Colorado developers are eagerly awaiting a $4.7 billion rail expansion that will close the gap between suburban Denver and the city. Nearly 120 miles of railroad track will be built between the Mile High City and dozens of high-prairie communities under the FasTracks initiative.
FasTracks is one of only five projects that the Federal Transportation Administration has publicly “recommended” for initial funding in 2005. As a result, Denver is likely to receive as much as $249 million in federal funds every year until the project is completed. The other favored transit projects are slated for San Diego,, Salt Lake City and Beaverton, Ore.
Denver's new tracks are projected to carry as many as 150,000 commuters a day by 2017, and commercial developments are on the drawing board at 32 of the 70 stations along the rail lines. Five rail lines will originate from Denver to the west, north and east and they are expected to promote a flurry of urban villages featuring multifamily-style development near the light rail stations.
“This is goodfor the Denver area. But now that they have the agreement, they need to develop a broader vision on how to pace the developments,” says Robert Dunphy, a senior resident fellow for transportation at the Urban Land Institute (ULI). He adds that the FasTracks initiative is one of the largest confirmed transit expansions in the nation, so other cities are keeping a close eye on how it unfolds.
Real estate developers are betting that mixed-use developments along the transit corridor will be in demand. Shea Properties is developing a $140 million transit-centered project with some 300,000 sq. ft. of commercial space in Arvada, located eight miles northwest of Denver.
Jeff Willis, president of land acquisitions at Shea Properties, says that the development began last fall before FasTracks was approved. The Arvada project is already located near a busy highway interchange, he adds. Still, he believes that the Gold Line — which will pass close to the Arvada development — can only bode well for the project.
“It's definitely going to have an effect. We're looking at other metro-area locations that are near the planned lines, too,” says Willis. He believes that downtown Denver will also benefit from the enhanced rail hub, which should help spur more development around the central station. He also anticipates that residential density near each station will increase as a result.
“You really can't overestimate the impact of the FasTracks project since all of these train lines will converge in downtown Denver,” says local developer George Thorn, president of locally based Mile High Development Inc.
While FasTracks is expected to attract mixed-use development along the rail spurs, Thorn believes that Denver's CBD will also benefit. It could certainly use a boost, given that office vacancy in the CBD hovered around 20% throughout 2004. Vacancy dropped from 20% to 18% during the first quarter of 2005, reports Grubb & Ellis. More good news: Denver's job growth of 2.2% in 2004 was higher than the national average of 1.7% and is expected to reach 2.4% this year.
“There are developers in Denver who would never have done a suburban development 10 years ago,” says Thorn. “Now they are looking at these locations because they know that being near a train station gives them options.”