Coming Soon: The Cherry Creek of the Future

Cherry Creek has come a long way from its origins as a farming community established as the town of Harman in 1886.

During the early 20th century, it was just a few houses, small farms and greenhouses on 320 acres. It was considered an economical place to live. 

Fast forward to today, and the town's founder, Edwin Preston Harman, likely wouldn't recognize the area, which has evolved as Denver's premier shopping and dining district and one of the priciest neighborhoods in the region to call home.

Cherry Creek is is undergoing yet another transformation with the development of new apartments, condos, office space, retail projects and a new hotel. The tony shopping district is experiencing the biggest construction boom it's seen in decades, fueled by developers wanting to create an environment where people can  live, work and play. The tony shopping district is experiencing the biggest construction boom it's seen in decades, fueled by developers wanting to create an environment where people can live, work and play.

Among the projects in the works are: 

• 3300 E. First Ave., the redevelopment of the former KeyBank building that will include 20,000 square feet of retail, refurbished office space and 172 apartments.
• 3033 E. First Ave., a retail and office building developed by Don Sturm, chairman and CEO of ANB Bank. The latest with the project is 26 apartments opened above the parking structure, seven of which Sturm is taking to create his own penthouse.
• 100 Saint Paul, a 150,000-square-foot office building being developed by Pauls Corp. and FirstBank.
• Steele Creek at First and Steele, a 12-story, 232 apartment complex being developed by BMC Investments.
• 245 Columbine St., the $60 million redevelopment of an old post office into a seven-story, 150-room luxury hotel.
• 250 Columbine, a 71-unit condominium project that includes 30,000 square feet of retail.

A couple of big nonprofits also plan to join The Denver Foundation in Cherry Creek. The Adolph Coors Foundation recently moved into renovated space in a building it purchased at Second Avenue and St. Paul Street, and the Anna and John J. Sie Foundation is planning a new five story-building at Second and Adams.

"Some very important groundwork has been laid for the redevelopment you see in Cherry Creek North today," says Julie Underdahl, president and chief executive of the Cherry Creek North Business Improvement District (BID). Founded in 1984, it was the first BID created in Colorado.

Underdahl points to $18.5 million in streetscaping and improvement projects, including lighting upgrades, street furniture and paving, in 2008 and 2009. The final phase of the project was the renovation of Fillmore Plaza, which enhanced pedestrian, event and retail activity. The projects were funded by bonds issued by the BID in 2006 that did not result in a tax increase.

"This BID was the first in Colorado to do that and one of the first in the country to do that," Underdahl says. "Typically a city would do that."

In all, there are about 1,500 residential units under construction. That number looms larger when you consider the BID has less than 100 residents today.

"There's been a pent-up demand, but the other thing that's happening is the Business Improvement District went through a new area plan," says David Steel, a partner in Western Development Group, which is building a 71-unit condominium project at 250 Columbine. In convention with the new plan, Denver City Council unanimously approved new zoning for the mixed-use district in late October.

Among the goals of the new ordinance is to enhance Cherry Creek North's character by offering building form options that create an incentive to provide street-level open space such as plazas and courtyards; make reinvestment economically viable by reducing off-street parking requirements and increasing maximum building heights; and creating height transitions  from the business district to the adjacent residential neighborhood.

To be sure, the demand for high-end residential in Cherry Creek is there. The $61 million Steele Creek development has 400 people on its waiting list, says Matt Joblon, BMC's chief executive. 

What BMC underestimated is the amount of parking the project would require. It planned for one parking space per bedroom, but now is considering valet for the project, Joblon says. "Most of these people have multiple cars," he says.

Transit -- or lack thereofCherry Creek is is undergoing yet another transformation with the development of new apartments, condos, office space, retail projects and a new hotel.

Regardless how many cars each resident has, the biggest challenge for Cherry Creek is transit. The neighborhood is not on the light-rail map. "There's a lot of room for improvement," says Underdahl. "Only 3 percent of people coming to Cherry Creek are using transit. It's actually fallen from 6 percent. That's an issue and an opportunity."

One possible solution is a "hop on, hop off" shuttle running every 10 to 15 minutes from Cherry Creek to Union Station, she adds.

The additional retail component of the projects is expected to increase Cherry Creek's retail inventory by 5 percent, or 120,000 square feet. The overall vacancy rate stood at 6.4 percent during the second quarter with median rental rates of $32 a square foot for small strip centers. However, prime locations can command as much as $70 a square foot.

While locally owned boutiques tend to cluster on Third Avenue, Second Avenue is favored by national retailers, says Susan Karsh, managing director of Newmark Grubb Knight Frank, a specialist in Cherry Creek North retail space. "Cherry Creek North has always been regarded as Denver's premier shopping district," she says.

A number of longtime retailers have thrived in the district. Those that have been in the area for at least 25 years include John Atencio, the Artisan Center, Pismo Fine Art Glass, Brass Bed, Antoine du Chez, Europtics, Wizard's Chest, Men's Warehouse and Continental Deli. And a number of new retailers have recently opened their doors.

One big difference is a newfound cooperative relationship between the Cherry Creek Shopping Center and the retailers in Cherry Creek North. When the mall came online in its current enclosed incarnation in the 1980s, many retailers on Second and Third avenues saw it as a threat. Launched in 2012, the Cherry Creek Business Alliance represents the first-ever collaboration between the mall and surrounding businesses, Underdahl says. "It essentially unified the Cherry Creek area from a business perspective."

And the boom goes on

Cherry Creek's office market also is strong, with a second-quarter vacancy rate dropping to 10.9 percent from 14.7 percent compared to the same period a year ago. Overall median rents increased to $27 a square foot, with Class A lease rates rising to $33 a square foot.

With the new construction, the office market will increase by about 15 percent by 2016, from roughly 2 million square feet to more than 2.3 million square feet.

The city has received an unprecedented request for building permits in Cherry Creek since the recession ended, Mayor Michael Hancock told a group of real estate professionals who participated in a walking tour of the district in September.

"This is the most important part of our city in terms of financial investment," Hancock says. "We receive more sales tax revenue from Cherry Creek than anywhere else in the city."

Last year, sales taxes in Cherry Creek North increased 9.2 percent, compared to a 7.5 percent increase in the City and County of Denver, according to the BID.

"Cherry Creek is really a microcosm of Denver, which also is experiencing a redevelopment boom," says Kevin McCabe, executive vice president and regional managing director of Newmark Grubb Knight Frank. "I don't think the general public has any idea of the scope of what's going on in Cherry Creek."



Note: An earlier version of this story incorrectly equated the population of the BID and the neighborhood.