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  #8301  
Old Posted Feb 11, 2020, 3:36 PM
bulldurhamer bulldurhamer is offline
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Originally Posted by SirLucasTheGreat View Post
Regarding bulldurhamer's post, it is absurd that one can park in the center of downtown for a lower monthly payment than a regional RTD monthly pass. The reality is that the economics greatly favor driving in Denver. However, the fact that driving makes more sense now does not mean that Denver shouldn't strive to become substantially less car dependent going forward. I would be in favor of a revision of RTD's fare pricing rules, a carbon tax, congestion pricing, and adding more transit-only lanes in addition to the sweeping redevelopment of surface lots that we see today.
i don't disagree.
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  #8302  
Old Posted Feb 11, 2020, 4:13 PM
laniroj laniroj is offline
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Originally Posted by TakeFive View Post
Part Two:
Developers rule the roost and since it's their money (including investors) they build to profit potential and prefer as mhays can tell you what pencils out the easiest. So they started small and increased their density over time as the demand warranted.

Whether catering to upscale housing or 'luxury' apartments downtown we only get what they decide to build. End of story.
I don't have the slightest clue what you're getting at with parts 1 or 2. Are you implying that the real estate development industry is DECIDING not to make money on building more affordable housing? That would imply (unlike every other for-profit industry in a capitalist society which has ample risk takers willing to figure something out then take a risk to make money) that real estate developers of the world are conspiring together and simply choosing not to make money at the lower end? Nobody is taking up a massive market opportunity?

If that is your position, it's simply laughable. IT'S NOT POSSIBLE TO MAKE MONEY AT THE LOWER END AND THAT'S WHY IT'S NOT GETTING BUILT AND THAT'S WHY IT WON'T GET BUILT AGAIN - regardless of whatever millenials do or whatever recession happens. A combination of land costs, construction costs, labor costs, and time to execute are why the more affordable units aren't getting built. If you can't make 6% return on cost and peg to an 8-10% IRR (and you can't with lower end housing) why not just invest in a dividend fund that you can buy and sell in seconds, not years?

Now, if municipalities would rezone vast swaths of land and open up the land market, the land cost issue could get solved. Municipalities are picking and choosing winners by way of zoning. Leveling the land playing field would solve one component of the problem.

The other problem that is absolutely solvable is the regulatory burden, both with regard to how long everything takes now and how much it costs. Impact fees have risen dramatically this decade. My latest project has municipal fees equal to 13% of total project costs. Land is typically only 10-15%, at most. That 13% municipal burden requires $165 per month for me to hit a very low 6.5% return on cost and that doesn't even include all the design/landscaping/beauty contest minimums which also all cost money.

Lastly, if there was money to be made at the lower end (think suburban garden apartments) people would be doing it. Many did do this earlier in the recovery years of this cycle before costs got out of control. A lack of will to build at the lower end by developers is not why certain unit types or affordability levels don't get built, it's a matter of economics. There is no money to be made on those projects. There is so much money on the sidelines just dying to go to a project, it's comical - and it's why they will accept a 6% return.

Again, we have a generational housing crisis...right now, it's not something that only affects millennials. It's not ok now and it won't ok for a significant period of time until we make sensible changes to zoning and how we regulate - zoning being the much more important factor.

If you've never read it, I would encourage everyone to study up on Harvard's annual housing report. It's an excellent effort, fair analysis without a slant one way or the other, and it's been around for quite some time with good data tracking and trend analyses over time. According to the study, 38 million households nationwide, almost 1/3 of all households (home owners and renters) pay more than 30% of their income toward housing. Of those 38 million who are housing cost burdened, 18 million pay more than 50% of income toward housing.

^That is not ok and when people like you say everything is dandy, it really speaks volumes as to the arrogance and selfishness of a generation. People are in tough times and this is why things like Trump happen (love him or hate him). The economy has worked for every generation prior to Gen X, but it's largely not working and won't work for those who come after unless we solve the housing issue, which is totally in our control. If you don't have stable housing, you can't maintain stable employment, or income, or food, or healthcare, or health.
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  #8303  
Old Posted Feb 11, 2020, 4:24 PM
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Best comment of 2020

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Originally Posted by twister244 View Post
Yeah, I agree here. I think the answers to some of these questions are somewhere in-between. Yes, Denver has tons of land. However, I suspect one issue was earlier last decade, developers and the city were simply unprepared for the level of growth that occurred. I suspect no city can adequately plan and anticipate going from 600k people to 700k people in one decade. I feel like that created a huge bottleneck that escalated prices quickly. Prices are still rising, but not to the extend we saw five years ago.
All of your points are well taken.
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  #8304  
Old Posted Feb 11, 2020, 4:52 PM
laniroj laniroj is offline
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Originally Posted by mhays View Post
That's categorically wrong.

Any idea what land prices are for areas that allow high density, and the relevant trends?
Yep, categorically wrong. There is a massive scarcity of land in Denver. TakeFive seems to think that just because land is vacant, it means it has a willing seller and appropriate zoning. Not to mention, most of the land he probably thinks is developable is old industrial ground likely not suitable for residential due to the decades of contamination his generation poured into the ground - at least not suitable unless you spend many millions removing the soil, pumping out and treating the groundwater and then taking it all to the hazardous waste dump - haha, that's super cheap to do, just look at Gates!
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  #8305  
Old Posted Feb 11, 2020, 4:54 PM
laniroj laniroj is offline
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Originally Posted by TakeFive View Post
...But it varies; there's also plenty of other land where costs are more reasonable...
If you can send me a link to this land, I will legitimately try to buy it. Hell, if you're still a RE broker, you can earn a commission too. It's not like I haven't already tried to buy every single piece of property, just like every other developer! Oh wait, I have...
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  #8306  
Old Posted Feb 11, 2020, 4:55 PM
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Under the radar and at the margin

BusinessDen has the news about a new hotel near Empower Field at Mile High.

One thing that has occurred to me is that over the last few years more and more locals have been able to join the construction parade. Since they're smaller projects including slot homes and they're scattered around we don't notice them. Whether it's apartments in Lakewood or new infill along So Broadway, Evans, So Santa Fe or along So Colorado Blvd there is activity that we may only note in passing. But all of it adds to the landscape and there's a cumulative affect with much still being planned.
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  #8307  
Old Posted Feb 11, 2020, 5:06 PM
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Originally Posted by laniroj View Post
Yep, categorically wrong. There is a massive scarcity of land in Denver. TakeFive seems to think that just because land is vacant, it means it has a willing seller and appropriate zoning. Not to mention, most of the land he probably thinks is developable is old industrial ground likely not suitable for residential due to the decades of contamination his generation poured into the ground - at least not suitable unless you spend many millions removing the soil, pumping out and treating the groundwater and then taking it all to the hazardous waste dump - haha, that's super cheap to do, just look at Gates!
I appreciate your perspective; you make sound observations. I didn't mean to say life is easy for builders.

BTW, Union Station Neighborhood comes to mind. And yes even Elitches will require some mitigation.

But twister244 does an excellent job of summarizing how we got to where we currently are.

Will the city add another 100,000 people over the next decade? It's certainly possible.
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  #8308  
Old Posted Feb 11, 2020, 5:35 PM
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On this very site...

Over the years we've often wondered with all that construction if we weren't creating a new housing bubble. Including me, at various points we knew it was only a matter of time before the good times came to an end.

A year ago or so I guessed we still had a five-year runway of growth. CherryCreek said I was crazy-nuts. Truth be told none of us can predict the future. But if you get 10 different opinions from ten different people there's a reasonable chance that one guess will be right.

The view from 40,000 feet.

There's currently so much money sloshing around it's very hard to see anything but more growth. The Stock Market keeps going higher and higher. Builders continue to build big and small projects. Demand continues to keep pace.

So long as the tech world keeps going and growing then more and more money get inputted into the economy. This impacts everything. The Bay Areas continues to be an incubator for the rest of the country. And yes, I'm convinced that the exodus out of California will continue.
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  #8309  
Old Posted Feb 11, 2020, 6:07 PM
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What could possibly go wrong?

A Black Swan event is by definition impossible to predict.

One potential example would be if there was a collapse in confidence over sovereign debt. Even the most prosperous country in the world is now printing a trillion $'s in annual red ink. While I don't ascribe to the ZeroHedge crowd conspiracies it's reasonable to wonder about the potential risk.

A Gray Swan can be unexpected like the coronavirus which can have more short term negative impacts of lesser consequence.

What if the copious amounts of Venture Capital suddenly dried up or just petered out. That would likely take the froth out of things. Tech jobs, instead of being high-paying could become more back-office support type at a reduced pay level. This would have a ripple affect on the overall economy.

Specific to metro Denver, politics could create too big a burden for businesses that they stop coming. This wouldn't happen overnight; instead it would play out over many years.

Gray Swans aren't obvious until they happen but at some point the party tray will be taken away.
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  #8310  
Old Posted Feb 11, 2020, 7:38 PM
bushw00d bushw00d is offline
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Originally Posted by TakeFive View Post
What could possibly go wrong?

A Black Swan event is by definition impossible to predict.

One potential example would be if there was a collapse in confidence over sovereign debt. Even the most prosperous country in the world is now printing a trillion $'s in annual red ink. While I don't ascribe to the ZeroHedge crowd conspiracies it's reasonable to wonder about the potential risk.

A Gray Swan can be unexpected like the coronavirus which can have more short term negative impacts of lesser consequence.

What if the copious amounts of Venture Capital suddenly dried up or just petered out. That would likely take the froth out of things. Tech jobs, instead of being high-paying could become more back-office support type at a reduced pay level. This would have a ripple affect on the overall economy.

Specific to metro Denver, politics could create too big a burden for businesses that they stop coming. This wouldn't happen overnight; instead it would play out over many years.

Gray Swans aren't obvious until they happen but at some point the party tray will be taken away.
Is this some sort of elaborate performance art?
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  #8311  
Old Posted Feb 11, 2020, 8:47 PM
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Originally Posted by coolmandan03 View Post
So I do this for a living, and that's not really a thing. You can always rehab a garage into other usable space, but if's always cheaper/more efficient to rebuild a garage as something new. Garage have live and dead loads so different than habitats and work places, and people prefer to work/live with higher ceilings. An investment in a parking garage is a long term one.
Party pooper
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  #8312  
Old Posted Feb 11, 2020, 8:57 PM
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CherryCreek CherryCreek is offline
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Originally Posted by laniroj View Post
I don't have the slightest clue what you're getting at with parts 1 or 2. Are you implying that the real estate development industry is DECIDING not to make money on building more affordable housing? That would imply (unlike every other for-profit industry in a capitalist society which has ample risk takers willing to figure something out then take a risk to make money) that real estate developers of the world are conspiring together and simply choosing not to make money at the lower end? Nobody is taking up a massive market opportunity?

If that is your position, it's simply laughable. IT'S NOT POSSIBLE TO MAKE MONEY AT THE LOWER END AND THAT'S WHY IT'S NOT GETTING BUILT AND THAT'S WHY IT WON'T GET BUILT AGAIN - regardless of whatever millenials do or whatever recession happens. A combination of land costs, construction costs, labor costs, and time to execute are why the more affordable units aren't getting built. If you can't make 6% return on cost and peg to an 8-10% IRR (and you can't with lower end housing) why not just invest in a dividend fund that you can buy and sell in seconds, not years?

Now, if municipalities would rezone vast swaths of land and open up the land market, the land cost issue could get solved. Municipalities are picking and choosing winners by way of zoning. Leveling the land playing field would solve one component of the problem.

The other problem that is absolutely solvable is the regulatory burden, both with regard to how long everything takes now and how much it costs. Impact fees have risen dramatically this decade. My latest project has municipal fees equal to 13% of total project costs. Land is typically only 10-15%, at most. That 13% municipal burden requires $165 per month for me to hit a very low 6.5% return on cost and that doesn't even include all the design/landscaping/beauty contest minimums which also all cost money.

Lastly, if there was money to be made at the lower end (think suburban garden apartments) people would be doing it. Many did do this earlier in the recovery years of this cycle before costs got out of control. A lack of will to build at the lower end by developers is not why certain unit types or affordability levels don't get built, it's a matter of economics. There is no money to be made on those projects. There is so much money on the sidelines just dying to go to a project, it's comical - and it's why they will accept a 6% return.

Again, we have a generational housing crisis...right now, it's not something that only affects millennials. It's not ok now and it won't ok for a significant period of time until we make sensible changes to zoning and how we regulate - zoning being the much more important factor.

If you've never read it, I would encourage everyone to study up on Harvard's annual housing report. It's an excellent effort, fair analysis without a slant one way or the other, and it's been around for quite some time with good data tracking and trend analyses over time. According to the study, 38 million households nationwide, almost 1/3 of all households (home owners and renters) pay more than 30% of their income toward housing. Of those 38 million who are housing cost burdened, 18 million pay more than 50% of income toward housing.

^That is not ok and when people like you say everything is dandy, it really speaks volumes as to the arrogance and selfishness of a generation. People are in tough times and this is why things like Trump happen (love him or hate him). The economy has worked for every generation prior to Gen X, but it's largely not working and won't work for those who come after unless we solve the housing issue, which is totally in our control. If you don't have stable housing, you can't maintain stable employment, or income, or food, or healthcare, or health.
Some very interesting points and perspective, I generally would not challenge your point about how unrealistic it is to expect developers to build "affordable" housing (unless mandated) in Denver, in this environment.

Having said that, of course the construction of "higher end" housing indirectly adds more relatively "affordable" housing to the market: as more and more higher end housing gets built, the older, less fancy stuff becomes less competitive for top dollar and ultimately drops in price, at least in comparison to the top of the market.

I've been in quite a few of the relatively expensive apartments built in RiNO, Brighton Blvd, and elsewhere and at its pretty clear to me that a lot of that stuff is not built to last, and won't remain as desirable (or as expensive) as other newer alternatives, as they come onto the market. As we continue to grow and those properties age, they will become the "affordable" alternatives of the future.

I put "affordable" in quotes because, of course, even though what I say above might be mostly true, supply and demand may dictate that even as some of the lower-quality "new stuff" declines in the future, it will continue to be way over priced for many looking for housing, even though it's much cheaper than the latest and greatest stuff then entering the market.

One other point that's been made on here before - some of the complaints about lack of affordability (at least for apartments) are exclusively focused on the newer product apartments built in the past 10 years that include health clubs, swimming pools, barbecue pits and more. When I was starting out after college we called those sort of places "luxury" apartments, and most people starting out didn't have an expectation that you could get a place like that right of college. No pool, and no in-room laundry was the norm, and all you could afford, often.

There's still tons of relatively affordable stuff like that in parts of Denver, but I think the explosion of the new "life style" type living of the latest mega complexes makes some people feel that settling for something like that, even if they are just starting their career is almost as bad as being homeless, lol.
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  #8313  
Old Posted Feb 11, 2020, 9:31 PM
Pedalrob Pedalrob is offline
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Originally Posted by coolmandan03 View Post
So I do this for a living, and that's not really a thing. You can always rehab a garage into other usable space, but if's always cheaper/more efficient to rebuild a garage as something new. Garage have live and dead loads so different than habitats and work places, and people prefer to work/live with higher ceilings. An investment in a parking garage is a long term one.
I was just in Baltimore and stayed at Brookshire Suites on Lombard. The ceilings were really low, so low in fact that my hair brushed the ceiling where a beam was going across the room. I'm 6'3". I asked for a room with a higher ceiling and they said they are all low since the building used to be a parking garage. I didn't doubt it, but now I do. I thought it was a great reuse, if it's true.
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  #8314  
Old Posted Feb 11, 2020, 10:15 PM
bulldurhamer bulldurhamer is offline
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Originally Posted by laniroj View Post
Yep, categorically wrong. There is a massive scarcity of land in Denver. TakeFive seems to think that just because land is vacant, it means it has a willing seller and appropriate zoning. Not to mention, most of the land he probably thinks is developable is old industrial ground likely not suitable for residential due to the decades of contamination his generation poured into the ground - at least not suitable unless you spend many millions removing the soil, pumping out and treating the groundwater and then taking it all to the hazardous waste dump - haha, that's super cheap to do, just look at Gates!
That’s some twisted logic. All land is owned. By that measure, upzoning every corner if the city would still leave you with land owned by someone, with the same “scarcity”issues.

As for for mitigation, im not even sure what you’re saying. Are you saying we need the neighborhoods to be rezoned since it’ll be cheaper to build there?

Finally I’ll repeat it once again, many if the areas being singled out already have existing row houses and such. It’s not going to be the magic bullet you think it will. Are they gonna pay millions for old row houses only to build new row houses in their place? Come on.
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  #8315  
Old Posted Feb 11, 2020, 10:25 PM
bulldurhamer bulldurhamer is offline
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It’s also worth saying that trying to protect neighborhoods from dramatic change isnt a racist like i keep reading. It many cases it’s quite he opposite. Id argue your rush to displace long established neighborhoods of color is what’s actually racist. It’s easy to say more density for the people, while writing off the blacks and browns, right?
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  #8316  
Old Posted Feb 11, 2020, 11:02 PM
twister244 twister244 is offline
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Originally Posted by bulldurhamer View Post
It’s also worth saying that trying to protect neighborhoods from dramatic change isnt a racist like i keep reading. It many cases it’s quite he opposite. Id argue your rush to displace long established neighborhoods of color is what’s actually racist. It’s easy to say more density for the people, while writing off the blacks and browns, right?
Oh no you don't..... I'm not falling for that trap.

In other news..... DenverInfill has an awesome topping out post for McGregor Square!

https://denverinfill.com/blog/2020/0...-tops-out.html
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  #8317  
Old Posted Feb 11, 2020, 11:07 PM
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Interesting tidbit I stumbled upon

With reference to the Tax Cuts and Jobs Act. https://www.marketwatch.com/story/tw...wsviewer_click
Quote:
As a footnote, it appears that the TCJA’s $10,000 limitation on deductions for state and local taxes has probably accelerated relocations from high-tax states like California, Illinois, New York, and New Jersey to low-tax and no-tax states like Colorado, Florida, Idaho, Nevada, Texas, and Utah.
This speaks to personal as apposed to business taxes and is only one slice of the migration pie. In addition the cost of living varies among these states also. In Colorado as twister244 has pointed out residential (as apposed to commercial) property taxes are very reasonable. Confirming the trend California, Illinois and New York are all expected to lose a House seat after 2020 census.

Quote:
Originally Posted by CherryCreek View Post
I've been in quite a few of the relatively expensive apartments built in RiNO, Brighton Blvd, and elsewhere and at its pretty clear to me that a lot of that stuff is not built to last, and won't remain as desirable...
Interesting observation; other good points too.

Lacking the more typical sprawl of new suburban 'starter' home neighborhoods of the past, in this cycle all the Millennials wanted to live in the city center. All those new apartments are your entry-level housing now. The growing demand speaks as much to the economy as to location preferences but they go hand in hand.

Quote:
Originally Posted by twister244 View Post
In other news..... DenverInfill has an awesome topping out post for McGregor Square!

https://denverinfill.com/blog/2020/0...-tops-out.html
I get a kick out of all people watching and taking pics with their smart phones.
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  #8318  
Old Posted Feb 11, 2020, 11:54 PM
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Here's an interesting data point from CREJ that I find somewhat shocking, and contrary to many of the broad discussion points on this board for years:


While more residents began renting, their share decreased. While the number of Denver renters went up by 17% in the past decade, the number of homeowners increased faster, by 21% since 2010. The share of Denverites who rent shrunk by 2% since 2010, down to 45% at the end of the decade.

The figures come in contrast with growth trends on a country level – the renter population grew two times faster than the owner population in the past decade, and the tenant share expanded by 3%, up to 34% in 2018.



https://crej.com/news/accelerated-gr...s-past-decade/


Can this be right ? Despite all the apartment construction, the population boom, and the general sense that both SFH and condo construction has not kept up with Denver's rapid growth, the percentage of persons who own vs. rent has gone UP in Denver in the last decade???

I'm really surprised. (though interestingly, the share of renters (45%) in Denver is much higher than nationally (34%), but per CREJ, it was that way here BEFORE the boom).
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  #8319  
Old Posted Feb 12, 2020, 2:05 AM
mhays mhays is offline
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Originally Posted by bulldurhamer View Post
That’s some twisted logic. All land is owned. By that measure, upzoning every corner if the city would still leave you with land owned by someone, with the same “scarcity”issues.
What a bizarre idea. If you upzone land, it can be used more intensively, typically meaning more homes can be built there.
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  #8320  
Old Posted Feb 12, 2020, 4:47 AM
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Sam Hill Sam Hill is offline
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Originally Posted by Pedalrob View Post
I was just in Baltimore and stayed at Brookshire Suites on Lombard. The ceilings were really low, so low in fact that my hair brushed the ceiling where a beam was going across the room. I'm 6'3". I asked for a room with a higher ceiling and they said they are all low since the building used to be a parking garage. I didn't doubt it, but now I do. I thought it was a great reuse, if it's true.
I don't see why a conversion couldn't be done as long as the garage was designed and built for future conversion. It wouldn't have low ceilings.

We already know converting an existing parking garage isn't practical, but that's not what the article was about.
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