MCGREGOR SQUARE ON RISE
Monfort says The development, struggling baseball team separate
McGregor Square, Dick Monfort’s three-building project with retail, condos and a hotel next to Coors Field, has had to endure a pandemic and the anger of baseball fans after Nolan Arenado’s trade.
Colorado Rockies co-owner Dick Monfort’s McGregor Square development next door to Coors Field has dealt with COVID-19 delays, a lost shipping container and now angry Rockies fans.
The late-January trade of superstar third baseman and face of the franchise Nolan Arenado ratcheted up fan scrutiny on the owner’s involvement in the three-building project south of the ballpark.
After consecutive losing seasons, the club shipped Arenado and $50 million to the St. Louis Cardinals for left-handed pitcher Austin Gomber and a quartet of prospects this offseason. After being in the top half of Major League Baseball teams for payroll at the end of 2019 season, according to Sportrac, the Rockies are now projected to open the 2021 season in April with the 18th-highest payroll, dropping below the league average.
The move sparked an outcry from the team’s fan base, including vows on social media to boycott home games in 2021 and accusations that Monfort is too financially and mentally invested in his real estate project to care about fielding a winning team.
At a news conference on Feb. 1, the day the deal was finalized, Monfort said the Rockies and McGregor Square are separate entities. He reiterated that point in an interview with The Denver Post this month.
“We have got a whole differ
ent set of ownership that owns McGregor Square, that is invested in McGregor Square,” Monfort said. “I think there are nine investors that are in McGregor Square, and I think four of them are involved with the Rockies: Charlie (Monfort, Dick’s brother) and I, and the other two are very minor owners in the team.”
“There is no tie,” he added. “Other than McGregor Square pays rents to the Rockies. And that rent goes to pay for upkeep for the stadium, which is very good for the team. We don’t have to go digging into our pockets to pay for paint and fix boilers and that stuff.”
A pandemic hit
McGregor Square, the blockspanning megaproject just across 20th Street from Coors Field between Wazee Street and the Wynkoop Walkway that leads to the stadium, is bringing more than 650,000 square feet of new construction to Lower Downtown. Spread across three buildings and topping out at 13 stories, it includes a 176-room hotel, 103 high-priced condos, a Class-A office building and a bundle of premium retail space. It’s maybe the biggest development in LoDo since the baseball stadium 26 years ago.
McGregor Square was announced in June 2018 and has had to contend with obstacles beyond any developer’s control. Call it the equivalent of a rain delay on Opening Day.
There’s the pandemic, which chilled the office real estate market, spurred unprecedented onsite safety protocols and caused other problems like delaying the delivery of cabinets from Italy. There was WeWork, the flexible office space company that was at first interested in leasing all the office space on the block, Monfort said, and instead ended up leasing none of it.
There were business shutdowns and months of civil unrest downtown, which contributed to muted demand for residential real estate in the area. A shipping container carrying supplies for the hotel was even lost in the Pacific Ocean, Monfort said.
McGregor Square’s planned New Year’s Day 2021 grand opening date is in the rearview mirror, but the first condo residents will begin moving in next month and the hotel, named The Rally, is scheduled to welcome its first guests March 25. The tarp is coming off the field slowly.
“I think probably our best plan is just to get things open and have a grand opening closer to when the weather is good and when we can have gatherings,” Monfort said of plans for celebrating the project.
The development team declined to tell The Denver Post how much McGregor Square cost to build, but 9News reported in September that the budget was $365 million. For reference, Coors Field cost $215 million to build when it opened in 1995.
The pots of money involved with running the Rockies and building McGregor Square may be separate, but the franchise and the development are stitched together like a baseball.
The project is named in honor of Keli McGregor, the team’s late club president. The second floor of the hotel will host a team hall of fame. Arenado will be playing in another city this season, but his achievements will be celebrated there the same as other franchise greats.
The stadium district
Like Coors Field, the land McGregor Square is being built on is owned by taxpayers. Specifically, it is managed by the Denver Metropolitan Major League Baseball Stadium District, a body that represents people in Denver and six metro-area counties that paid sales tax to fund the stadium’s construction in the early 1990s.
Formerly the West Lot parking area, the land came under the franchise’s control in March 2017 when Monfort signed a deal extending the Rockies’ lease at Coors Field for 30 years.
The West Lot property is valued at more than $10 million, according to city records. The Rockies’ front-loaded $125 million lease for the land requires the team to pay the stadium district $7.5 million a year in rent through 2022, $5 million a year for 15 years after that, $1.25 million for 10 years and finally $100 a year for the final 69 years.
Stadium district spokesman Matt Sugar said the arrangement was motivated by a desire to shore up a revenue stream to take care of the now quarter-century-old ballpark. In 2017, it was estimated $200 million would be needed to keep Coors humming into 2047. The stadium district board rejected other funding options, including a new sales tax and direct payments from the city and state.
Control of the land didn’t automatically turn Monfort into a commercial developer. The coheir to a meatpacking fortune (worth an estimated $700 million, according to reporting by the Los Angeles Times) originally sought proposals from other developers, he said. He received four or five but rejected them because they all wanted to spread out lease payments over the entire span of the 99-year arrangement with the stadium district.
“That didn’t work for the Rockies. We needed to crunch those payments into 30 years,” he said.
The stadium district board supported the decision for a Monfortled team to develop the property, Sugar said.
“It doesn’t help you to get those dollars in year 89,” Sugar said.
The stadium district board doesn’t have oversight on the project now that the ground lease is in place. But the McGregor Square team was active in seeking neighborhood input when designing the project and has been diligent in sharing updates with the board on progress, Sugar said.
In the wake of the Arenado trade, many prognosticators have the Rockies finishing the 2021 season in last place in their division, with some projecting the team will lose 100 games. Sugar said that outlook does not impact the way the board works with team ownership.
“We all want a winning team,” he said. “I’m sure everybody does, the board, the Rockies and every current fan. I don’t know that we have much say in that.”
It’s not uncommon for commercial developers to sell projects after they build them. There is no indication Monfort is on that path. He and his wife soon will be living in a custom condo there.
The West Lot lease does allow for the buildings to be sold provided the stadium district provides prior written consent. District approval would not be contingent on the prior sale of the franchise. That’s another transaction Monfort has shown no indication he is considering no matter how much disgruntled fans bang the drum for it.
From the perspective of Robert Litan, an attorney, economist and columnist for online sports site The Athletic, McGregor Square is a clear sign the Rockies fans should make their peace with Monfort. He’s invested for the long term.
These type of real estate projects, where a professional sports team or its owners get involved in development around their stadiums, capitalizing on the center of gravity and activity their teams create, are gaining popularity, Litan said. He pointed to Stan Kroenke’s massive new stadium (home to the Los Angeles Rams and Chargers) and surrounding real estate plans in Southern California as a model.
In Denver, Kroenke is backing the River Mile project that would create an entirely new downtown neighborhood around Ball Arena, where his Denver Nuggets and Colorado Avalanche play. The Denver Broncos and public officials are inching forward with plans to redevelop chunks of the surface parking lots that surround taxpayer-owned Empower Field at Mile High.
Monfort’s new role as a commercial landlord could play in fans’ favor, in Litan’s estimation.
“If the team gets so bad that no one comes to games, then his retail gets killed and he doesn’t want that,” Litan said.
Litan, however, called that “cold comfort.” It will depend on how much Monfort wants to spend on players and other elements of running a successful baseball team, such as analytics, he said. If Monfort determines the team needs to be only a fringe
competitor, winning 45% to 50% of its games with an occasional outside shot at the playoffs to bring crowds to LoDo, that may convince him greater investment isn’t necessary.
Some Rockies fans would argue that’s been the team’s model since Coors Field opened. With bountiful sunshine and an easy-to-access downtown stadium surrounded by bars and restaurants, the ballpark has maintained its drawing power even when the team was an afterthought.
Progress with tenants
For all the hand wringing over the state of the Rockies, reasons for optimism are multiplying at McGregor Square.
The project has announced two major tenants for its office building. Law firm Lewis Roca Rothgerber Christie LLP is taking on the top two floors, Monfort confirmed. Cybersecurity company Red Canary will be just below them on floors eight and nine, eating up about 20% of the space, according to a news release announcing the deal in December.
Those leases come amid a year in which office vacancy hit a 10year high in Denver and companies put millions of square feet of space on the sublease market.
On the retail front, Monfort’s team is adding local familiarity to a project designed — as evidenced by its 28,000-square-foot public plaza complete with a grassy seating area and massive video screen — to get people to linger.
The Tattered Cover bookstore, in which Monfort is now an investor, will be a marquee tenant. Denver Italian restaurant Carmine’s on Penn, a Speer neighborhood standby for 26 years, recently announced it would be opening its second location at McGregor Square.
Tom Ryan, co-founder of the Tom’s Urban restaurant chain that has a location in Denver International Airport and previously had a spot on Larimer Square, is bringing his Tom’s Watch Bar concept to the McGregor project. The bar and restaurant will have more than 100 screens in its 360degree viewing room and room for 230 guests on a patio space that overlooks the development’s central plaza. Ryan and partners already operate a Smashburger inside Coors Field.
With so many screens, the bar plans to dedicate viewing space to all the major U.S. pro sports, college athletics and even obscure events like competitive face slapping, Ryan said.
“Tom’s Watch Bar is really here to provide this really new experience for sports-based viewing,” Ryan said. “As strong as the Rockies can be, obviously that’s good for business, but we’re a four-season concept on top of being a great spot to watch the Rockies.”
Condo sales have been sluggish at McGregor Square during the pandemic, Monfort acknowledged. Patrick Walsh, the property’s general manager, said the McGregor Square Residences is about 60% sold. As of Sunday, the website had 10 active listings ranging from $500,000 for a 531-squarefoot studio to $2.5 million for a two-bedroom, three-bath unit.
“We had some (buyers) drop out and had some additional sales,” Walsh said. “Part of the allure of downtown is everything going on, concerts, restaurants. With the pandemic that has really put a halt to a lot of people coming downtown.”
McGregor Square isn’t alone in dealing with that fallout.
Jill Schafer, a real estate agent covering Denver for Kentwood Real Estate, said she has a client who lives near McGregor Square who has pulled back twice from putting a condo on the market out of concern about value they could get in 2020.
But according to recent research Schafer did on the 80202 ZIP code, which encompasses downtown Denver, things may be looking up in that department, too. Thirty-three condos sold in the area closed from Jan 1. to Feb. 11, according to Shafer, a member of the Denver Metro Association of Realtors market trends committee. But 77 condos were under contract as of Feb. 11.
“Until they close, we won’t know if they are selling at significant discounts or if they have then been on the market for five months,” Schafer said. “I didn’t think we would have that many under contract because it has been a difficult time downtown.”
Monfort is expecting to be granted clearance to fill his 50,000-seat baseball stadium to about 20% capacity when the Rockies open their season again the Los Angeles Dodgers on April 1. He’s looking forward to that and banking on travel demand coming back strong as more people get vaccinated and COVID-19 restrictions are rolled back this year, all things that could boost business at McGregor Square.
“I was on a panel with a couple other people who are much smarter than I am,” Monfort said this month. “They truly feel that this summer will be tipping point and things will turn around. We’re hopeful that we’re going to come back with a bang.”