22 January 2009

Anxious For The Neighborhood

In addition to the neighborhood where I live, in West Washington Park, I also spend a lot of time in the Southwest Capital Hill neighborhood where my law office is located.

The good news in the neighborhood is that in recent months we have added two new purveyors of pizza (one was previously a take and bake only pizza shop), and a new nightclub (Zen). We also have a large high end apartment/condominium high rise on the verge of opening.

The bad news in the neighborhood is that we have lost two of my favorite neighborhood coffee shops (although Avianos survives), an Oyster bar, a Chipotle clone, and one of Planned Parenthood's biggest offices in the state. We've also seen a neighborhood jewelry store lose its franchise, although it is still in business at this point.

But, all that is inconsequential compared to the ugly threat looming over our little part of the neighborhood.

My office is equidistant between the neighborhood's two largest employers. The Denver Public Schools have their administrative offices in a massive 1960s office building at 900 Grant Street. Anthem, which is Colorado's Blue Cross and Blue Shield affiliate and one of the state's largest health insurance providers, has a massive medium rise office building that takes up an entire block at 700 Broadway. The two office buildings together bring thousands of people to work in my neighborhood every day.

Neither DPS nor Anthem are at any risk of going out of business. But, like every enterprise these days, they are looking to shed costs.

Before being appointed as U.S. Senator for Colorado (he should be sworn in today), Michael Bennett, as superintendent of the Denver Public Schools, was seriously exploring a move of the DPS administrative offices at 900 Grant to vacant space in the District's many half empty high schools and middle schools. The move continues to make economic sense for DPS because the district has far too much real estate for its current student body, and a move from the 900 Grant building would disrupt students not at all, and would be most easily converted for use by occupants other than schools and colleges.

Meanwhile, the 700 Broadway building now has a "for lease" sign prominently displayed outside. And, since the building has basically only one tenant, and there is no sign that health insurance companies are making major layoffs, it is fair to guess that the whole operation may be relocating to cheaper offices elsewhere in the metropolitian area -- perhaps some Inverness or Denver Tech Center office park that has lots of empty space as a result of the economic downturn.

If both these possibilities come to pass (and I don't have enough inside information in either to put reliable odds on these things happening in the way that I fear that they will), the vitality of my day time neighborhood will be sucked into a giant black whole for a while, until these spaces can be filled with new tenants, which could take a long time in the current economy.

The Anthem departure could also produce a measurable reduction in Denver head tax collections, eat into sales and gas taxes these workers pay in the neighborhood which might migrate to the suburbs, and greatly devalue all of the commercial real estate in the neighborhood, which could eventually reduce Denver's property tax base.

It isn't clear that there is any room for municipal government intervention in either of these ugly possibilities. A DPS move from 900 Grant Street would hurt my neighborhood, but provide a boon to some other struggling Denver neighborhood and increase the financial stability of DPS as well. Anthem is free to locate itself where it wants, and the price it is paying per square foot to lease its old and new spaces probably overwhelms any kind of tax incentive that the City could provide it.

The one thing that the state, municipal and regional governments might consider, which could help my neighborhood, is to see if it might be possible to lease space in either of these buildings on favorable terms, consolidating from other locations. Both buildings are fairly convenient to downtown and key governmental buildings, while not being so close that it is possible to demand 80202 zip code rent premiums.

One could also imagine one or both of the city's daily newspapers, The Denver Post, and if it survives, The Rocky Mountain News finding a way to relocate from their expensive prime real estate signature office building next to the Wellington Webb building at Civic Center Park, to parts of one of these less prime locations.


Dave Barnes said...

If I were in charge at Blue Cross, I would move out of Denver.

Two words: Head Tax.

Anonymous said...

I believe the "for lease" sign at 700 Broadway is because they have always had a bunch of tenant space in that building, and they have a good bit available right now. Anthem doesn't occupy the whole building.