Medallion Name – BOOM AND BUST
Significance – The oil boom restructured Denver into a modern metropolis, with immense high-rises sprawling along the Front Range. Then, in the mid-1980s, the price of oil plummeted from $39 a barrel to $9, sending the City into a devastating recession. Downtown skyscrapers stood virtually empty, Downtown Denver resembled a ghost town. Tech brought Denver through the oil downtown.
Inscription – The downtown skyline was transformed in the late 1970s and early 1980s as the Denver economy boomed based on the price of oil. As oil prices fell below $10/barrel in 1986, Denver’s economy contracted.
In 1986, the Denver economy entered its worst downturn since the Great Depression of the 1930s. The drop in the price of oil led to major lay-offs at many Denver petroleum companies. Downtown land prices declined as much as 80% and office vacancy rates exceeded 35%.
Location – 39°44’48.0″N 104°59’30.6″W
Details – The modern evolution of Denver’s skyline begins in the 1950s. After World War II, “black gold” struck the hearts of Denverites. The City’s central role in oil and gas exploration can be explained by access to transportation; oil and gas companies from around the globe opened offices in Denver because of its proximity to mountain energy fields.
In the early 1970s, the price of oil from around $2 per barrel. Then, the oil boycott by the Arab nations and the Iran-Iraq war pushed oil prices to nearly $40 per barrel in the early 1980s. Downtown Denver changed radically from its “cow town” persona as energy revenues fueled a skyscraper boom. Outside capital from real estate development firms such as Webb and Knapp in New York and Texas oil magnate the Murchison family helped build New bank headquarters, retail space and hotels. Tax revenues were used to revitalize schools, institute cultural amenities and reinvent the central business district. The oil boom had transformed Denver into a modern metropolis, with immense high-rises sprawling along the Front Range.
A Denver business reporter described the scene. “Denver was rich, unimaginably rich. People made fortunes, sometimes in a matter of days. A fever possessed the city… Tales of riches echoed across the plains and people came flocking.”
Then came the recession. In 1981-82 the U.S. economy suffered its most severe downturn since the Great Depression. The Federal Reserve invoked sharply restrictive monetary policy in an attempt to rein in double-digit inflation. Drilling in the region plummeted because Rocky Mountain wells generally need to be drilled deeper, making them more expensive and riskier than in other areas and therefore most vulnerable to declines in oil prices. In early 1982, more than 600 rigs were active in the region, by 1984, the number had fallen to just over 200. As oil prices fell below $10/barrel in 1986, Denver’s economy contracted and the spiraled city into a devastating recession.
The effects spread well beyond the oil industry. The state’s manufacturing had dropped off while oil and gas production and mineral exploration increased. Iron and steel employment fell sharply, while the meat processing, leather and rubber industries shifted production to lower cost regions. With a lack of opportunity, much of the populace departed Denver for better opportunities elsewhere. Home prices collapsed.
Almost overnight, lenders and investors realized that there was more office space in Denver than could be filled in the near or even distant future. New projects were canceled, lenders pressured developers to pay off their loans and regulators forced financial institutions to write down their assets. Office space was abandoned, demand for legal services, with the exception of bankruptcy law, diminished. One third of all office buildings were vacant. Average lease rates for “Class A” office space dropped from $25/square foot in 1981 to $14/square foot in 1987-89. Downtown was synonymous with Skid Row and the central streets of the city soon resembled a ghost town.
Denver’s 1980s downtown was unique in that it occurred during a period of general national prosperity. Not since the “silver bust” of the 1890s had Colorado seen such a severe regional downturn that was not linked to similar national weakness. The regional slump is often described as an “oil bust” caused by the collapse in oil prices.
Tech brought Denver through the oil downtown. As the 1990s dawned, the advanced technology sectors grew and progressed there was a notable increase in construction activity.
Mayor Federico Peña – who we all now know for Peña Blvd – worked diligently to change the city’s identity. Tourists were already passing though Denver en route to the world-class skiing in the mountains, but Peña’s goal was to keep visitors in Denver longer. He directed new funding into Denver’s cultural institutions, including the Denver Zoo and the Denver Art Museum. The City’s industrial base was repositioned to accommodate a tourist and service-oriented economy. Peña laid the groundwork for Denver International Airport, Coors Field and Sports Authority Field at Mile High Stadium – all welcoming to visitors.
Denver was awarded a major league baseball franchise in the early 1990s and Coors Field was built in the heart of an old warehouse district, assuming, “If you build it, they will come.” The result: Coors Field– a walkable urban stadium. Developers intentionally built minimal parking around the field to allow patrons to walk past the businesses to get to the game. New businesses, restaurants, and shops were incentivized to restore the remaining historical structures in the area; establishing upscale entertainment district called LoDo (Lower Downtown.)
The success of LoDo spilled into downtown and the surrounding areas, creating an infusion of inner growth. Developers transformed the urban core transforming old buildings into elegant lofts. The promotion of luxurious urban living served as an antidote to some of the area’s aggressive suburban sprawl. Denver’s population soared.
Technological breakthroughs were leading the U.S. into a new economic age. Denver was already a hub for companies specializing in local and long-distance telephone services as well as wireless communications, the Internet, fiber optics and cable TV systems. The state was well-poised when the Telecommunications Act of 1996 opened local and long-distance phone systems to increased competition. The Denver area attracted aggressive investments because the local labor force were already experts in broadband access to voice, video and data stimulated. Between 1998 and 2001 the number of miles of fiber increased by a factor of five and, at the same time, advances in technology increased the transmission capacity of each strand of fiber a hundred-fold. As the New Millennium dawned, Colorado per capita income became the eighth highest in the nation. Average weekly earnings in the private sector rose 43% in the Metro Denver area.
Prosperous again, the city continued to focus inward, moving the beloved historical amusement park, Elitch Gardens, to the central Platte Valley just south of LoDo. Colorado’s Ocean Journey, an interactive aquarium, opened nearby. In downtown, the Pepsi Center became the new home to the Denver Nuggets and the Colorado Avalanche.
The Union Station redevelopment project, completed in 2014, is perhaps one of the most-effectively redesigned train station in the country, and a beacon of the economic health of Denver’s new economy. Union Station is a large-scale mixed-use development—including office, residential, retail, hotel, and transit uses—in downtown Denver. The project has been a transformative effort for downtown and the region. The redevelopment of Denver Union Station turned an underused old train station and a vacant parcel of land into a progressive urban redevelopment that established a new epicenter within downtown Denver. It is an exemplary model for cities and transit systems worldwide.
Denver’s boom and bust cycle has allowed the city to continually reinvent itself, fluctuating from a gold town to a cow town, from an oil town to a tourist town. With each change the city history becomes more complex and vibrant. No one can predict when the next bust will come, but Denver will most likely continue to find new and unique ways to propel itself forward.
What was the reason for Denver’s skyline evolution?
Why are regional economic downturns more complex to correct?
How did Colorado get such a highly educated workforce?
What new structure transformed downtown Denver?
How did the renovation of Union Station impact downtown Denver?