old buildings. His most recent concept, La Diabla Pozole y Mezcal is in a century-old structure in the 2200 block of Larimer Street. There are few other restaurants in that enclave of downtown. The business’ next-door neighbor is a pawn shop. La Diabla doesn’t even have a sign, relying on social media and word of mouth to attract diners, Avila said.

But he wouldn’t have it any other way. The block is surrounded by apartment buildings occupied by mostly young people with disposable income. And since opening this past summer, Avila has found that people will come from far and wide to try the pozoles, tacos and cocktails on his menu. On a recent Tuesday, the dining room was full despite frigid temperatures outside.

Is downtown dead? That’s a hard no, Avila said.

“You hear things like ‘Downtown stinks. There is a lot of homelessness,’” Avila said. “Yeah, downtown is like that. Here and every downtown in the world is like that. That’s just part of the essence of living in the city. I am from Mexico City. I love that. It’s part of the experience of going downtown.”

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