DENVER | Main Development Thread #7

[Interzen]

While I'm here I'll beat TakeFive to the punch with another quote from a Denver Business Journal Article:

Businesses in the Denver area are hiring more often and paying better wages compared to their out-of-state peers, making the region the country's hottest market for job seekers. according to a new report.

Payroll giant ADP recently identified the nation's hottest hiring markets based on pay growth, starting wages and hiring rate for 15 million workers.

The Denver-metro area, defined as the Denver-Aurora-Lakewood metropolitan statistical area, earned the top place out of 55 metro areas analyzed by ADP.

Here is a direct link to the ADP Analysis

[TakeFive]

Nice posts -- Keep posting

Originally Posted by Interzen

While I'm here I'll beat TakeFive to the punch with another quote from a Denver Business Journal Article

BTW, I don't have DBJ privileges so feel free to relay good stuff from there anytime.

I'm taking some extra time off as the temps spiked down here. Wednesday we set a new record of 116 degrees, but back down to 111 today. It's the overnight lows that I look at this time of year. In a couple of weeks (maybe it takes three) the overnight lows should drop into the lower 70's and quickly into the 60's. That's great patio weather.

Aren't you dialed into the Santa Fe district? Do you know if Holland finished their second apartment project in the ten hundred block, just north of their 1st project called The Quinn?

[Interzen]

Originally Posted by TakeFive

Do you know if Holland finished their second apartment project in the ten hundred block, just north of their 1st project called The Quinn?

Looks like it's in wrap-up mode but I don't think they are moving in yet.

[TakeFive]

Cool and Thanks

Originally Posted by Interzen

Looks like it's in wrap-up mode but I don't think they are moving in yet.

Nothing beats a 'man on the street' update.

--------------------------------------

Whether being Business Unfriendly is good or bad or perhaps a mixed bag all depends

These guys like calling Denver their home.

Major Data Center Firms Call Denver Home, But Most Won't Build In Their Own Backyard
September 8, 2024 Dan Rabb, Data Centers via Bisnow

Some of the world’s most prominent data center companies are headquartered in Denver, but they see hurdles in their home state that have prevented them from turning Colorado into a hotspot for data center construction.

I didn't know this:

In some ways, Denver is a critical nerve center of the data center industry. The Mile High City is a hub of data center leadership, with seven of the world’s largest data center developers and operators headquartered in the area. Only Dallas, a far larger city, is home to more data center companies, and only by a narrow margin.

Denver-based firms like CoreSite, Vantage Data Centers, Flexential and Stack Infrastructure have helped lead the data center building boom and seen their valuations swell in the process.

This I did know if not the specifics:

But while Denver may be a capital of data center decision-making, it is a relative backwater when it comes to the development of data centers themselves. Its 105 megawatts of total inventory ranked at the bottom of the 16 markets measured. By comparison, the Northern Virginia data center market is nearly 44 times bigger.

What about the Rocky Mountain West?

Data center development has remained stagnant in Denver despite exploding elsewhere in the Rockies.... Emerging Mountain West data center markets like Salt Lake City, Nevada and Arizona have seen capacity triple since 2020.

It's certainly not for me to say if good or bad and data centers can be electricity hogs - although most new data centers are trying to use renewable energy as well as finding better cooling efficiency methods.

Colorado’s failure to launch as a digital infrastructure development hotbed remains a significant source of frustration for Denver-based data center leaders, many of whom gathered at Bisnow’s DICE: Rockies event last month at the Grand Hyatt Denver.

The region has many of the characteristics developers and tenants are looking for, according to Brian Cox, CEO of Denver-based data center firm STACK Infrastructure and previously a longtime leader of Denver-based Cologix.

I suspect partly it may be the GHG's they are afraid of but not sure.

[TakeFive]

What Goes Around Comes Around?

Real Estate has long been notorious for its development and ownership cycles. Over the last 15 years the Denver Tech Center has played the stepchild to downtown Denver and its exciting new development.

Koelbel and Company Acquires Metropoint I and II in DTC
September 9, 2024 -- Mile High CRE


View of Metropoint I via Loopnet courtesy CBRE; Metropoint II partially visible in lower right.

In a joint venture with Real Capital Solutions, Koelbel and Company continues to grow its commercial office investment portfolio with the recent acquisition of Metropoint I and II, a class A office building in the North Denver Tech Center (DTC). The joint venture purchased the two buildings at 4600 and 4610 S. Ulster St., for $22 million according to public records.

$22 million sounds like a bargain?

Real Capital Solutions (RCS) is capitalizing on what it views as a rare moment in the office real estate market, driven by the current market’s distressed conditions. The company believes that the existing office sector downturn has created a window of opportunity to acquire high-quality properties at steep discounts

“We’re seeing opportunities to acquire incredible real estate at just 10% to 30% of their replacement cost,” said Adam Abeln, chief acquisition officer at Real Capital Solutions. “This is a classic scenario where exceptional assets are struggling due to weak capital structures, but are located in robust submarkets.”

IMO, the DTC doesn't really compete much with downtown but I have to be impressed with Koelbel and Company. They recently also purchased the Axis Tower in DTC which I posted. Prior to this they also purchased an office building in Lone Tree at a more modest discount but nearly fully occupied.

What I would suggest is that it seems as though the DTC is coming out of a 15 year downtrend and these recent purchases give new owners a nice low basis from which to operate and attract new tenants. I'd also guess that many of the older DTC buildings will either be converted to new housing or demolished before new housing construction.

Not sure what this means for downtown other than it can take time to work through and sort out the trash from the treasures.

[TakeFive]

Creating Affordable Housing

It's easy enough to become intoxicated by Mayor Mike's housing proposal. For example:

• “In the early 2000s we allowed developers to take advantage of our upcoming communities, displacing me, displacing my family, my community,” said Councilmember Serena Gonzales-Gutierrez, who voted yes on the measure. “We needed to take control of the issue long, long ago. We are trying to pick up the pieces.”
• “Denver can’t afford to wait,” Johnston said when announcing the campaign. The new sales tax would build housing for teachers, waiters, firefighters, and other workers and middle-class people who have been struggling to afford the city.

We've had debates on this site going back 15 years over these 'talking points.' And I'm not saying they're wrong; indeed they speak to real concerns. But despite the 'feel good' intentions there's too many unanswered questions.

The intention of Mayor Mike's proposal (as I understand it) is to build and lock in affordable housing long into the future.

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‘The Whole Industry Could Collapse’: D.C.'s Housing Providers Face An Existential Crisis
September 5, 2024 By Jon Banister, Deputy East Coast Editor -- Bisnow

When Adrian Washington announced last month that he was shutting down his prolific D.C. affordable housing development firm, the news was a shock to many and left the thousands of residents in Neighborhood Development Co.'s buildings in limbo.

It was also a warning.

NDC's collapse wasn't an isolated incident. The owners of tens of thousands of income-restricted apartments are at risk of losing their properties, jeopardizing the future of affordable housing in the nation's capital.

Can't say I understand all the issues but it reminds me of an old saying: "Eh, it's not a problem -- until it is."

Fannie Mae CEO Priscilla Almodovar On Solving The Unaffordability Crisis And Fannie's Transformation
September 8, 2024 - Walker & Dunlop Emily DeNardo, Studio B Writer -- Bisnow

Walker asked Almodovar one of the industry’s most important questions: Why is it so difficult to build affordable housing? The answer, Almodovar responded, involves a lot of moving parts.

“It all comes down to numbers,” she said. “You need land, you need financing and you have to charge the rents. To keep all of this affordable is not easy.”

“It really is all hands on deck and takes coordination on all levels of government,” she said. “Understanding that everyone has to give something to build this housing is key, but the numbers have to work as well for developers. Many developers are not going to build if the deal doesn't pencil out.”

Just curious?

Who is going to be responsible for all the repairs and maintenance; who will be responsible for renovating units, replacing appliances etc when the time comes? Is the city going to assume these obligations?

[mhays]

Development doesn't just require projects to pencil, which is tough enough.

It also requires projects to compete for funding from equity partners (who want profit potential) and lenders (who want certainty they'll be paid back). A small projected profit won't cut it.

And "penciling" is just likelihood of making your money back plus some. There's always a sizeable chance you could lose money in the end.

With affordable housing the rent side of the equation is relatively clear in advance. But construction costs, delays, etc., can vary tremendously even after you have a contract price etc.

[TakeFive]

Taking a second look

Originally Posted by Interzen

While I'm here I'll beat TakeFive to the punch with another quote from a Denver Business Journal Article:

I noted this and was curious but didn't give it much additional thought. But KDVR has a piece on the same topic.

Here are the Top Five markets in their study:

• Denver, Aurora and Lakewood, Colorado
• Oklahoma City, Oklahoma
• Las Vegas, Henderson and Paradise, Nevada
• Seattle, Tacoma and Bellevue, Washington
• Portland, Vancouver and Hillsboro, Oregon and Washington

I consider the parameters used to reach these conclusions to be a mixed-bag. It speaks to these areas relative affluence which logically might lead to growth. But "times they are a-changing." For more 'basic' or sedentary businesses they may be more concerned with the 'cost of doing business.' And of course it also helps to explain the general increasing 'cost of living' and growing need for affordable housing, for example.

At some level I suspect it speaks to Colorado's relative appeal as a nice place to live. How well 'governments' can manage this going forward will be the challenge I suspect. But Colorado continuing to become an 'elitist' place may work for Colorado.

[TakeFive]

At this Point I don't care
but I knew bunt would want to know (just kidding)

Townhomes and grocery store proposed for Marilyn Hickey property
December 20, 2023 By Freda Miklin -- Villager

On December 13, the City of Greenwood Village hosted a public input meeting for Alberta Development to get resident feedback and answer questions about a proposal to build 54 for-sale townhomes, attached in groups of three to seven units, along with a potential grocery store and other retail shops, at 8081 E. Orchard Road in Greenwood Village. Alberta 8081 East Orchard LLC purchased the property from Marilyn Hickey Ministries for $14,813,876 on February 17, 2017.

Whole Foods is still potentially interested.

The Orchard

The Orchard, as planned, meets the requirements of the Greenwood Village Zoning Code, although residential development in the Town Center zone district where it is located is considered a special use thus must be specifically approved by the city council.

For those not familiar,
Greenwood Village turned down a previous proposal for more normal light rail station density and then rezoned the property to be even more restrictive.

Then there's this

Three Triad buildings in GV’s Orchard Station lost to foreclosure
January 4, 2024 By Freda Miklin -- Villager

In early December, Focus Triad LLC, owner of the Triad office complex, directly adjacent to the Orchard Light Rail Station, lost the three multi-story buildings located on 22 acres at 5660, 5670, and 5680 Greenwood Plaza Boulevard in Greenwood Village in a foreclosure action.

Two of the Triad buildings were built in 1962, the third in 1972.

Focus, headed up by Bahman Shafa, purchased the complex in February 2020 for $54 million, most of which was still owed when the property was sold in the foreclosure auction to the only bidder, its lender, Oconee Real Estate Holdings LLC, for $46,400,000. Oconee is an affiliate of Voya Financial.

Compare the Triad to the two building posted above that were bought for $22 million by Koelbel and Company.

Other than the nice landscaping, as best I recall, the Triad buildings are 🞵🞵🞵🞵.

The site could be ideal for additional housing but would Greenwood Village allow for 'reasonable' density? Maybe. (My best to the lender)

[laniroj]

Originally Posted by TakeFive

Just curious?

Who is going to be responsible for all the repairs and maintenance; who will be responsible for renovating units, replacing appliances etc when the time comes? Is the city going to assume these obligations?

I'm so glad you pointed this out and ^ is what politicians cannot understand about the real estate market. Over the course of 15-20 years, all real estate needs significant maintenance, renovation, etc. By requiring rents to remain affordable forever, the City is effectively creating slums over the long term. There is no 'excess cash flow' to make those kinds of investments. The market will either dictate a property owner to 1) sell a property with the new owner recapitalizing the asset, including huge dollars for maintenance/renovation and a corresponding increase in rents, or 2) hold the property with no money for maintenance/renovation leading to slum conditions. There really only are 2 options. People seem to think there is all this money just sitting around - there's not! This is a fundamental mis-understanding of how property economics work on the part of politicians in addition to them not understand how ALL HOUSING becomes affordable over time.

[laniroj]

Originally Posted by TakeFive

At this Point I don't care
but I knew bunt would want to know (just kidding)

Townhomes and grocery store proposed for Marilyn Hickey property
December 20, 2023 By Freda Miklin -- Villager

Whole Foods is still potentially interested...

^ This is so effing depressing.

[TakeFive]

In The News

bet365 Opens its US Headquarters in Denver
September 30, 2024 -- Mile High CRE

Corporation (EDC) and the Colorado Office of Economic Development and International Trade (OEDIT) have announced that bet365, a leading global online sports betting
company, has opened its new U.S. corporate headquarters in Denver at One Platte. The U.K.-based company expects to bring nearly 1,000 jobs to the Denver community.

1701 Platte Street (One Platte)


Courtesy Nichols Partnership/1701 Platte Street

BTW, I had previously mentioned that Shorenstein Properties had teamed up with Nichols Partnership when this development was announced back in February of 2020. Then in
February of 2022 it was reported that Robinhood had leased two floors of this building.

bet365 has taken 120,000 square feet at One Platte, occupying two full floors within the five-story, Class A office building... Before opening, the company completed a renovation
of the space to support its operational efficiencies and employment goal... bet365 anticipates onboarding over 300 employees within the first year of its Denver operations,
with approximately 50 employed at the time of the opening.

So, the good news for 1701 Platte is that it is now leased up save for some retail space, some of which has been leased.

EDIT: I have now learned that Robinhood never moved into their office space and it became available for sublease according to the DBJ Nov 21, 2022.

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Kore Picks Up Denver Offices at Steep Discount
September 25, 2024 By Mike Boyd -- Connect CRE


Courtesy Kore Investments

Kore Investments bought ParkRidge Four at 10375 Park Meadows Drive in Lone Tree from Principal Financial Group for $18 million, a steep discount compared to the $42.2
million the previous owner bought the property for in 2015.

Kore Investments also owns the Re/Max Plaza building in the Denver Tech Center and the Kore Co-Working building in Greenwood Village.

The Denver Business Journal reports that prior to closing on the ParkRidge Four building, which Kore secured through an auction, the company increased its occupancy from 82%
to 89% while the property was under contract.

Principal Financial Group has been involved with (funding) many apartment developments in Denver but I wasn't aware they were also doing office. At least in this case they didn't
do so well, apparently. Guessing that Principle Financial must have foreclosed on the building, but not sure of all the particulars.

[TakeFive]

Careful; the paint may not be completely dry

Kalaco Apartments
1010 W Colfax Ave

Apartments starting at $1,500 and up to 8 weeks free

Kalamath and Colfax. It used to be just a corner. A stoplight. An intersection. A place tens of thousands of people passed through, but never stopped. Starting now, we’re changing everything. These homes are a door to everything Denver has to offer. The creative vision and diverse legacy of the Art District on Santa Fe. The innovation and education found on the Auraria Campus. The opportunity and energy of downtown’s emerging businesses. This is a landmark on a special intersection, where vibrant, creative people meet.

Images courtesy The Opus Group.

Original Announcement

Apartment Project Including Live-Work and Affordable Units Breaks Ground in Downtown Denver
March 9, 2022 -- Mile High CRE

Serving as the developer, design-builder, interior designer, architect and structural engineer of record, The Opus Group has officially started the construction of KALACO Apartments, a 280-unit multifamily development across the street from the Auraria Campus in downtown Denver at the southwest intersection of Colfax and Kalamath.

This is interesting

The seven-story apartment building will offer studios, one-bedroom, two-bedroom, and three-bedroom apartments, as well as live-work units, which will allow residents to operate a business on the first floor with favorable business lease rates. Opus worked with the City of Denver Department of Housing Stability (HOST) and Neighborhood Equity and Stabilization (NEST) on the project. Ten percent of the apartments will be affordable to households earning 60 to 80 percent of the area median income.

[TakeFive]

The paint is dry but brand new fresh

The Northern
2600 Wewatta Way

True. North.
Taking RiNo to New Heights

With a nod to the area’s industrial legacy... The Northern rises above its neighbors on the edge of the reinvented Denargo Market district to offer remarkably light-filled homes with expansive, iconic views.

Early Rendering courtesy of Pacific Western Bank


Courtesy Cyprus Real Estate

Original Announcement

Cypress Real Estate Secures $88.7M Construction Loan for Denver Project
September 27, 2021 -- Mile High CRE

Pacific Western Bank has provided an $88.7 million construction loan to investment firm Cypress Real Estate Advisors (“CREA”) for the development of a 336-unit, Class A multifamily community at 2600 Wewatta Way in Denver.

Equity Partner

Mitsui Fudosan America has joined Cypress Real Estate Advisors (CREA) to develop The Northern, a sixteen story, 336 unit, class A apartment building in Denver’s RiNo neighborhood.

[TakeFive]

Groundbreaking: Fitzsimons Gateway Affordable Housing Community
September 18, 2024 -- Mile High CRE

BMC Investments (BMC), a Denver-based, fully-integrated real estate investment company, in partnership with Mile High Development, announced today that they have officially
broken ground on Fitzsimons Gateway, a 210-unit affordable housing project designed for families and individuals who make between 30% and 70% of the area’s median
income at the southeast corner of Colfax Avenue and Peoria Street in Aurora.

Located on a 1.7-acre site adjacent to the Hyatt House Fitzsimons – a BMC hotel – Fitzsimons Gateway will be a six-story, 178,000 square foot building offering 171 one-bedroom
and 39 two-bedroom units. The building will also offer three private, centralized courtyards, a double level of garage parking and an exterior façade mix of masonry and stucco.

Courtesy BMC et al

Recently I also posted about the opening of The Broadleaf apartments by the The Max Collaborative who had earlier finished One River North apartments. The Broadleaf would be
due east of this new project with the Hyatt House being at the back of the site between both of these projects.

“As a real estate company who has been developing projects across Denver for more than a decade, we have seen firsthand the impact that a lack of affordable housing is
having on our community,” said Matt Joblon, founder and CEO of BMC Investments. “By partnering with groups with deep expertise in the field, such as George Thorn and Mile
High Development, we can leverage our extensive development experience and launch an affordable housing platform. We are eager to contribute our talents and do our part
to positively impact one of the most vexing challenges facing not only Denver but countless cities across the country.”

[TakeFive]

We Like Denver

University Hills Shopping Center Sells for $56.5M
October 3, 2024 - Mile High CRE

KPR Centers, a New York City-based retail real estate development and investment group, has entered the Denver retail market with the $56.5 million acquisition of University Hills, a 210,000-square-foot grocery-anchored center located at 2750 S. Colorado Boulevard. The grocery-anchored asset featuring King Soopers... was 100 percent leased and occupied at the time of the transaction.

Courtesy of KPR Centers

Why you not stay in New York City?

KPR Centers is now active in 18 states, with approximately 10 million square feet of owned and self-managed properties.

“We consider the greater Denver metropolitan area as among the most economically vibrant and healthiest retail markets in the United States, and we have been extremely diligent in our search to establish a foothold in the region with a signature property,” stated Daniel Eisenberg, operating partner of KPR Centers. “University Hills provided the rare opportunity to invest in an institutional-quality asset in the heart of Denver anchored by eight major national retail brands...

“We intend to remain aggressive in our approach to acquire additional assets in the greater Denver area to quickly scale our asset and property management operations in this market.”

[TakeFive]

DENVER: It's time to say Goodbye

Natural Grocers is closing Denver’s Colfax Avenue store due to “theft and safety issues”
Oct. 02, 2024 Andrew Kenney -- Denverite

Here's an unhappy Halloween surprise: Natural Grocers is permanently closing its store at Colfax Avenue and Washington Street on Oct. 31. The grocery chain, which is based in Lakewood, announced on Wednesday that the downtown Denver store will be closed due to "retail theft and safety issues impacting the store's performance."

Courtesy CBS News/Denver

"Despite our investment in security and loss prevention strategies over the years, these factors have continued to challenge our ability to operate our store safely and sustainably, and we have made the difficult decision to close our doors at this location," said Kemper Isely, the company's co-president, in a news release.

Have I ever mentioned that "you get what you tolerate?"

It also fair to say that Denver - DPD has limited resources. That said, Wheat Ridge has started prioritizing retail theft and DougCo has been prioritizing the problem.

As Colorado struggles with widespread retail theft, Wheat Ridge police takes proactive approach
September 26, 2024 By Karen Morfitt -- CBS News/Denver

"Frankly, our businesses don't deserve to deal with this constantly and constantly calling our department saying 'Hey we've got another guy walking out the front door after stuffing bags worth of goods,'" Rose said.

Rose says their new approach involves partnering with stores that are being targeted to track thieves in real time. On one day operation he says they arrested six suspected thieves. Each, he says, was seen loading up on carts or bags and then walking out the door.

"That day we just basically gave radios to the folks at loss prevention, so we had real time communication with those folks and every single person they identified we got them coming out of the store that day," he said

While the crime is all but ignored in some parts of the Denver metro area, Wheat Ridge Police hope going after every case will send a stronger message.

Then they need to have the 'laws' and the 'courts' do their part. Perhaps Wheat Ridge will be successful in chasing all these miscreants back to Denver or Lakewood.

[TakeFive]

One Down, more to come

Downtown office tower sells to Dikeou at 80 percent discount
October 3, 2024 By Thomas Gounley -- BusinessDen

The Hudson’s Bay Centre office tower in downtown Denver has sold to a local buyer for nearly 80 percent less than it fetched a decade ago. Denver-based Dikeou Realty bought the 20-story building at 1600 Stout St. on Monday for $8.95 million...

1600 Stout Street


Courtesy Cushman & Wakefield

[gopokes21]

That's the same group that's failing to redevelop the El Jebel Temple.

[TakeFive]

DOWNTOWNS: How BIG are they?

I have on occasion suggested that Denver's downtown was generally well defined and modest in size. I decided to put my guess to the test based on the total amount of office space. Per usual I stayed west of the Mississippi.

For starters, Denver's downtown is reported to have 28.3 million square feet of office space.

• Downtown Seattle is reported to have 50.7 million square feet of office space
• Downtown Portland is reported to have 44 million square feet
• Minneapolis--St Paul is reported to have 128 million square feet
• Minneapolis is reported to have 51.7 million square feet
• Austin is reported to have 15 million square feet
• Dallas is reported to have 33 million square feet
• Fort Worth is reported to have 36 million square feet
• Houston is reported to have 44 million square feet

What would be the point?

Well, one point I would make is that Denver having say 25% office vacancy would be half as much space as a downtown that had twice as much total office space and 25% vacancy.

I'll hope-assume that aside from the three already announced moves out of downtown 1) Antero Resources to Cherry Creek 2) Excel to RiNo and 3) TIAA to Frisco, TX that this is the bottom. And if the worst is over then better days are ahead.

Total Trivia

I recently read where The Henry restaurant will be opening on the ground floor of the 201 Fillmore building in 2026, where Antero Resources is moving to. The Henry is a nice restaurant/bar and is a part of Fox Restaurant Concepts family. Other Fox restaurants in Denver would be North Italia and Flower Child also in Cherry Creek plus Blanco Cocina + Cantina and Culinary Dropout at 9th Ave and Colorado Blvd.

Fox Restaurant Concepts is the brainchild of Sam Fox. In 2019 Sam sold his company to The Cheesecake Factory Inc. for $353 million. Prior to this sale Cheesecake had helped Sam with funding the expansion of North Italia and Flower Child restaurants. Sam then went on to develop a nice hotel called The Global Ambassador featuring three new restaurant concepts. I've picked up riders there several times and the Valet circle in front is always jam packed. "Just keep moving everybody."