Who owns Colorado: Taking flight in a down economy



“That’s a crackerjack idea to put the new airport terminal under a tent. I like the ‘big top’ symbolism. You can almost hear the circus band playing ‘Entrance of the Gladiators’ and see the parade of trapeze artists, tumblers and wild animals.”
– Gene Amole in the Rocky Mountain News, Aug. 7, 1990

Back in 1990, when the great Gene Amole wrote the preceding passage about the then-new Denver International Airport, the economy was recovering from close to a decade of recession, and it was still in a shambles characterized by financial scandal, gyrating energy markets, and the near-collapse of lending, banking and real estate values.

Today, by contrast, we live in an era characterized by financial scandal, gyrating energy markets, and the near-collapse of lending, banking and real estate values.

Yet things are different this recession, mostly.

The first chapter in the life of Denver International Airport was noted for its savings and loans scandals, over-ambitious pols and thirsting business interests.

This time around our wallow in the depths of recession appears to have brought about an era splicing together a Carter-like malaise combined curiously with a Reagan-like sunny optimism for the long term – sometimes the long, long term – based on DIA’s passenger traffic, employment needs (30,000 workers today with the potential to double) and the singular significance of extending RTD’s FasTracks rail service from downtown to the airport.

What has not changed over the past 20-some years is the sheer huge-ossity, the enormousness or enormity, of most everything associated with Denver International Airport.
Giga-normous TOD (transportation-oriented development) projects on the drawing board or otherwise in early stages include Mortenson Construction’s $200 million, 500-room DIA Westin, comprising a hotel and a FasTracks station at the terminal’s south end.

The gargantuan plan’s piece de resistance, of course, is DIA’s agreement with famed Spanish architect Santiago Calatrava to design the integrated hotel-FasTracks train station.
Calatrava once was described by the Chicago Tribune as a magician whose “buildings and bridges make steel and concrete fly through the air with the greatest of ease.”
Calatrava’s designs indeed arouse.

“This is my passion,” Denver aviation manager Kim Day recently told 
the Denver Post. “It’s just the most magnificent example of how public infrastructure can be designed to be beautiful, utilitarian, efficient and 
intuitive to use.”

The High Point development, too, 
is huge.

But it, too, has suffered.

Through the downturn, “Our plan has remained largely the same, but obviously the economic climate has impacted some timing issues,” says Gardner Hammond, vice president of Newport Beach, Calif.-based LNR Property Corp., developer of 1,600-acre High Point, along Tower Road.
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“Certainly it has gone slower than we would have hoped,” Hammond says, and even in the Big Recession, High Point has scored some sales.

One-third of High Point is slated for residential development, and “we have sold some of that, and will start up homebuilding again in a couple months,” Hammond said.

The rest of High Point is reserved for retail, light industrial, office and hotel development. LNR Property has sold five commercial parcels since acquiring the acreage in 2006, including four hotels: a Holiday Inn and adjacent Holiday Inn Express; a Baymont Inn, one of two in Colorado; and Hyatt Summerfield Suites that opened this spring.

Yes, we are in a period of economic malaise, which is 1980s-speak for “things suck.”

That dampens but does not douse the native optimism of real estate developers.

“Lending and financial conditions are improving somewhat for existing product, meaning finances are being restructured on existing buildings, loans are being renegotiated. It has eased up a little bit there,” Hammond says. “The scenario is not looking too good right now for new development, and we have a little ways to go before we’re going to see much new development.”
Still, we can look down, down the road.

“We believe we’re in a great business park-type of location. With the proximity of DIA and the potential of that Gateway Area along Tower Road, we believe that time will see that evolve into a much more intensively developed area,” Hammond concludes.

Denver-based L.C. Fulenwider Inc. has been in the real estate development business since 1904 and has owned land near what today is DIA for almost that long. Taking the long view is taken for granted at Fulenwider.

Today, the company’s Denver International Business Center is big and getting bigger. In 20, 30 or more years the project at Tower Road and Pena Boulevard ought to grow into its 450 acres, guesstimates president Cal Fulenwider.

DIBC is a master-planned, covenant-controlled, mixed-use office park. His company began putting in infrastructure there in the mid-1980s, Fulenwider says.
The slowdown has had an impact, of course, but it has not put a hitch in Fulenwider’s git-go.

“With 100 million passengers, the development that is going to occur around the airport will be phenomenal,” he says. “FasTracks will be a critical piece of infrastructure – the icing on the cake.”
Fulenwider is one of two finalists for a FasTracks station, one of two optional stations in addition to the five FasTracks already has planned for its East Corridor.

LNR Property has proposed a stop near Himalaya Street and 72nd Avenue and near its projected High Point Conference Center Resort, which would include a conference center, hotel and mixed-use development.

Fulenwider has proposed a station near 64th Avenue and Peña Boulevard, by Denver International Business Center. The plan would add a 100-acre conference center, hotel and park, a 165-acre business campus, and 50 acres of mixed-use development to go with the office, hotel and restaurant development already in place. Fulenwider likes his plan.
“You would be able to live at the stop and walk across street, whereas High Point is maybe a half-mile from their stop,” he says.

But the success of the airport is the thing, Fulenwider says. And in May, DIA hosted about 4.4 million passengers, the second busiest May ever for DIA and a 4.3 percent jump over the same month in 2009. Meantime, passenger traffic through the first five months of the year rose 3.8 percent over the first five months of 2009.

“This is the only major airport I know of anywhere in the country if not the world that has shown increases in traffic since the meltdown in 2008,” Fulenwider says.

“People are still flying in this down economy,” he says. “Sure, our business is way off but our 800-pound gorilla is healthy and growing, and that’s the airport. Yes, we’ll get through this. Yes, it probably will take more time than we would want. But in the long-term scheme of things what other major airport out there has the real estate and all the entitlements and everything else in place to double? There just aren’t any.”
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Categories: Real Estate