Progress on Office/Mixed Use Developments a Great Sign for Downtown Economy

In the DenverInfill Blog, I noticed progress has been made recently on two new downtown mixed use developments with substantial office components : Two Tabor Center and 999 17th Street. Having just filed its building permit, the long awaited second tower at the Tabor Center is much further along in the development cycle than 999 17th Street which is in the preliminary design stage.

However, progress on both these two projects is a positive sign for the downtown Denver economy. Although I do not have any direct or inside knowledge of the situation, I believe both projects' office components are at least partially speculative, meaning they do not have 100% pre-lease commitments for the space. The types of businesses likely to occupy this type of "Class A or higher" CBD office space include companies in the FIRE sectors (financial services, insurance, real estate), professional services firms and corporate or regional headquarters operations. The willingness and ability of Callahan Capital Partners and Shea Properties to move these projects forward in the face of macroeconomic and capital market headwinds, is compelling evidence that Denver's CBD is well poised to grow its base of high paying jobs and attract new businesses.

This continued progress at the likely start of a U.S. economic recession is particularly notable compared to the office space downturn that hammered Denver in the great 1980s construction boom and bust. It is evidence that the current regional economy is more diversified and resilient than it was in the eighties and that the office sector has not been overbuilt during the current construction boom.

The fact that both Two Tabor and 999 17th Street are mixed use projects is notable. With office, hotel, retail, parking and residential condo components, 999 17th street will be a highly diversified real estate development. Economic weakness in any one use category can be offset by strengths in the others. In fact, this development, with its widely mixed uses is emblematic of the broader changes in land use in downtown Denver over the past 25 years and helps explain why the core is so much stronger today than it was in the 1980s.

Branding Colorado's Green Energy Cluster

This year has seen a wave of positive developments for the green energy sector in Colorado, from the ConocoPhillips purchase of the former Storage Technology site to to the massive $130 million venture capital funding of Broomfield-based biofuel company Range Fuels.

The time is now ripe for regional boosters, civic organizations and clean energy trade groups in Colorado to come up with a memorable nickname for the alternative energy cluster in the region to help brand this sector's presence in Colorado in the same way that "Silicon Valley" represents the technology sector in the San Jose/San Francisco corridor. Giving the sector a concrete, memorable identity will help plant the idea in the public consciousness that Colorado is the place to be for green entrepreneurs, investors and workers, and serve as a rallying cry to help recruit employers and complementary economic entities to the area. This branding action will serve as a preemptive strike against other metro areas who are fiercely competing for similar jobs and investments. Once the nickname is established, a focused public relations and advertising campaign should be used to create brand awareness.

A short, simple, catchy, relevant, two to three word nickname is required. To get the ball rolling here are some suggested components for the name.

Possible alternatives for the first part of the phrase:

• green
  
• renewable
  
• alternative
• clean
• sustainable
  

Possible alternatives for the second part of the phrase:

• prairie
  
• plains
  
• foothills
  
• mountains
• range
• slope
  

The alternative that sounds best to me is "The Renewable Range." I like the meaning, the catchiness of the "double r" alliteration and the implied geographical references to "the Front Range," the well known term for the most populous part of Colorado on the eastern slope of the Rocky Mountains.

I am wondering what others think? Please send your suggestions and comments.

Denver and the REIT Sector

On Thursday April 3, I attended the New York University 2008 Annual REIT Symposium. One of the featured speakers was Jeffrey Schwartz the Chairman and CEO of Denver-based Real Estate Investment Trust (REIT) ProLogis. ProLogis develops and manages one of the largest global portfolios of distribution facilities. The company has operations all over the planet many of which are located in key port cities and help facilitate international trade flows. ProLogis is investing heavily in China. See here for a definition of REIT.

One of the key takeaways from Mr. Schwartz's presentation was that international trade is consistently growing three times faster than global GDP, providing a tremendous opportunity for companies like ProLogis who participate in the process. As I was thinking about the fact that Prologis is headquartered in Denver, I found it really interesting that Denver, a landlocked city without a major water port, which is geographically removed from other large metropolitan areas, has been able to attract and retain a globally oriented company like ProLogis.

The Denver Office of Economic Development has posted an interesting podcast interview with Walt Rakowich, COO and President of ProLogis where Mr. Rakowich discusses the company's relationship with the City of Denver. He cites the City of Denver's business friendly climate, strong infrastructure, world class airport, high quality amenities (mountains, sports teams), highly skilled labor force, and local culture of sustainable development as key factors that have made Denver a hospitable location for the company.

During lunch at the REIT Symposium in New York I met an executive at another REIT which is also located in Denver who told me that ProLogis has informally spun off several other local REITs in the Denver area as talented employees have started new REIT ventures. This got me thinking that perhaps there is an emerging cluster of REITs in Denver.

I found the following web site which lists REITs by geographic location and shows that there are at least nine publicly traded REITs in Metro Denver (ten if you include ProLogis which is not on this list). Also this list does not include private REITs like DCT Industrial and Dividend Capital. At least anecdotally this does seem to be a high concentration of REITs for a single metro area. I am wondering if anyone knows how Denver stacks up compared to other metro areas as a REIT host city?

Colorado Springs Retains USOC Headquarters, Positive Spillovers for Denver?

Civic leaders in Colorado Springs are celebrating their city's successful efforts to retain the United States Olympic Committee's (USOC) headquarters. See here for the city memo which describes this full details of the arrangement between the city and the USOC and here for a summary of the key points.

As reported in the Colorado Springs Gazette, the city and a private developer are offering the USOC $53 million in incentives to relocate their administrative offices to a new six story downtown office building at Colorado Avenue and Tejon Street (See rendering above. Note both images in this Blog entry are from the Gazette's website). Another near-by office building, formerly occupied by a city utility, will be made available for several national sports governing bodies. Public officials believe the activity generated by these two buildings will help revitalize the downtown district in Colorado Springs. The USOC training center at Union Blvd. and Boulder Street (see photo below from the Gazette 's web site) will be redeveloped and renovated with additional living and training facilities constructed for athletes. Colorado Springs will retain thousands of jobs, millions of dollars in economic activity and will have the right to officially associate the city with the Olympic brand.

Since this is a a blog about economic development in the Denver region, you might be asking "Why are you writing about Colorado Springs?" First, although Colorado Springs is not in the Metro Denver Region, its only 70 miles from downtown Denver to Colorado Springs, close enough for there to be substantial economic spillover effects between the two metro areas. One of Metro Denver's biggest weaknesses as a regional economic entity is that it only receives limited spillover traffic and activity from near-by economic entities, unlike cities in the northeast corridor, on the west coast or in Texas for example. A more prosperous Colorado Springs will ultimately benefit the entire Front Range and Denver region. The spillover benefits become even more clear when you consider that the likely alternative location for the USOC was Chicago.

Second, if the Denver region is serious about efforts to win the right to host a Winter or Summer Olympics, the presence of the USOC and the accompanying dignitaries and officials just down the road in the Springs is a major advantage.

Third, this retention helps reinforce the State of Colorado's "global brand" as place with an appealing sports-oriented outdoor lifestyle. The USOC would be welcomed in any community in America but its decision to stay in Colorado speaks volumes about quality of life in the state.

Congratulations to Denver's friends to the south.

A String of Positive Job Announcements Concentrated in the Energy Sector

The core function and primary concern of economic development is attracting jobs, investments, corporate operations and head offices to a region. Over the past several weeks, since the ConocoPhillips announcement, the Denver region has had an excellent string of successes in this area.

Many of the incoming jobs are in the energy or alternative energy sectors which appear poised for substantial future economic growth. RES-Americas, a wind energy company is relocating its headquarters to Broomfield from Austin, Texas. Its notable that, like the ConocoPhillips decision, this relocation did not require state economic development incentives to occur. Instead it appears to be based on the region's emerging status as a green energy cluster.

An executive at wind-turbine manufacturer Vestas said that the Front Range of Colorado is one of the finalist locations for siting a research and development hub. Vestas, of course, recently opened a turbine manufacturing plant in Windsor, Colorado. Littleton-based Ascent Solar Technologies will be expanding its production capacity with an injection of capital from Norwegian aluminum giant, Norsk Hydro ASA. AVA Solar, which makes thin film photovoltaic technology, recently decided to site its first manufacturing plant in Longmont.

Berry Petroleum, a traditional oil company, announced it is relocating its corporate headquarters to Denver from Bakersfield, California. Gas and oil companies continue to have a huge presence in the Colorado economy. According to a recently released study sponsored by the Colorado Oil and Gas Association titled Real Estate Market Impacts of Oil and Gas Industry in Metro Denver:

• 1,1519 oil and gas firms occupy almost 11 million square feet of metro area real estate.
  
• The market value of this property is $483 million with annual rents of $171 million.
• Almost $26 million in annual local tax revenue is generated by these operations.
  
• At least 26,000 workers are employed in the oil and gas sector.
  

However, thankfully, since the 1980s, the Denver regional economy has diversified into other areas in addition to energy, oil and gas. In the financial services sector, Charles Schwab is planning to bring about 500 new jobs to Denver from its headquarters in San Francisco and its operations in Phoenix.

It will be interesting to see if the Metro Denver Economy is able to continue this string of success in coming months in spite of the current overall U.S. economic downturn.

The Widom of the Union Station Developer Selection Decision: The Conservative Choice was the Right Choice

I live in the New York Metro Area where there are more than a dozen sorely needed massive infrastructure projects in various stages of planning and execution. As the economy weakens, many of these projects, which are public private partnerships, are beginning to be scaled back or indefinitely postponed.

Figure I: Rendering of the Proposed Moynihan Station in New York, First Proposed in 1993 and Likely to be Delayed and Scaled Back (Image from www.moynihanstation.org).

The Hudson Yards on the far west side of mid-town Manhattan, The Atlantic Yards in Brooklyn and Moynihan Station (the proposed new Penn Station and Madison Square Garden-see Figure I to the left) are likely to be delayed and/or reduced in scope. When projects of this magnitude and complexity get delayed or postponed, they frequently languish for years or even decades without regenerating enough momentum to be restarted. Many big infrastructure projects like the channel tunnel, which connects England and France by rail, run massively over budget.

Closer to home for Denver residents, the Auraria Campus Science Building had its State of Colorado funding eliminated due to budgetary shortfalls despite the fact that construction has already started. There is a gaping hole in the ground at the Downtown Denver Campus and a great deal of uncertainty about when and if it will be "filled in" with a new science center.

This leads me to the most important public private partnership going in Metro Denver today - the Union Station redevelopment. I have blogged previously about this project suggesting the use of green design ideas, discussing changes in the station design, and the need to integrate commercial bus service on site at Union Station.

Many people were disappointed that Union Station Partners (USPs) lost out to Continuum Partners/East West Partners (CPEWPs) on the contract to be master developer for Union Station. USPs proposed a denser development at Union Station which was closer to the original vision for the site with all of the transportation elements (bus, light rail, commuter rail, Amtrack) located underground in close proximity to each other.

CPEWPs proposed a less costly design with only the bus and commuter rail underground and the light rail above ground a couple of blocks away from the station terminal building. Critics felt this design was too much of a compromise from the original vision, complaining that it would not provide a "world class" solution for the region and that the intermodal transit connections would be inconveniently spread out. These are, of course, legitimate concerns.

This CPEWPs design has subsequently been changed again to move the commuter rail above ground for both budgetary and safety reasons, resulting in even less density at the site and further complaints from critics.

At the time the master developer selection decision was made in November 2006, the project's public leadership argued that level of density needed to pay for the higher costs associated with building the transportation infrastructure underground was very risky. Basically the public sector would be required to make upfront infrastructure investments partially financed by municipal bonds and would have to hope that market conditions would allow for the very dense real estate development to be successfully financed and absorbed to generate enough new property and sales tax revenue to pay off the public sector debt via a process known as tax increment financing (TIF). If economic, real estate or financial market conditions changed between the time the public sector investment was made and the real estate was developed and leased, the public sector could be "on the hook" for millions of dollars in debt without an adequate revenue stream to service the bonds.

According to a Rocky Mountain News Article featuring extensive quotes from then Denver Director of Economic Development John Huggins:

"[USPs], Huggins explained, needed almost every dollar of income projected from private development to pay off the public bonds that will fund a state-of-the-art travel hub. 'If the projected private development isn't there,' Huggins said, 'or if it comes late or if it isn't as valuable, there won't be enough money to pay back the loans. It was like a balloon inflated to the bursting point. One sharp edge and the thing would pop.'"

Since the selection of CPEWPs was made back in November of 2006, two things have happened. First, the costs of building the transportation infrastructure and refurbishing Union Station have escalated and the resulting design has been scaled back. Second, economic conditions have deteriorated. If the more expensive USPs plan had been selected, I beleive the whole project might have become economically infeasible jeopardizing the overall FasTracks Plan or causing large scale delays to the project timetable.

With the benefit of a few months of hindsight, the decision to select CPEWPs as the master developer was clearly the correct choice. Underground transportation infrastructure and greater density is a good thing for a transit-oriented development like Union Station but its an even better thing to have a transit hub that actually gets built and provides benefits to the region. A theoretically great design that never gets built or gets delayed for years or decades or that bankrupts the public purse would not be an acceptable outcome for the Denver Region.

The Wisdom of FasTracks

The FasTracks program is working its way from planning to implementation stages along the various transit corridors. A range of issues and challenges are emerging from cost overruns and service cut backs, to engineering challenges and community opposition to the noise and disruptions associated with rail service, to the fear and pain experienced by individual property and business owners whose land is in the rights-of-way which will be acquired to build the transportation network. In the face of all these issues, it is very easy to forget the long term region-wide benefits of building such an extensive public transport system.

In the age of $100 per barrel oil and gas prices approaching $4 a gallon, growing concerns about global warming, and ever increasing world-wide economic competition among metro areas, the FasTracks investment looks wise indeed. I found this article about the growing use of public transportation based on a study by the American Public Transit Association to be a powerful reminder of the foresight of metropolitan Denver voters in approving the plan.

The Denver Region in Richard Florida's "Who is Your City?"

I mentioned Richard Florida in two recent blog posts (here and here). Florida, currently a Professor of Business and Creativity at the Rotman School of Management at the University of Toronto, is a well known public intellectual who specializes in issues of economic competitiveness and the role of social and demographic trends in place-making and economic development.

He has a new book titled Who's Your City? which delves into how people make location decisions. Part economic development tome and part self-help guide, this book and its associated web site, take Florida's academic work and makes it applicable and useful for everyday Americans thinking about a relocation decision.

The Who's Your City? web site has several very interesting features including a "Best Cities" section and a series of graphic maps. In the Best Cities section among small regions, Boulder is ranked as a top 5 city for young singles, mid-career professionals, families with children and empty-nesters and Denver is ranked as a top 5 large region for mid-career professionals.

The maps are also very interesting, showing how real estate prices, economic activity, innovation, personality types, gender distribution, population and other factors are spread across geography. Its very interesting to see how the Denver Metropolitan Region appears on these maps. Collectively they convey how the region is a relatively remote island of activity surrounded by economically sparse parts of the country.

FasTracks Spurring Development at the Denver Federal Center

The Denver Post has an interesting article about the new Federal Center Master Plan and Preferred Development Alternative. This new plan provides further evidence that FasTracks is spurring Transit Oriented Development, real estate redevelopment, region-wide economic development and helping to change land use patterns, even before the tracks are laid and the trains are operating.

Image taken from Denver Federal Center Website.

ConocoPhillips is Mystery Buyer of StorageTek Campus in Louisville

The Metro Denver Area received a tremendous economic development boost when Governor Ritter announced that ConocoPhillips was the mystery buyer who purchased the former StorageTek Campus in Louisville for more than $55 million. The energy giant plans to build a Global Technology and Corporate Training Center which will focus on the development of new technologies for renewable energy and consolidate world-wide employee training. It is appropriate that this announcement was made by Governor Ritter who has made alternative energy a keystone of his early governorship.

Despite the complaints of skeptics that this is not bringing a new corporate headquarters to Metro Denver, this is a huge boon for the Colorado economy for a number of reasons. It will provide new jobs and it will also lead thousands of people each year to visit the area to attend training classes, boosting local travel, hospitality and leisure spending. More importantly it will provide a key piece of the puzzle for the emerging green portion of the energy cluster in Colorado.

For a technology-based economic cluster to succeed, a region needs a critical mass of vertically-related producers, suppliers, distributers, sellers and consumers and researchers. The presence of ConocoPhillips will add serious financial muscle and prestige to the local green energy cluster. When a cluster reaches a critical mass, the economic power of the whole becomes greater than the sum of its parts, creating a strong positive economic externality drawing other related companies and investments to the region - ConocoPhillips will help make this a reality for Metro Denver.

Additionally, the presence of an energy company in the U.S. 36 Corridor will help diversify the commercial real estate market and local tax base in Broomfield/Louisville which is dominated by technology and telecommunications companies.

This is a fascinating case study in site selection decision-making. Although the energy sector is one of six areas targeted for recruitment by the MDEDC, senior economic development officials such as Tom Clark at the MDEDC and Don Elliman at the Colorado Office of Economic Development were not even aware that ConocoPhillips was considering this site and public speculation on the identity of the site's buyer centered on internet and computer companies. ConocoPhillips apparently made this decision entirely on its own without receiving tax credits or other economic development incentives or lobbying. This is great news for Metro Denver because it means we are competitive without needing to spend public funds to land jobs.

There are several factors which drove this decision. According to Perry Pearce, manager of state government affairs in Colorado for Conoco Phillips as quoted in the Rocky Mountain News, regional academic and research institutions were a key reason for this site selection:

"When you look at the institutions here — the National Renewable Energy
Laboratory, Colorado School of Mines, CU, CSU and DU — those sorts of central
research and educational centers contributed to the attractiveness of this
site."

These institutions are linked together by the Colorado Energy Collabaratory which is a research partnership "dedicated to performing world class research to develop new energy technologies and to transfer these advances as rapidly as possible to the private sector."

There is a rapidly growing base of private renewable energy companies involved in wind, bio-fuels, solar and other green energy areas in Metro Denver. This presence is indicative of a highly qualified local labor pool and potential collaborators and partners for ConocoPhillips.

The excellent transportation links at this campus probably also played a huge role in the site selection decision. The campus location on Highway 36 between Denver and Boulder provides easy access to the super-quick and uncongested Northwest Parkway and E470 toll roads which connect to DIA making it very easy for people from around the world to get to/from the campus on training visits.

With oil in the $100 a barrel price range, developing countries like China and India using ever larger amounts of energy resources and increasing concerns about the impact of carbon emitting energy sources on global warning, investment in and use of alternative energies is becoming increasingly financially viable and socially critical. If Metro Denver can establish itself as a core location for the green energy cluster, it is likely to bring long-term economic growth to the region. This could well be a sector which is poised for huge long-term growth capable of creating wealth on a scale similar to the development and commercialization of the internet.

Although this is a big win for the region, Metro Denver has many strong competitors who want to build green energy clusters. According to an Economist article from May 24, 2007, Silicon Valley, Boston, and Austin have all had more venture capital invested in clean technology companies than Metro Denver. Other places such as New Jersey, Arizona, Toledo, and Seattle also are trying to establish clean-tech clusters. It will take continuing political support, aggressive efforts by regional economic development officials and wise public investments in education and regional infrastructure to keep attracting further investment in green energy to the Denver Metro Area.

Metro Denver should also come up with a clever and memorable nickname for the region's renewable energy cluster like "GreenFoothills"or "Renewable Prairie" to keep the region in the "front of the mind" for green entrepreneurs and corporate decision-makers.

Ranking Denver Using Florida's Technology, Talent and Tolerance Criteria

In my recent blog entry about Metro Denver's historical connection to the Beat Generation and ongoing concentration of Bohemians, I discussed Richard Florida's work on what he calls the creative class. Florida defines this group as:

"engaged in science and engineering, research and development, and the
technology-based industries, in arts, music, culture, and aesthetic and design
work, or in the knowledge-based professions of health care,
finance and the law." (Cities and the Creative Class, p. 3)

Additionally, Florida theorizes that three interdependent factors help explain why some economic regions have been successful in the new knowledge-based economy and others have not.

"The key to understanding the new geography of creativity and its effects on
economic outcomes lies in what I call the 3 T's of economic
development: Technology, Talent, and Tolerance. Creativity and the members of the
Creative Class take root in places that posses all three of these critical
factors. Each is a necessary, but by itself insufficient, condition. To attract
creative people, generate innovation, and stimulate economic development, a
place must have all three. I define tolerance as openness, inclusiveness, and
diversity to all ethnicities, races and walks of life. Talent is defined as
those with a bachelor's degree and above. And technology is a function of both
innovation and high technology concentrations in a region." (Cities and the
Creative Class, p37)."

This raises the obvious question of “How does Metro Denver compare to other regions in the United States?”

The table taken below is from the Appendix in Florida’s book Cities and the Creative Class which was published in 2005 and some of the indices are likely substantially older than that. However despite the age of the data, it does provide a recent historical reference point from which to analyze Denver's economic position from a Floridian perspective.

The Tech-Pole Ranking comes from the Milken Institute and is based on a region's location quotient of high tech output. According to the Tech-Pole Index, Denver is the 13th ranked high tech region in the United States. Denver's ranking on the Tech-Growth Index (10) and Gay Index (8) are higher than its Tech-Pole Ranking but its rankings on the Composite Diversity (17) and Melting Pot (29) indices are below its Tech-Pole Rankings. Its Bohemian Index rank of 14 is very close to its Tech-Pole Index rank. These rankings seem to fit pretty well with my anecdotal understanding of Metro Denver's demographics. As an inland city, away from the coasts, Denver has a relatively small percentage of foreign-born residents.

This data also got me thinking that the college town of Boulder (also my hometown), probably plays a key role in contributing to the region's strong Tech-Pole, Tech Growth and Bohemian rankings but relatively lower diversity rankings. Boulder is part of the Denver Metro Region and is home to several national laboratories and the State of Colorado's flagship university. It also has a relatively ethnically homogenous population with a large percentage of tech companies and workers and long-standing ties to counter-cultural movements.


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Anticipating Wild Card Events in Planning for the 2008 Denver Democratic National Convention

As everyone knows, Metro Denver is preparing to host the Democratic National Convention (http://www.demconvention.com/) from August 25 to 28 2008. Back in July 2007 I blogged about the opportunities and risks for Metro Denver of hosting this event (http://aviewoftherockies.blogspot.com/2007/07/con.html).

Since my blog entry back then, as the campaign season has evolved, several ideas have come into clearer focus for me. The convention will be a historic and exciting event and, for the reasons discussed below, is likely to attract more than a normal convention's share of global attention. With the certainty that the Democrats will nominate either the first female or first African American major party candidate for President of the United States, the campaign season is shaping up to have a landmark, historic atmosphere. Voter turnout in Democratic primaries and caucuses has been tremendously high.

The competition between Barack Obama and Hillary Clinton for the nomination is intense and is very likely to be closely fought until late into the primary season. There is a strong chance that neither candidate will have enough pledged delegates from primary and caucus results to obtain a majority of total delegates and decide the nomination. This means that votes from super delegates, party officials and grandees who are not chosen by the primary voters, would be required for either candidate to achieve a majority of total delegates and secure the nomination. This could lead to a tense and acrimonious convention. There is even the remote possibility of a brokered convention where neither candidate has enough support to clinch the nomination in the first round of voting. These types of scenarios would drive interest in the convention even higher and could lead thousands more people to descend on Denver than are currently being planned for.

Already there are large contingents of anarchists, antiglobalization advocates and other similar groups with names like "Recreate 68" and "Unconventional Action" who are planning to stage protests, demonstrations and disruptions in Denver. See for example this article in Westword (http://www.westword.com/2008-01-24/news/anarchists-stalk-democratic-convention).

Given the very high profile nature of this convention and the likely accompanying street level theatrics surrounding the event, the stakes and risks are unbelievably high and growing for Metro Denver. The region has to "thread the needle" by staging a safe, secure and exciting convention that allows the Democratic Nominee to shine and that showcases Metro Denver to the world in positive light while at the same time making sure that security enforcement and police action are not too heavy-handed and do not trample legitimate free speech. This excellent blog entry from Colorado Confidential (http://coloradoconfidential.com/showDiary.do;jsessionid=05CFFC53FD194861C44651A13BFC01FC?diaryId=3338) discusses the approaches taken by Boston and New York for the 2004 Republican and Democratic National Conventions. Denver clearly has less historical experience than New York or Boston in hosting these types of high profile events.

I understand that the City of Denver is reaching out to near-by police jurisdictions for help providing extra police officers during the convention. (http://cbs4denver.com/local/police.denver.convention.2.560924.html). Securing extra police is a great first step. But the city needs to make sure that it adequately forecasts all possible risks and contingencies by engaging top level law enforcement officials, intelligence agencies, security experts and risk planners. In addition to high probability scenarios, officials need to brainstorm possible wild cards which can be defined as "low probability high-impact events which happen quickly" (See Out of the Blue How to Anticipate Big Future Surprises by John L Peterson, p. 4). Examples of possible wild cards include acts of nature, civil unrest, infrastructure sabotage or terrorist attacks. By their very nature, wild cards are extremely difficult to anticipate and plan for.

Planning miscalculations, lack of contingency options or failures to respond with nimbleness to rapidly evolving events during the convention could have catastrophic consequences for the perception of Denver by people around the world. This convention is a once-in-a-lifetime opportunity for the Denver Metro Area and planners have to ensure that it has a positive impact on the global perception of the region.

On the Road in Denver: Beatniks, Bohemians, the Creative Class and the Economic Geography of Talent

I recently visited the New York Public Library’s exhibit on Jack Kerouac and his seminal 1957 novel On the Road and it reminded me that the City of Denver is one of the important stops on the in the legendary journeys chronicled in the novel and that Metro Denver has its own unique connection to the history of the Beat Generation.

Figure I: Cover of On the Road by Jack Kerouac

Figure II below is a map from Kerouac’s journal of the 1947 road trip that ultimately inspired him to write On the Road.













Figure II: Hand Sketched Map from Kerouac’s Personal Journal of the 1947 Road Trip Which Inspired On the Road

Note that Figure II to the left could just as easily be a partial map of important cross country rail networks, or of internet backbone routes. On the Road implicitly points out that Denver has long been an important economic, cultural and transportation junction in the middle of the United States.

In On the Road, Sal Paradise, Dean Moriarty and the gang make stops in Denver as they are traveling between New York and the west coast. The Denver portrayed in the novel is urban, ethnically diverse and alive with energy. The descriptions of Denver’s historic African American District, Five Points, are vivid and memorable.

In real life, Denver also played an important role in the development of the Beat Generation. Neal Cassady lived in Denver for many years and was responsible for brining Jack Kerouac and Allen Ginsberg to Colorado. They all spent time in Denver listening to jazz at places like the legendary El Chapultepec and at clubs in Five Points. For a great introduction to Denver’s role in the history of the Beat Generation visit Denver’s Beat Poetry Driving Tour written by beat historian Andrew Burnett (http://www.denvergov.org/aboutdenver/today_driving_beat.asp). Many figures from the Beat Movement had long standing connections in Metro Denver and Colorado including Allen Ginsberg who was affiliated with Naropa University in Boulder.

This is all very interesting but how does it apply to economic development which is the theme of this blog?

Richard Florida, an urban economic theorist, has written several well known books about the creative class and its growing importance in the contemporary knowledge-based economy. One of Florida’s ideas is that places that are open, diverse, and tolerant will be able to attract well-educated and creative workers who are the key input into knowledge-based businesses such as software, internet and biotechology companies, leading to sustained economic prosperity for those places. Florida argues that places with “Bohemian Culture,” large gay populations, ethnic diversity and other indictors of tolerance and opportunity will be home to tech industry clusters. Florida defines Bohemians, using U.S. Census Bureau data, as people with creative occupations such as authors, designers, actors and directors, musicians and composers, photographers, craft-makers, dancers and perfumers.

Figure III below, taken from Florida’s book, Cities and the Creative Class, shows the high concentration of Bohemians in Metro Denver. Notice the large dark circles on the three maps below representing Denver's large absolute number of Bohemians, high concentration ofBohemians per 1000 people and high score on the Bohemian index. It is interesting to note the spatial isolation of Denver from other Bohemian centers and to compare the maps in Figure III below with the road trip route in Figure II above. If you horizontally connect the largest dots on the maps below you get a route that is pretty similar to Kerouac's 1947 road trip.


Figure III: Bohemia and Economic Geography, from Florida’s Cities and Creative Class


Denver’s role in the history of the Beat Generation is solid evidence of the region’s long-standing ability to attract creative and talented people. However, Denver’s association with the Beat Generation is less widely known than that of cities like New York and San Francisco. The online Beat Generation Driving Tour should be further developed into an actual self guided tour with historic markers, descriptive plaques and related cultural events to promote and celebrate this side of Denver’s personality to local residents and visitors alike and to help attract even more creative people to the Denver Metro Area.

Spire: A Bellwether for Continuing Growth in Downtown Denver

There was a very positive development for the Denver Metro Region recently when it was announced that construction on Spire (http://www.spiredenver.com/), a 41-story residential condominium with ground floor retail will be resuming shortly. Work on the tower, located at 891 14th Street in Downtown Denver, was halted last year after the primary construction lender, a U.S. based subsidiary of a German financial institution, backed out of its loan commitment. I first blogged about this situation back in September 2007 (http://aviewoftherockies.blogspot.com/2007/09/global-credit-squeeze-and-metro-denver.html)

In my recent blog on 10 Metro Denver Economic Development Issues to Watch For in 2008 ( http://aviewoftherockies.blogspot.com/2007/12/10-metro-denver-economic-development.html ) I called Spire "a key signpost indicating whether the local downtown residential construction boom will continue or tail off in the face of economic and credit market headwinds." Spire is a well conceived project, targeting the ripe segment of young professionals who want to live in Downtown Denver with moderately priced units starting at around $200,000. Spire's developer Randy Nichols has a strong reputation backed by substantial experience. If Spire had withered on the vine it would have been a powerful signal that the current residential expansion in Central Denver was slowing and confidence in Metro Denver was diminishing.

Spire, and other similar projects are helping to transform Denver into a more urban city with the possibility of 24 hour life and improved amenities. This transformation will play a key role in Denver's future economic development because it will help attract, young, educated workers who can power a knowledge-based economy. The fact that Spire will be financed in spite of the global credit market turmoil and fears of a U.S. recession shows that the financial markets are still willing to invest in Denver's economic future.

The rendering of Spire in this blog entry is from the Rocky Mountain News website.

Airline Developments and the Denver Regional Aviation Cluster

If you are a regular reader of this blog you will probably notice that I frequently discuss developments in the airline industry and at Denver International Airport. The reason for this emphasis is this industry serves a dual economic role in Denver. It is part of the local economic base, employing a higher than national average concentration of workers in Denver (See my blog from July 4, 2007 for a discussion of the Metro Denver economic base http://aviewoftherockies.blogspot.com/2007/07/analyzing-metro-denver-economic-base.html) and air transport is a vital part of the regional transportation infrastructure impacting the area’s overall economic competitiveness. Air transportation is particularly critical to Metro Denver given its spatial isolation from other large metropolitan areas and its lack of a water port. The aviation cluster, has been identified as a sector targeted for recruitment efforts by the Metro Denver Economic Development Corporation (MDEDC http://www.metrodenver.org/industries-companies/industries/aviation.html). According to the MDEDC, the cluster contains 240 companies which employ more than 14,000 workers in the nine county Denver Metro Area.

I want to blog about a couple of recent airline developments which could have big impacts on economic development in Metro Denver. Southwest Airlines announced over the next few months it will be adding18 new daily flights to six new destinations from DIA: Los Angeles; San Jose; St. Louis; Philadelphia; Raleigh-Durham; and San Antonio. This will bring the total number of Southwest flights in Denver to 79 from 0 a few years ago. On balance this should have a positive economic impact for the region as it will increase connectivity to important national business centers, help drive down travel costs for businesses and consumers and add new jobs.

However, Southwest’s expansion has put competitive pressure on Denver-based carrier Frontier Airlines. It would be an economic development loss for Denver if Dallas-based Southwest drove Frontier totally out of business, costing Metro Denver a corporate headquarters in the aviation sector. Additionally, the new Southwest fights do appear to validate DIA’s facilities expansion plans discussed in my blog from July 30, 2007 (http://aviewoftherockies.blogspot.com/2007/07/dia-expansion-fullfilling-vision.html ).

The other big airline-related piece of news is the continued speculation about a merger between United and Delta airlines. Denver is United’s second largest hub after Chicago-O’Hare but Delta uses Salt Lake City as its regional hub. If the merger goes forward, the key economic development question for Denver will be - “Can the 'Mile High City' maintain its hub status, concentration of flights and number of employees post merger?” Given the Denver Metro Areas’ central geographic location, high quality airport facilities and population size, I am guessing the answer to that question would be “yes” but anytime a merger occurs it opens up the risk of a negative outcome. If the merged Delta/United, reduced its presence in Denver and Salt Lake City took over Denver's hub role, that would be a serious blow to the Metro Denver economy.

Photos provided courtesy of Denver International Airport.