DENVER | Main Development Thread #7

[Passportphoto]

I hear you tommyboy733. They can cut the fares as much as they want. I won't ride it for free. They are unsafe and a public health hazard. Plus, I have to worry about my car the entire time I'm gone. What a shame.

[rds70]

Here is the final design of the 20 story apartment building proposed at 805 W 38th Avenue from the building permit application. The project will have 425 units and ground floor retail. The developer is Continental Realty Group of Littleton:

[TakeFive]

As always; nice work

Originally Posted by rds70

Here is the final design of the 20 story apartment building proposed at 805 W 38th Avenue from the building permit application. The project will have 425 units and ground floor retail. The developer is Continental Realty Group of Littleton:

Here's a rendering courtesy of Continental Realty Group

805 W 38th Avenue



20-Story Building Coming to Edge of Globeville
June 15, 2023 By By Eric Heinz - Denver NorthStar

“At one point, we did contemplate doing a condo tower, but we’re doing all apartments for rent,” Snyder said. “Fifty-one of them will be affordable, half of them will be 60% AMI (area median income) and half will be 80% AMI.”

Quite Interesting

“We reached out to whoever we could to talk to about this, and I think that people were excited to know that we were actually achieving the zoning that the city laid out for the area,” Snyder said. “Some of the other projects in the area are only going up five stories.”

“It’s a special area in my mind because there are only so many places in the city that have 20 stories zoning on them,” Snyder added. “We think it’s very important that we are utilizing the zoning that’s been afforded to this area.”

Continental Realty Group has an interesting background as it looks like most of their projects have been outside of Denver including Las Vegas, Metro Phoenix, Durango, Albuquerque, Overland Park, Kansas, Memphis, Louisville etc. Looks like they've focused a lot on buying existing projects for value-add purposes.

Given the proposed unit-affordability mix this is not a surprise.

Our current focus is developing workforce housing in high cost markets and inside opportunity zones while utilizing space efficient design with modular/pre-fab components to tighten the construction timeframes.

We strongly believe density, affordability, and sustainability are key factors in addressing the housing needs in our communities. ... We strive to preserve access for all to our communities by securing paths of affordability through reduction in construction costs and/or utilization of workforce housing finance instruments.

The End

[bunt_q]

We need a new term for “commie blocks” that are developed out of our over regulated semi-capitalist framework. Seems there is convergence.

[wong21fr]

Originally Posted by bunt_q

We need a new term for “commie blocks” that are developed out of our over regulated semi-capitalist framework. Seems there is convergence.

It's obvious that "freedom blocks" is the appropriate, somewhat ironic, descriptor.

[TakeFive]

Induced Demand? Not a problem

Originally Posted by Passportphoto

I hear you tommyboy733. They can cut the fares as much as they want. I won't ride it for free. They are unsafe and a public health hazard. Plus, I have to worry about my car the entire time I'm gone. What a shame.

Denver's got this down; just offer crappy transit service that repels normal people from riding.

Denver's crappy transit service is adding as much as 80,000 cars per day.

Silly to obsess over more freeway lanes; forget all the 'white paper' analysis when all you have to do to induce lots of cars is simply offer terrible transit service.

Fair to say that RTD needs to figure out how to run a transit system that's safe and comfortable to ride. While bus routes 15 and 15L have a history of being colorful the rest of the system should be rather boring. Boring is Good.

Some are suggesting that transit might need to de-emphasize commuting and realize other ways it can be beneficial. For example perhaps Arvada Station, Park Meadows or Lone Tree will become more of a destination.

[TakeFive]

So what are the current transit numbers?

Note: While the 1st quarter ridership numbers are now posted at APTA, RTD declined to provide weekday ridership numbers so I've had to use 4th quarter of 2022. 2022 was a nice bounce-back year for transit and chances are any ridership gains for 2023 are negligible.

Total weekday ridership for all modes 4th quarter

• 2019 - 406,000
• 2022 - 238,500 or 59% of 2019

Light Rail ridership

• 2019 - 95,300
• 2022 - 51,200 or 54%

Commuter Rail ridership

• 2019 - 40,000
• 2022 - 29,100 or 73%

All rail service combined ridership

• 2019 - 135,300
• 2022 - 80,300 or 59%

Bus Service ridership

• 2019 - 135,300
• 2022 - 80,300 or 59%

Notes:

• RTD has 125 bus routes and 8 rail lines
• Between 2019 and 2022 the ratio of rail ridership to bus ridership has remained impressively consistent. 1/3 for rail ridership and 2/3 for bus ridership.
• Commuter rail has benefited from better A Line performance plus the addition of some amount of N Line that was added after 2019.
• The 80,000 of imputed more cars on the road came from dividing the total ridership difference from 2019 to 2022 in half (trips versus total ridership).

Denver and Portland like two peas in a pod. Portland has similar issues and their ridership remains at 60% of 2019 ridership numbers.

Simple Question: if using transit is an unpleasant experience then how do transit experts and fans expect to boost ridership? Or should we simply celebrate Denver's 'Induced Demand' achievements.

[Robert.hampton]

Originally Posted by bunt_q

I'm picturing your stiletto heels really increasing the wear and tear on those sidewalks.

Obviously the lifecycle cost of "busier" concrete is higher than the cost of the suburban corner lot with twice as much concrete. Oh wait, no it's not.

lol wut? This response is about as half baked as the sidewalk fee structure

[laniroj]

Originally Posted by mojiferous

Because they are really bad. At least for a first world country. Much like our streets and highways and bridges and electrical and communication infrastructure. We treat everything like the cost is the most important factor and the actual function of the infrastructure is way down the list...

We can agree to disagree on the first part of this. Other than a handful of very expensive city centers, my personal experience is that I haven't really been anywhere in the world that gets close to the level of accessibility we have in this country - legitimately, nowhere close.

[laniroj]

Originally Posted by bunt_q

We need a new term for “commie blocks” that are developed out of our over regulated semi-capitalist framework. Seems there is convergence.

Commie blocks actually look better because they don't have a parking podium...

[laniroj]

Originally Posted by TakeFive

[SIZE="3"]Some are suggesting that transit might need to de-emphasize commuting and realize other ways it can be beneficial. For example perhaps Arvada Station, Park Meadows or Lone Tree will become more of a destination.

This would be an excellent question and analysis done by CHAT GPT. I've got to think mobile phone companies could sell movement data to large, unsophisticated transit agencies who could then contract with big tech to see where and how people are actually moving and formulate service plans accordingly. Same goes for roads and traffic signals. My hope is that AI eliminates transportation engineers from our universe entirely within the next decade.

[mishko27]

Originally Posted by laniroj

Commie blocks actually look better because they don't have a parking podium...

Yeah, but as a Slovak, let me tell you, I wish they did. Parking around the estates is just abysmal, it's a total chaos these days. Arguably, people drive way less and you usually have one car per family as you simply do not need more than that, but the commies still did not plan for that.

Arguably, I grew up hating "paneláky" (plural of panelák, a building made of panels, the Slovak word for commie blocks) and "sídliská" (commie estates, as in whole city districts full of commie blocks). They are compact and have great transit, but there was next to no retail, very few (if any) cultural institutions, no restaurants or bars available. It's vastly different now and they are actually desirable place to live these days.

I digress. That building, especially the white / grey part does look like a panelák out of Košice. It's kinda wild.

[TakeFive]

The State of Office Space in Denver

Want to see something interesting and impressive, CHECK THIS OUT
Mile High CRE featured this property in April of 2022.
Fast-forward and BusinessDen now reports this building is in Foreclosure.

Cushman & Wakefield: Five Fast Facts for Office ... Markets in Denver
August 21, 2023 Mile High CRE

The Denver metro office net absorption continues to trend negative with downsizing and tenant move-outs, however, asking rents remain steady at the end of Q2 2023.

• Vacancy, Sublease Availability Falls Slightly
• Leasing Activity decreases in Second Quarter 2023
• Net Absorption Continues to Trend Negative -- Absorption continues to be heavily impacted by downsizing and tenant move-outs, resulting in 1.5 msf of negative net absorption in Q2 2023, a decline from the negative 0.8 msf of negative absorption recorded in Q2 2022.

This was just reported by the DBJ
Slack looks to unload 80K SF of office space in downtown Denver

Not sure how important but perhaps Interesting?
Coworking in Broomfield is 49% Cheaper than Traditional Office ...
August 28, 2023 Mile High CRE

Just the Same

[bunt_q]

This is what gets me:

Vacancy, Sublease Availability Falls Slightly
Overall vacancy decreased 20 basis points QOQ in Q2 2023, while sublease availability fell to 6.2 msf.

Leasing Activity decreases in Second Quarter 2023
The Denver Metro recorded just 1.4 msf of leasing activity in Q2 2023, a decrease of 21.8% compared to Q1 2023.

Net Absorption Continues to Trend Negative
Absorption continues to be heavily impacted by downsizing and tenant move-outs, resulting in 1.5 msf of negative net absorption in Q2 2023, a decline from the negative 0.8 msf of negative absorption recorded in Q2 2022.

But....

Asking Rents Remain Steady
Rental rate growth remained stable QOQ, ending Q2 2023 at an average rate of $31.84 per square foot (psf) on an overall basis. This represented a $0.18-psf increase QOQ and an $0.48-psf increase compared to Q2 2022.

There needs to be a reckoning amongst office building owners and brokers. We were actually looking to expand, but the lease rates were unforgiving, and the tenant finish was getting priced at double estimates. So we walked away and kept our smaller crappier space.

It makes no sense to me that, given vacancy trends, there is zero reduction in rents. It's almost like the office market is just broken. They'd rather hold out for $10, and end up in foreclosure with $2, rather than take $6 and be full and, just perhaps, become a part of restoring the vibrancy that will sustain their business model (and real estate value) for decades to come.

Much the way some on here feel about robots replacing transportation engineers, I will be pleased when robots replace all real estate brokers. (Assuming the robots show up before the towers of skulls do; I can't say for certain which way society is trending.)

[TakeFive]

Very Interesting

Originally Posted by bunt_q

This is what gets me:

There needs to be a reckoning amongst office building owners and brokers. We were actually looking to expand, but the lease rates were unforgiving, and the tenant finish was getting priced at double estimates. So we walked away and kept our smaller crappier space.

It makes no sense to me that, given vacancy trends, there is zero reduction in rents. It's almost like the office market is just broken. They'd rather hold out for $10, and end up in foreclosure with $2, rather than take $6 and be full and, just perhaps, become a part of restoring the vibrancy that will sustain their business model (and real estate value) for decades to come.

Much the way some on here feel about robots replacing transportation engineers, I will be pleased when robots replace all real estate brokers. (Assuming the robots show up before the towers of skulls do; I can't say for certain which way society is trending.)

Love the Bots

Here's what I just read tonight on "Bisnow":
Remote Work Will Persist, Goldman Forecasts, Bringing More Pain For Office Landlords Through 2030

Impacts of the remote work revolution on landlords are expected to grow as leases expire and tenants renew for smaller spaces, according to a new report by Goldman Sachs.

This doesn't even speak to the financial mess that's brewing.

I recall that December last year that Block 162 just went over 50% occupancy (finally). My guess here is the project was totally or substantially self-funded by USAA so they can afford to be as patient as they want.

Mostly, it's how well the economy, including Denver's 'seems' to be doing.

My 1st prediction: the dam will break ~18 months from now.

My 2nd prediction: Nikki Haley will be the next President based largely on being the only notable Adult in the Room.

Edit: that reminds me I found a wonderful site (pdf) about CDOT's ten year plan updated to include iija info as of Sept 2022. It's a nice easy-to-read vision of various projects currently moving forward. Just the right amount of detail without giving one a headache.

[COtoOC]

Originally Posted by TakeFive

Very Interesting

Love the Bots

Here's what I just read tonight on "Bisnow":
Remote Work Will Persist, Goldman Forecasts, Bringing More Pain For Office Landlords Through 2030

This doesn't even speak to the financial mess that's brewing.

I recall that December last year that Block 162 just went over 50% occupancy (finally). My guess here is the project was totally or substantially self-funded by USAA so they can afford to be as patient as they want.

Mostly, it's how well the economy, including Denver's 'seems' to be doing.

My 1st prediction: the dam will break ~18 months from now.

My 2nd prediction: Nikki Haley will be the next President based largely on being the only notable Adult in the Room.

Edit: that reminds me I found a wonderful site (pdf) about CDOT's ten year plan updated to include iija info as of Sept 2022. It's a nice easy-to-read vision of various projects currently moving forward. Just the right amount of detail without giving one a headache.

I can't completely gauge how big this trend is, but quite a few people I know are being forced back into the office soon, myself included. Seems to be a corporate trend to increase pollution and traffic Although like my return to office, many won't be in seats 5 days per week, but it could be enough by mid 2024 to impact the office market.

[bunt_q]

Are you guys doing 3 days?

Are you keeping dedicated individual space for employees, or will you move to a hoteling model?

Just curious.

[wong21fr]

Originally Posted by COtoOC

I can't completely gauge how big this trend is, but quite a few people I know are being forced back into the office soon, myself included. Seems to be a corporate trend to increase pollution and traffic Although like my return to office, many won't be in seats 5 days per week, but it could be enough by mid 2024 to impact the office market.

Seems like September is the big month for the return to the office movement with the three day per week option being the most prevalent. Know a number of people as well who have been given their marching order to get their butts back into their office chairs. It will be interesting to see just how observable the impact is.

Now if the City of Denver would reopen the development review walk-up counter and bring back in-person review sessions...

[laniroj]

Originally Posted by bunt_q

..It makes no sense to me that, given vacancy trends, there is zero reduction in rents. It's almost like the office market is just broken. They'd rather hold out for $10, and end up in foreclosure with $2, rather than take $6 and be full and, just perhaps, become a part of restoring the vibrancy that will sustain their business model (and real estate value) for decades to come...

It makes perfect sense. They bought the building at a 5 cap (if they were lucky and didn't compress below that) and now if they don't get the asking rent they give the keys back to the bank anyway. So they can hope to get it in the next 12 months or they walk away - either way the discounted rent doesn't work for the current owner. Companies don't remain a going concern by bleeding out on non-performing properties and funding huge deficits - much easier to just hand the keys over given most of these huge office buildings likely have non-recourse financing. Once the bank takes it over, auctions it off, or sells the loan for $0.50 on the $1.00 that new owner will accept that lower rent...

[SirLucasTheGreat]

Are the lenders behind these depreciated office towers going to have liquidity problems when they auction off their vacant buildings? It seems like there will be substantial losses there.

By the way, active excavation appears underway at Parq II in Golden Triangle. Parq II will help fill in that wall of buildings on Speer.