In a sign that tenants are seeking out the newest and nicest options for office space, national utility Xcel Energy's decision to relocate its regional headquarters to one of Denver's recently completed developments is powering up an office market that has struggled in the face of record availability.
The deal with the Minneapolis-based electric and natural gas provider at the T3 RiNo development marked the largest office lease signed in Denver since early 2016, according to CoStar data, earning it a 2024 CoStar Impact Award for lease of the year, as judged by real estate professionals familiar with the market.
The company, which is the largest energy provider in Colorado, preleased all 220,172 square feet of office space at the 3500 Blake St. development, which has been spearheaded through a joint venture between Canada-based investment firm Ivanhoé Cambridge, Houston-based Hines and Chicago-based McCaffery Interests.
"In an extremely hard year for office leasing, this is a large lease with multiple unique facets," CoStar Impact Award judge Jeremy Ballenger, an executive vice president at CBRE, said of the deal.
The move underscores tenants' focus on newer, high-quality office spaces, and having the full building to itself will allow the utility company the chance to adapt its future space to its post-pandemic work policies.
Once it relocates sometime in mid-2025, Xcel will also be the largest office tenant in Denver's RiNo area, a neighborhood that has become increasingly popular among both commercial and residential tenants for its popular restaurant scene, concert venues, art galleries, food halls and breweries.
About the Project: The $186 million T3 RiNo development includes an industrial, heavy-timber-structured design that is 100% renewable, recyclable and non-toxic. Xcel employees will have access to a roster of amenities such as private outdoor terraces; a state-of-the-art conference center; bike storage; a 5,000-square-foot fitness center; roughly 18,5000 square feet of retail; as well as easy access to nearby transit options.
What the Judges Said: "The Xcel Energy lease in T3 RiNo represents not only a commitment to sustainability, but a significant investment in the RiNo submarket," CoStar Impact Award judge Sara Croot, a client manager and executive director with JPMorgan Chase, said of the deal. She added that the relocation of about 1,200 employees will also contribute "to the vibrancy" of the neighborhood, which has become one of Denver's most popular among both office and residential tenants.
They Made It Happen: Savills' Rick Schuham, Connor Monahan and Brendan Fisher represented Xcel in the deal at T3 RiNo. Co-developers Ivanhoé Cambridge, Hines and McCaffery were represented by JLL’s James Roupp, John Beason, Don Misner and Maddy Stevenson.
CoStar Market Manager Kathryn Binns contributed to this report.