Neighborhood Report: Interlocken
Interlocken Business Park in Broomfield, Colo., continues to lure companies and jobs away from other cities and states.
The 900-plus-acre site in the Denver area’s northwest quadrant has the region’s lowest percentage of empty offices—and that vacancy rate is expected to drop further, according to Jessica Erickson, vice president of the Broomfield Economic Development Corp.
As of September, the vacancy rate for class A properties at Interlocken was 8.5%, compared to 16% marketwide and 14% for Broomfield as a whole.
The latest numbers reflect the addition of the 300,000-sq-ft Central Park Tower at 385 Interlocken Crescent, which opened in August and is 52% leased. Before the new building came online, the vacancy rate was closer to 5%, Erickson says.
“Listed lease rates have dropped some in recent years because of the economic climate, but overall they have remained relatively stable and competitive,” Erickson adds. “They’re generally below the rates in Boulder, downtown Denver and the Tech Center.”
Access & Amenities
Interlocken’s location provides companies with easy access to Boulder, Denver and the mountains, as well as Denver International Airport and Rocky Mountain Metropolitan Airport.
In addition to high-end office space and conference facilities, the master-planned office park features a 390-room hotel and 27-hole golf course.
The multi-tenant offerings have proved particularly desirable to medium-sized companies that need room to grow but are not big enough for buildings of their own, according to David Hart, a broker with CB Richard Ellis who handles the leasing for several properties in the business park.
“Companies want to be in nice, new spacious buildings, and those are hard to come by in Boulder, where growth has been restricted for many years,” Hart says.
The office park has 3.6 million sq ft of multi-tenant office space—of which roughly 300,000 sq ft was available as of early October. About 150,000 sq ft is located in Central Park Tower, with smaller blocks of space dispersed throughout the park.
That total excludes the owner-occupied headquarters of Staples, Level 3 and Oracle, the leading employers in the area. The majority of the 30,000 jobs in Broomfield is concentrated in the southwest quadrant of the city in and around Interlocken Advanced Technology Environment, according to the Broomfield Economic Development Corp.
Central Park Tower—which broke ground in December 2008 when construction of speculative office buildings along the Front Range had largely stopped—has essentially cornered the market on new Class A office space.
“We weren’t developing for the short term or trying to predict recovery in this region, says Will Friend, vice president and regional director of Franklin Street Properties, the Boston-area real estate company that owns Central Park Tower. “We approached this project with a long-term view that a LEED-certified, Class-A office building would have enduring value in this submarket.”
Franklin Street Properties also owns the office buildings at 380 and 390 Interlocken Crescent.
Meanwhile, Urban Frontier LLC chose a more conservative approach. The Denver-based development company postponed plans for a 180,000-sq-ft, LEED-certified office building at 575 Interlocken until tenants can be secured.
“We decided it was better to own a site and wait rather than have a building sit vacant for several months or longer,” says Garrett Baum, Urban Frontier managing partner. “We’re encouraged by the market though, and we’ve seen some improvement.”
Urban Frontier’s original proposal also called for a second building that would house a five-story, 170-room hotel, but the provider backed out, Baum says.
Baum remains optimistic, however, that the office project will move forward in the next 12 months, and the market will allow for a second office or hospitality building at the site.
Also on hold are plans for the “Eastlake | Interlocken” project, according to Charles W. Elder, senior vice president for Houston-based Hines, the project developer.
Hines purchased the 50-acre site at the east end of Interlocken in 2007 with the intention of developing a 185,000-sq-ft, LEED-certified, Class A office building, but the economy and real estate market collapsed in 2008 before the project broke ground.
“The project is pretty much shovel ready, but we’re waiting for the markets, both debt and equity, to recover further before we proceed,” Elder says. “We do like the Northwest Class A office submarket, however, because of its historic resiliency.”
The upside of builders remaining cautious for several more quarters is that space is in stable demand and vacant space is being absorbed relatively quickly, according to commercial agent Frank Kelley, senior vice president with the Denver office of CB Richard Ellis.
The northwest submarket of the Denver metro area, where Interlocken is located, is outperforming the rest of the market in terms of net absorption—the difference between the amount of space leased and the amount given up through departures, Kelley says.