Arnold Schwarzenegger smiled for the photographers on a chilly day in March 1995, strolling down Wazee Street with a retinue of overawed city bureaucrats, retail CEOs, neighborhood potentates and bodyguards. The beaming actor told reporters that he thought lower downtown was "fantastic" and that he wanted to do a project in Denver "in a big way."
Schwarzenegger was out to make a splash in Denver, and he succeeded. When he and his entourage took their stroll through the streets around Coors Field, the event combined money, muscle, sex appeal, movie stars, beer and lower downtown--all of Denver's favorite things, neatly tied up in one package. And the PR stunt was received as expected: The next day, a photo of Arnold and his pals appeared on the front page of the Denver Post.
But Schwarzenegger was playing a new role here, one far different from his stints as a ruthless Russian assassin in Red Heat or the muscle-bound cyborg in The Terminator. It was in Denver that he was to make his most audacious bid to become a serious businessman. His role was as a real estate developer who promised to transform an entire block of lower downtown into a dazzling array of chic lofts, movie theaters and hip retail stores, all of it anchored by Planet Hollywood, the popular nightclub chain that Schwarzenegger owns along with Hollywood pals Sylvester Stallone, Bruce Willis and Demi Moore.
Schwarzenegger promoted his scheme with all the Hollywood moxie he could muster. He lassoed executives from some of the hottest retailers in the country to board his Gulfstream jet and fly into Denver, landing at Centennial Airport and motoring downtown to chow down with LoDo civic leaders and City Hall insiders at McCormick's Fish House & Bar. They slurped beer at the Wynkoop Brewing Company--Arnold ordered a Railyard Ale--and breezed through the Tattered Cover Book Store.
But Schwarzenegger, who's been lucky in so many things, hit a brick wall in Denver. The multi-millionaire Austrian immigrant soon learned that while it may be easy to wow individual city workers, it's not easy to fight City Hall. He also encountered the surprising street smarts of a rival Los Angeles developer named Bill Denton, who looks like a college professor but has the gutsy bravado of a bare-knuckles brawler--so much so that he once reportedly vowed to "kick Arnold's ass." The result was a high-powered faceoff that's still the talk of Denver's real estate community.
"We had all these characters fighting over our beloved cowtown," recalls Denver planning consultant Brad Segal. "We were the center of attention for movie stars and mega-developers."
In the end, Denton won the battle for the right to build downtown's latest hip strip. The block Schwarzenegger owns on Blake Street, between 18th and 19th streets, still languishes, while Denton's project--known as the Denver Pavilions--is under construction on the 16th Street Mall between Welton Street and Tremont Place, with an opening planned for October 1998. But those working with Schwarzenegger insist that, like his most famous character, he'll be back.
In some ways, real estate is more ruthless than anything in the movies. Developers think nothing of threatening to destroy anyone who gets in their way. The stakes are high, especially in Denver, where memories still linger of the 1980s crash that bankrupted numerous big-shot developers. With millions of dollars at stake, image is everything, and creating an impression of "momentum" is part of the game plan.
Schwarzenegger probably thought he had the image thing down. After all, what kind of retailer would turn down a private invitation from a Hollywood superstar? In Denver, though, the Hollywood magic didn't work. Simply put, Arnold was KO'd.
Bill Denton still hasn't forgotten the bad news he received after returning from a short vacation to Mexico in March 1995.
For months Denton had been talking to retailers about his two-block, 350,000-square-foot Pavilions project at the upper end of the 16th Street Mall. The $101 million project had repeatedly been delayed since first being announced by Denton in 1994, as a succession of banks and real estate investors made tentative commitments to the project and then backed out. Memories of shopping centers that crashed and burned around the country as a result of retail overbuilding in the 1980s were still fresh, and the location on the upper part of the mall was seen as risky. However, Denton had persisted and had managed to get tentative commitments from the AMC theater chain and several prominent retailers. But what he saw come out of his fax machine at his L.A. office was a huge shock.
"When I came back, I got a fax of [the Post article] showing our tenants walking down the street with Arnold," says Denton. "The tables were turned over a five-day period when I was relaxing by a pool in Mexico."
Denton says he felt especially betrayed by AMC, which he claims had already entered into lease negotiations with the Pavilions. "I don't believe when somebody is in lease negotiations they should be talking to another project," says Denton. (A spokesman for AMC declines to comment.)
Schwarzenegger was joined on his jaunt to Denver by representatives of AMC, Niketown, Virgin Records and his own Planet Hollywood chain. Denton had been in discussions with all of them and thought he was getting close to signing leases. Since showbiz-oriented retailers like to be near each other, the thinking was that many of them would wind up in the same development.
Schwarzenegger isn't usually directly involved in his real estate ventures, instead creating partnerships with creative names (his LoDo real estate holdings were acquired by Pumping Bricks Ltd.) and handing over responsibility to his partners and employees. And until he saw Arnold's picture in the paper, Denton didn't even realize Schwarzenegger was planning a retail project on the property near Coors Field. He also didn't realize that Schwarzenegger apparently got the idea from him--tipped off, most likely, by one of his colleagues at Planet Hollywood.
Schwarzenegger had begun buying property in LoDo in the early 1980s, paying prices that now seem like chump change. At the time, it was widely believed that Denver's office-building boom would extend into LoDo and that historic buildings would be demolished to make way for high-rises. Instead, the office market tanked, and Schwarzenegger was left holding the mortgage on most of the 1800 block between Blake and Wazee streets.
But the actor's luck turned in 1991, when the decision was made to build Coors Field at 20th and Blake streets. Land along Blake Street tripled in value overnight, as restaurant and bar owners made plans to open their doors to thousands of baseball fans. By the mid-1990s, LoDo was the place to be, and the area caught the eye of national developers--many of whom Denton was already trying to sell on his Pavilions project.
Before he went on vacation, Denton had spent months wooing Planet Hollywood into joining the Pavilions. "We were working to get the Planet Hollywood chairman [Robert Earl] to Denver for six months," he says. According to Denton, he was a week away from meeting with Earl in Denver when the retail blueprint he had put together for the Pavilions started to come apart.
"In a 48-hour period, Schwarzenegger got wind that [Earl] was going to Denver," he says. "Schwarzenegger told him, 'I own a block in downtown Denver. Why don't we get a group together and fly out to Denver?'"
Denton says he doesn't believe Schwarzenegger intentionally tried to lure away his would-be tenants. But he doesn't conceal his anger at the people working with the movie star, who he claims were well aware that many of the retailers accompanying Schwarzenegger to Denver were about to sign leases with the Pavilions.
"Do I think Schwarzenegger had any idea these were our tenants?" Denton asks. "I say no. I hear he's a good businessman and a nice person."
For the rest of 1995, the two projects jousted for many of the same tenants. Schwarzenegger's project--dubbed Stadium Walk--was said to be ready to break ground in 1996. Behind the scenes, however, Denver's movers and shakers were doing everything they could to push the Pavilions--and they were getting help from the administration of Mayor Wellington Webb.
Schwarzenegger's first indication that he would have trouble in Denver probably came at the lunch at McCormick's. The lower downtown neighborhood leaders he met with made it clear that they would prefer the retailers go to the Pavilions project, since they were concerned about LoDo being overwhelmed by traffic and parking hassles. Schwarzenegger--who struck many people at the lunch as a thoughtful and intelligent businessman--told the group he didn't want to get into a fight with the neighborhood.
"He said he didn't need the brain damage of having the neighborhood against him," recalls Carrie Kramlich, former president of Lower Downtown District Inc.
The city had already made its preference clear: In December 1994, the Denver Urban Renewal Authority, whose boardmembers are appointed by the mayor and approved by the city council, gave the Pavilions a $24 million subsidy. With that funding, known as tax-increment financing, the city sells bonds to help fund the project and then pays off the bonds with sales-tax revenue generated by the new development. That means Denver is betting $24 million on the Pavilions' success.
The city's position was grounded in its belief that while LoDo had already boomed thanks to Coors Field, upper downtown along the 16th Street Mall was slowly deteriorating. While Schwarzenegger might have received enthusiastic city support for his Stadium Walk project in the late 1980s or early 1990s, the block he owned was now surrounded by trendy new restaurants and bars and hardly seemed in need of a city subsidy. "We needed to get excitement and vitality on the mall," says Tyler Gibbs, the city's director of urban design. "LoDo had a head start, and we needed to focus attention on blocks that were empty parking lots."
The city has struggled to find anchor stores for the 16th Street Mall ever since longtime downtown department stores like the Denver Dry and Neusteter's started closing their doors in the late 1980s. Gibbs says he believes the entertainment retailers coming to the Pavilions will fill that role, drawing suburbanites who are bored with cookie-cutter shopping centers.
"People want to come downtown," he says. "It's a different sort of experience than you can get in the suburbs. You get out on the street with other people. It's more dynamic and fun."
The Pavilions project also hopes to create a buzz by tapping into a nationwide retailing phenomenon: the show-biz trend that includes Virgin Records superstores, which are as large as some department stores, and "eatertainment" restaurants like the Hard Rock Cafe and Planet Hollywood, which serve up celebrity razzle-dazzle along with overpriced hamburgers. The most prominent of the entertainment retailers is Niketown, a mind-boggling shoe store that features a basketball court where landing a shot triggers a taped roar of the crowd, transparent vacuum tubes that shoot pairs of shoes up from storage, and more music and neon than the average Las Vegas casino.
Denton figured show biz would be big biz for the Pavilions, and the project's big break came in December 1995, when, after months of haggling, Niketown announced it would sign on to the project. Denton already had commitments from United Artists theaters, Virgin Records, the Hard Rock Cafe and Barnes & Noble. The addition of Niketown--arguably the hottest retailer in the country--was the capper.
"The biggest challenge was convincing [the retailers] to come to Denver," says Denton. "All of the major tenants looked each other in the eye and said, 'If you go, I'll go.'"
Many local observers are still surprised that the Pavilions project was able to break ground last winter. Today Denton has more than fifty tenants signed up for the giant complex, which would be bigger than the Tabor Center, Larimer Square and Writer Square combined. "Denton pulled together something a lot of people didn't think would happen," says Denver retail consultant Eileen Byrne. "He deserves a lot of credit for that."
However, Denton isn't exactly loved by many locals. He earned a reputation for his fiery temper--"He's a big hothead," says one real estate insider--and became known for bawling out newspaper reporters who wrote about the project's many setbacks. Some say Denton turned the competition with Schwarzenegger's project into a piece of macho theater, reportedly boasting to acquaintances, "I'm gonna kick Arnold's ass."
"I've never said that," responds Denton. "I said, 'I'll worry about him in real estate when he sees me in action films.' I was prepared to do whatever I had to do to get my tenants back."
Denton faced the daunting task of trying to lure retailers to a two-block stretch of downtown that had earned a reputation as a Bermuda Triangle for developers. Several development schemes for those blocks had been floated and gone nowhere, including one in the late 1980s for a massive shopping center that died after landowners, the city and the developer became mired in an ugly legal battle.
Even though lower downtown seems to have all the excitement these days, Denton says the upper end of the mall has more advantages than are generally realized. Thousands of office workers fill the streets during the day, and the convention center and major hotels are nearby. Denton estimates there are 8,000 parking spaces within two blocks of his project, and most of those spaces are empty at night.
To highlight the difference between the two sites, Denton put together a video he showed at the 1996 International Council of Shopping Centers convention in Las Vegas. The annual real estate get-together is a must for developers, as men wearing red power ties and women in heels gossip over the latest projects and scheme against rivals.
At his booth, where he sought to attract still more tenants by stressing the advantages of upper downtown over LoDo, Denton ran a video showing the scant pedestrian traffic at noon along Schwarzenegger's block of Blake Street. "The only thing missing was sagebrush on the sidewalk," says Denton proudly.
Then the scene shifted to the Pavilions site on the 16th Street Mall, where hundreds of people walked down the street and lined up at Tristan's hotdog stand. Once retailers visited Denver, says Denton, they could see the advantages of being on the mall.
However, one insider who worked on the Stadium Walk project says the Pavilions' real advantage was more basic: public money. While lease terms at the Pavilions haven't been disclosed, the rumor is that Denton gave big tenants like Niketown sweet deals to get the project moving--deals made possible only by the eight-figure contribution from DURA. It also hasn't hurt that the Pavilions will sit next door to the newly refurbished Adam's Mark Hotel, a likely source of well-heeled shoppers that has benefited from its own $25 million DURA subsidy.
"We didn't have $24 million to subsidize rents," says the insider. "It's not as difficult to sign leases when you're offering high tenant finishes and low rents."
Many of the people who can take credit for making LoDo what it is today were happy when Denton's project beat Schwarzenegger's to the punch. The specter of corporate chain restaurants such as Planet Hollywood especially bothers them, since it was locally owned businesses like the Wynkoop Brewing Company and the Tattered Cover that put LoDo on the map.
Already it's been largely forgotten that the creation of the lower downtown historic district in 1988 was controversial--opponents claimed that outlawing the demolition of historic buildings was a violation of private property rights. The measure had to be pushed through a skeptical city council, and many of the first people to invest in LoDo were told by friends that they were wasting their life's savings on a rundown wasteland.
Now those same investors see the oldest district in Denver taking on the atmosphere of a theme park. "Lower downtown was not set up for this," says pioneer LoDo developer David Clamage. "You're creating so many big attractions, it's creating huge parking and traffic problems."
Clamage misses the low-key, friendly downtown neighborhood he remembers from the 1980s. He believes the city is allowing too many oversized new projects in LoDo, and he's not looking forward to having Planet Hollywood as a neighbor.
"I'm a purist," he says. "I would preserve the neighborhood as it is. I don't want it turned into Disneyland."
But those working on Stadium Walk say Schwarzenegger's magic kingdom is alive and well and that Denver can still expect to witness the opening of a Planet Hollywood a stone's throw from Coors Field.
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"We're actively leasing the retail space and making good progress," says John Lehigh, the former director of construction at Coors Field who was hired last year to oversee development of Stadium Walk. Lehigh says he's seeking tenants and negotiating with an undisclosed movie-theater chain to open a multiplex with a dozen or more screens.
In response to neighborhood criticism, Lehigh says the $70 to $80 million project has increased the number of planned parking spaces from 300 to 500. The development has also been redesigned, he says, to include a larger number of lofts on the Wazee Street side and to make most of the 200,000 square feet of retail space face the street instead of an interior courtyard.
Sources familiar with the project say officials want to break ground in 1999 and are in serious negotiations with several retailers. Lehigh will say only that Schwarzenegger's project will break ground when the market is ready for it.
Despite the fact that the Pavilions snagged the high-profile tenants like Niketown--and the fact that the only publicly announced tenant at Stadium Walk so far is Arnold's own Planet Hollywood--Lehigh insists that Stadium Walk can still be successful. Adds another person involved in trying to resuscitate Schwarzenegger's foray into big-time real estate, "It's unfortunate that when projects get quiet, people think the projects are dead.