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  • Thursday, October 18, 2018
    Building an aerotropolis: Development surge boosts DIA region as major economic hub
    "A sleeping giant" — That’s how some describe the land that surrounds Denver International Airport.
     
    As infill space in Denver runs out, the area around DIA has emerged as one of the Front Range's hottest areas for new development.
     
    Of the airport’s 34,000 acres, 16,000 can be used for non-aviation purposes — and for the last two years, airport officials have been taking a “strategic and measured approach” as to how that asset can be utilized for both the city and residents to enjoy, according to Darryl Jones, DIA’s chief commercial officer.
     
    But development of the airport property itself can’t be residential, due to noise and safety issues.
     
    So airport officials are creating a master plan for those 16,000 acres. Buildout of the massive project — one that is sustainable well into the future — will likely take 40 to 50 years.
     
    “We get to pass it on as [a] legacy for future generations,” Jones said.
     
    The plan, which incorporates what Jones calls "placemaking," has been concentrated into specific districts, each with its own special character.
     
    The development process will be twofold, Jones said. Developers could come in unsolicited, or the airport might roll out individual sites and make them available for development consistent with the overall plan.
     
    56th and Peña
    Right now, the airport is making a 3.8-acre parcel available to developers near 56th Avenue and Peña Boulevard. A committee of people from the airport, city and the community will look at proposals and decide which best fits the long-term vision of the stakeholders.
     
    Initial planning for the Peña Boulevard core includes the following elements:
     
    • East Approach, 250 acres, will have 2.5 million square feet of development including office, industrial, hotel and a conference center. Airport plans call it a "signature destination for global business at Denver’s front door."
    • West Approach, 150 acres, will have 1.6 million square feet of development including office, light-industrial, research and development, and co-working space. Airport plans call it a "regional office headquarters [with] hospitality services, and retail."
    • Second Creek Campus, 360 acres, will have 4.5 million square feet of development including research and development, manufacturing, education, technology and research. This would be ideal for a corporate campus, Jones said. Plans for the airport development describe it as "a hub of research, development, education and manufacturing."
    • 72nd and Himalaya, 355 acres, will have 6 million square feet of development that will accommodate a diverse mix of commercial uses, including office, retail, industrial and entertainment
    Beyond the 16,000 acres
    Growth moving east toward the airport is a necessity, said Mike Kboudi, executive director at Cushman and Wakefield. He said that, about five years ago, he started noticing a shift in interest and activity in that direction.

    AEROTROPOLIS TAKING OFF
    As infill space in Denver runs out, the area around DIA has emerged as one of the Front Range’s hottest area for new development. Of the airport’s 34,000 acres, 16,000 can be used for non-aviation purposes.

    “We always knew at some point that Peña Boulevard. would be a road that looked like every other main road leading into an airport around this country,” he said, adding that it’s finally starting to happen.
     
    Kboudi said that most of the major land deals in the region have already happened, such as High Point, Painted Prairie, Aurora Highlands and Green Valley Ranch. Large swaths of land are privately owned and not currently in the development mix, said Chris Cowan, executive managing director at ARA Newmark.
     
    But in 10 to 20 years, the area will see a complete transformation.
     
    “It feels like it’s finally ready to explode out there,” Kboudi said.
     
    Jim Capecelatro, senior managing director at Cushman and Wakefield calls the area the "hole in the donut."
     
    Prepping for the 'aerotropolis'
     
    The Aerotropolis Regional Committee, made up of elected officials from Adams County, the airport and the cities of Aurora, Brighton, Commerce City and Denver, is tasked with driving a coordinated effort to promote and market development opportunities on and around the airport — by working together on the coordination of strategic land use, infrastructure planning and marketing efforts.
     
    The committee has three major goals, according to the committee's stated objectives:
     
    Establishing a "joint vision for an internationally recognized and competitive 'aerotropolis that will be a significant asset for the region; responsible, thoughtful growth on and around the airport through a sustainable model for coordinated development that reflects the values of our collective community; and attraction of primary employers and jobs that will continue to strengthen Colorado’s economy.
     
    Last year, the committee started a three-phase plan to create and implement a "strategic road map" for the aerotropolis. It's not defined or anchored by one development, said Andrea Tilliss, marketing manager at Aurora Economic Development Council, but will be made up many development efforts including commercial, industrial and some residential.
     
    "There are a number of ways in which this regional asset will impact the city, and the reason why we’re so excited is that it’s in a way, a culmination of all of the catalytic asset projects that we’ve already completed," Tilliss said, mentioning projects such as the Amazon fulfillment center, Panasonic, the Regional Transportation District's R-Line and A-Line, and the Gaylord Rockies complex. Though they are are all one-off projects, she said, they are what have together "brought eyes and attention on Aurora and the region."
     
    Mixing up the uses
     
    There are a unique mix of industries that already exist in the area, Tilliss said, and the growth of logistics and e-commerce is a "perfect fit" for the aerotropolis model because of the easy access to air and cargo. This empty acreage also presents an opportunity for innovation, Tilliss said, including technology and transportation.
     
    "It’s a blank canvas that we get to create," she said.

    Already underway in the area is Painted Prairie, a 628-acre mixed-use development that will include housing and retail, Green Valley Ranch, an existing but growing masterplan community, First Aurora Commerce Center, 138-acre industrial park going in about 10 miles south of DIA, and the 1,500-acre, master-planned business park Majestic Commerce Center just 5 miles south of DIA. There's also High Point, which will have both residential and commercial components, and Porters, a commercial development. Painted Prairie, High Point, and Porters were all mentioned as an important part of the aerotropolis area during a a Table of Experts panel titled “The Growth and Transformation of Denver’s Business, Political and Geographic Landscape.”
     
     
    Peña Station Next, a 382-acre transit-oriented, mixed-used development at the 61st and Peña Station, is also in the process of building out. It already has Panasonic Enterprises Solutions Co.'s 112,500-square-foot operations and technology center, and plans for 250 multifamily units. Under construction right now is McWhinney's 226-room Hyatt.
     
    Directly south of DIA at E. 64th Avenue and Jackson Gap Street is JAG Logistics Center at DIA, in the Porteos development, a commercial mixed-use development that was recently approved as an Opportunity Zone. The first phase of this development will be a speculative 188,000-square-foot building.
     
    Yuriy Gorlov, vice president of Aurora’s Economic Development Council, said that Aurora’s growth has been a long time coming. He said that Aurora has about 150-200 acres of developable land around its light rail stations, which offers a lot of potential for developers, as most of it is privately owned. He predicts the development will be a mix of multifamily, retail, and class A office users.
     
    Right now, Gorlov said a decent amount of development occurring is industrial. But he believes in the next five to to fifteen years, there will be a good amount of mixed-use development along the E-470 corridor. In addition to the aforementioned projects, Aurora also has the 1 million-square-foot Amazon fulfillment center near Interstate-70 and E470.
     
    Michael Wafer, executive managing director at Newmark Knight Frank, said that this is the metro's largest submarket for industrial real estate. But it's not the only thing the area offers or will offer as development continues.

    Commerce City opportunities
    Commerce City has millions of square feet of industrial warehouse space, said Jodi Hardee, interim communications manager at Commerce City. UPS, Shamrock Foods and FedEx are some of the area's top employers, she said. There is demand for mixed-use space in the area, Hardee said, but the biggest demand is for distribution. She mentioned McLane opening a food service and distribution facility at Nexus at DIA, an industrial park over 200 acres. Becknell Industrial recently purchased a site in the park for $6 million, with plans to construct a nearly 550,000-square-foot distribution facility. That industrial park is located just north of DIA's conceptual Second Creek Campus plan.
     
    There's also a 55-acre, in-fill development coming to the I-76 corridor, called Mid-Rail Industrial Park, located at 84th Avenue and Ulster Street in Commerce City.
     
    "We’re getting more and more interest in large chunks of property, more so than any other time in my career," said Michelle Claymore, Commerce City economic development director.

    In unincorporated Adams County, there's a 620 acre, rail-served industrial park that will be anchored by Rocky Mountain Resources.
     
    Hardee said that they'd like to diversify the economy a bit more, by attracting more corporate headquarters, office tenants and IT companies. While the city embraces its industrial heritage, it would welcome more —and different — users.
     
    Other developments near DIA include a $35 million apartment community at E. 56th Avenue and Tower Road and the 930-acre Sky Ranch development.
     
    Though Commerce City is competitive with Denver and Aurora, figuring out how to work together to attract more companies to the area as a whole is a great opportunity, Claymore said.

    A 'transformative' project
     
    According to Aurora Economic Development, the Gaylord Rockies hotel project will create thousands of permanent jobs and attract hundreds of thousands of visitors to the area.
     
    In a presentation given by Ryman Hospitality Properties (NYSE: RHP), the soon-to-be majority owner of the hotel, part of the rationale behind investing in the Gaylord Rockies was the property's proximity to 61.4 million annual passengers at DIA, the area's 31.7 million annual visitors, the metro's 1.3 percent population growth and 2.9 percent unemployment.
     
    The official opening date of the hotel is Dec. 18.
     
    Kboudi called the project "transformative," and said that we haven't even begun to see the effects of what the area will ultimately look like. He said it has already begun to transform the area into a place that's more than just a transition area between I-70 and DIA.
     
    "I would say that development was certainly beginning before Gaylord and the Gaylord then became a lightning rod for increased attention and activity," said Cushman's Capecelatro.
     
    The Gaylord has been "a huge catalyst" for Aurora, Gorlov said. He said it really put them on the map a few years ago.
     
    "Twenty percent of our call volume went up because we got the Gaylord here," he said, whether it was a Panasonic type deal, a JP Morgan data center type of deal, or an industrial deal.
     
    He believes that the entertainment district the Gaylord will create will spur more office development.
     
    "It's a game-changer for the city," he said.
    The timeline
     
    It's clear that development in the aerotropolis region won't be overnight.
     
    From what the public sees as true development, you have to back up three years, in terms of getting entitlement and lot infrastructure, Cowan said. To "unlock" these sites, which were mainly wheat fields, requires an "incredible amount of investment," he said, whether it's private capital or public dollars. It will require building roadways and utilities that don't exist about a mile out from the airport, he said.
     
    Projects in the works today began three to five-plus years ago. Cowan said it will likely take that same amount of time for the public to see vertical activity.
     
    Significant transportation plans are required to expand roads and open up the land "so it can be developed," Wafer said, which is why finding infrastructure and transportation solutions is a part of what the aerotropolis committee is working on.
     
    "We can coordinate infrastructure and transportation," Aerotropolis Regional Committee's Tilliss said. "These are of course two huge issues in the region, and we have to work together on them to make any progress."