DENVER | Main Development Thread #7

[wong21fr]

Originally Posted by mhays

The micro concept works, including shared kitchens and bathrooms. This isn't experimental or theoretical.

Usually these are in thin buildings. The only innovation in the Gensler study is that modern office towers with large floor plates can work too.

Shouldn't the working poor have better market-rate housing options, including the chance to live Downtown?

Before TakeFive posts a five-paragraph response of non-sequitur and tangents..... yes, there should be additional affordable options downtown.

My question would be if the micro-concept with shared spaces is indeed cheaper than a traditional conversion. My intuition says that it would be, but would it be cheaper than a new build?

[mhays]

I believe Gensler that it would be cheaper than a normal conversion (centralizing plumbing and fixtures/appliances, and building net fewer per unit), though all coversions likely cost more than new construction. I have no idea about numbers. But I also think micros could rent at higher rates right Downtown, and new construction of this type doesn't tend to be optimized by downtown land use codes.

Just as importantly, they're offering an idea that could allow "un-convertible" buildings to convert. They've found a way to use the deep interiors of buildings that normal units wouldn't (in any way that would draw much rent).

Dorm living isn't for everyone, and that might go double as we get past 22. But wow, the chance to live within walking distance of work and save 90 minutes a day when you're taking home a $30k a year? I'd have jumped at it at 22, and I'd consider it a backup plan if the retirement funds don't hold up.

[TakeFive]

Are you ready; have you had your breakfast?

Originally Posted by wong21fr

Before TakeFive posts a five-paragraph response of non-sequitur and tangents..... yes, there should be additional affordable options downtown.

My question would be if the micro-concept with shared spaces is indeed cheaper than a traditional conversion. My intuition says that it would be, but would it be cheaper than a new build?

Decided to go a-googling!

Happy Coliving in Seattle



https://tripalink.com/blog/co-living-spaces-explained-benefits-drawbacks-and-key-tips

Co-living spaces have experienced an explosion of popularity in cities like Los Angeles and Seattle where housing costs can be extraordinary. Co-living spaces offer more affordable living solutions that foster community spirit and attract young professionals, students, digital nomads, and digital nomads alike

The Modern Day version of coliving started in Singapore by a company named HABYT. Awhile back somebody posted here how they loved Singapore. But (remember) Singapore does NOT have a drug problem; Singapore does not have people running around stealing from anyone and anywhere.

Easier said than done?

Habyt News release

June 3, 2024 - New York, NY - Common Living, a leading provider of coliving and apartment solutions, announced today that it will be ceasing operations due to insolvency. Despite concerted efforts to manage the challenging financial landscape, Common Living was not able to achieve profitability and did not have the liquidity to continue operations without the ongoing significant financial support of Habyt, Common’s parent company.

"It is with a heavy heart that we announce the closure of Common," said Luca Bovone, CEO of Habyt. "The Common team has dedicated themselves to delivering innovative living solutions to our customers. It is deeply disappointing to end this journey, and we extend our heartfelt gratitude to Common’s employees, partners, and customers for their unwavering support over the years.

Effective immediately, all operations of Common will be suspended as the company initiates the process of winding down its business affairs. This decision will impact its employees, who will receive support during this transition.

Common Living projects existed in New York City; Chicago; Los Angeles; Washington, D.C.; and Austin, Texas.

[TakeFive]

I decided to review the history

Originally Posted by mhays

The micro concept works, including shared kitchens and bathrooms. This isn't experimental or theoretical.

Usually these are in thin buildings. The only innovation in the Gensler study is that modern office towers with large floor plates can work too.

Shouldn't the working poor have better market-rate housing options, including the chance to live Downtown?

Go back a hundred years or more and there were "boarding houses."

Over the decades there have been various iterations like "Hostels" or "Bed and Breakfast's." As you mentioned there's the classic college dorm or private student housing, usually more upscale versions.

It's always a good idea to check out what the customer reactions are. Reddit is a great source for that. Always a mixed bag but many comments expressed satisfaction with coliving. Two things stood out. Most were talking about the converted house versions or building of modest size and for many it was more of a temporary experience.

Coliving is a thing in couple German cities like Berlin

Per Reddit:

BerlinerRing - Lived for 3 years in a habyt room, back when they were not that overpriced, (650e for a room with balcony and everything included), and two of the roommates I had over time became some of my closest friends in Berlin.

Friends of mine had total opposite experience, with the worst roommates, 🞵🞵🞵🞵🞵🞵 flat state & location compared to what was advertised.

sleepysparrow- NEVER BOOK WITH HABYT.

SERIOUSLY. My friend has just gone through the most diabolical ordeal with their 🞵🞵🞵🞵🞵🞵🞵 properties. They are crooked slumlords. I don't understand how they are allowed to function as a company and aren't being slammed with lawsuits. Seriously. Just read their trustpilot reviews.

theanubhav - Habyt is a bogus option. You will just pay high rent, feel helpless every now and then, support wont even help, and above all, your keys might not work all of sudden, and wont be fixed for month.The dishwasher/washing machine might not work and after reporting it would not be even fixed for months while you still pay "furnished" apartment rent.

[TakeFive]

Coliving is legit - but perhaps not easy

From all my reading it's now obvious that X Denver was their version of Coliving.

Multi-Housing News has a nice piece:

How Co-Living Is Reshaping Urban Housing
August 28, 2023 By Corina Stef

Catering to contemporary lifestyles, this community-driven solution is blending privacy with sociability.

In a rapidly changing housing market, co-living has emerged as a solution that addresses renters’ evolving needs and their growing desire for flexible, community-centric living arrangements.

Fun, Fun, Fun -- de zeen is way cool

Six of the best co-living developments from around the world
8 July 2016 By Anna Winston -- de zeen

Including from Across the Pond

World's largest co-living complex promises residents "everything at their fingertips"
By Jessica Mairs -- de zeen

Note: 28 April 2016 - Residents of the world's largest co-living block will have so many services to hand they may never have to leave the building, according to the entrepreneur behind the London project. When "The Collective Old Oak" opens its doors ... it will be largest in a rash of shared-living spaces launching in cities all around the world, which operate like a cross between student housing and hotels.

Containing 550 bedrooms, the building is more than twice the size of the WeWork development that recently opened in New York. Speaking to Dezeen during a tour of the site, Merchant said that young renters are increasingly seeking convenience. He claims that by integrating a co-working space, with a restaurant, gym, cinema, spa and launderette, the every desire of residents can be catered for within one building.

"We see the need to essentially have everything that you could possibly need while living in this building," he said.

You think their 'Spa' offers a Rub and Tug? Probably; Everybody like a Happy Ending!

wong - Hot off today's press

You just need to believe that Denver can have nice things too.

P.S: Nobody likely to finance 28 stories of 44 beds per floor.

[laniroj]

Originally Posted by TakeFive

...You can't avoid what has already happened. But how to proceed from here needs to be smart, not hasty or half-hazard.

Denver office building property values take a $2 billion hit as remote work endures
Dec. 22, 2024 By Sarah Mulholland -- CPR News

If there's disappointment with office conversions then the obvious comeback would be that "we started with a pig and all we could do is add lip stick on the inside and since costs were high all we could afford was cheap lip stick."

Think $2 billion is bad, wait until the re-assessment values for 2025 factor in! In Colorado, re-assessments only happen every other year (odd years). The City will get serious about this when they see their revenue crash or all the assessor's will commit fraud (again) and come up with bogus values.

What the market can afford, without intervention, is nothing. WE CAN AFFORD (and it is in the City's best financial interest) to incentivize proper conversions but need we incentives to get it done. Let me be clear, you have an opinion on the matter and I have direct experience trying to make this happen. What the market thinks is possible and needs to happen is real and quantifiable and it's not taking forever funding a bunch of planning jobs and "missing the market". What you and the government think do not represent market opinions. To enact change you need to figure out how to move with the market or move the market yourself. Government has moved the market, in the wrong direction mostly. The market moves faster than studies, regulations, and bumpers can function and once you miss it, there's no second chances in the real world. Further, you still get most of the waste/fraud by going slow and being intentional so what's the point?

[laniroj]

Originally Posted by wong21fr

Energize Denver won't go away since there's too many green weenies who would raise political hell, but curious as to what you think about the recent reforms that were proposed to make the program less onerous:

https://milehighcre.com/city-proposes-updates-to-energize-denver/

Complete BS. It's basically just delaying penalties a TINY BIT and allowing for troubled assets to "opt-out" until such time as they are "ready" to participate in a program that will bankrupt their investment. Who subjectively deems when a property is ready to participate in Energize Denver is beyond me! For large buildings on central systems, these systems cost tens of millions of dollars. For other smaller investments these systems cost millions of dollars. The standard is you upkeep the big ones every year for several hundred thousand dollars or limp them along if you're an operator who doesn't take care of your stuff. Regardless, any new buyer of those assets will more than dollar for dollar discount their purchase of that asset if they are required to comply with this absolute overreaching nonsense. Eventually, the market will learn about this and write Denver investments off more and more. How and why should government be able to impose such crazy cost burdens on owners? Buildings constructed under the prior building code iteration and certified green under many programs don't even meet the standards of this nonsense!! It's complete insanity and IMO is one of the main reasons developers/investors are abandoning Denver en masse.

[TakeFive]

RCS Wraps 2024 With Big Deals, Sets Sights On $1B In 2025 Distressed Investments
January 2, 2025 Jonathan Rose, Denver -- Bisnow

Louisville, Colorado-based Real Capital Solutions closed out 2024 with acquisitions in three states, teeing up 2025 with a big goal: snapping up $1B in distressed commercial real estate loans and properties.

The investment firm closed deals in Denver, Dallas and Washington, D.C., in the last weeks of December. All of the purchases were office buildings at steep discounts from their previous sales price.

RCS plans on acquiring $3.5B in assets through 2027, a company executive told Bisnow in an email.

With respect to Denver?

Belleview Tower -- 7887 E. Belleview Ave. in Greenwood Village


Per Offices.net

RCS acquired the 201K SF Belleview Tower in the Denver Tech Center for $20M. The Class-B office property is 75% leased and recently renovated, with RCS planning further upgrades to common areas like the fitness center and a spec suite program to attract tenants. It last sold in 2019 for $40.1M.

“Belleview Tower represents an exceptional opportunity to acquire a premier office property in a high-demand location at a fraction of its previous valuation,” CEO Marcel Arsenault said in a statement.

RCS previously purchased other DTC properties teaming up with Koelbel and Co. on two of them.

[TakeFive]

DTC office complex sells for half of 2019 price
January 7, 2025 By Thomas Gounley -- BusinessDen

Three office buildings along Interstate 25 in Greenwood Village have sold for nearly half what the seller paid. Miami-based SF Partners purchased the Vista 25 complex at 8100, 8200 and 8300 E. Maplewood Ave. on Dec. 19 for $9.16 million, according to public records.

Vista 25 at Arapahoe Station -- 8100 E Maplewood Ave

.....

I would be a fan of the area and property around Arapahoe Station.

[TakeFive]

Originally Posted by laniroj

Think $2 billion is bad, wait until the re-assessment values for 2025 factor in! In Colorado, re-assessments only happen every other year (odd years). The City will get serious about this when they see their revenue crash or all the assessor's will commit fraud (again) and come up with bogus values.

This may not be so bad. While not an equivalency it's related to the strategy.

https://www.bisnow.com/denver/news/economic-development/denver-ballot-measure-6a-126636

The major funding tool that will be used to revitalize the CBD as proposed in 6A is an extension of tax increment financing, DDP CEO Kourtny Garrett said. TIF is a method used by cities to finance development projects by capturing the increase in tax revenues, or increment, that results from rising property values and economic activity within a designated area. TIF was used to finance the Union Station redevelopment.

Denver does have a stellar record of investing in itself with impressive returns.

Denver City Council created the Denver Union Station Project Authority and approved the DDDA’s creation in 2008, establishing a $500M TIF area on the Regional Transportation District’s Union Station site and about 40 acres surrounding it. That debt was paid off 15 years early, Garrett said...

One other point:

While your focus is on the hole in the donut it's also important to recognize all the development that has occurred in surrounding neighborhoods to the CBD - with respect to property taxes.

[wong21fr]

The reporting somewhat 🞵🞵🞵🞵🞵, but this is quite the large project coming to the Auraria Campus:

Auraria’s massive mixed-use development project is expected to start construction this year
January 6, 2025
Denverite

Two towers at 11th Street and Auraria Parkway will include over 330 units of workforce housing, new education centers and retail.

From this article and other sources each tower will be ~10 floors with one having student housing and the other workforce housing (at one point MSU Denver and CU Denver were going to reserve units for their employees, not sure if this is still the case). Other programing includes an expanded Auraria Early Learning Center, MSU Denver's C2 Hub (career center), retail, dining, and maybe some additional office space (there were talks about Gary Community Ventures moving their offices here, but I think this was canned in favor of the student housing).

This will easily bring over a thousand new residents to the campus and will provide some much needed energy during evening hours and weekends.

[TakeFive]

It's Crazy Out There and it's not just Denver

Office Demolitions Are On The Rise, Even Where It Was Recently 'Unimaginable'
January 6, 2025 Jarred Schenke, Atlanta -- Bisnow

Even office buildings constructed in the 21st century aren't safe from the wrecking ball. As owners of commercial properties in Atlanta's suburbs grapple with anemic demand and values that have plummeted in recent years, many are coming to the realization that their buildings — even those that haven't yet celebrated their 25th birthday — are worth no more than the land they're built on.

In recent months, more and more buildings are being sold to developers who plan on tearing them down to make way for newer, more desirable commercial projects. “I never thought I would see that, but that’s where we are in the cycle,” said Brian Granath, a partner with OA Development in Atlanta who owns a portfolio of suburban office buildings in Metro Atlanta. “There’s too much suburban office product.”

How about this one?
BXP Lands Major Lease To Build New Downtown D.C. Office Building
January 7, 2025 Emily Wishingrad, Washington, D.C.

Zero new office developments began construction in D.C. last year, but just one week into 2025, a new ground-up project is moving forward.

BXP signed a 150K SF lease with a law firm that is allowing the office REIT to kick off the demolition and redevelopment of a 1990s-era Metro Center building into a 320K SF trophy office, BXP announced Tuesday.

BXP purchased the building for $34M from Hines in the final days of 2024. It plans to deliver the new building in late 2028.

[TakeFive]

I agree; that article is all over the map

Originally Posted by wong21fr

The reporting somewhat 🞵🞵🞵🞵🞵, but this is quite the large project coming to the Auraria Campus:

Auraria’s massive mixed-use development project is expected to start construction this year
January 6, 2025
Denverite

This will easily bring over a thousand new residents to the campus and will provide some much needed energy during evening hours and weekends.

I'm confused as to how close they are in getting funding.

“We think this is the project that not only will our city council members be excited about, but that our city will be excited about,” said Colleen Walker, the Auraria Higher Education Center’s CEO, to Denver City Council during a Budget and Policy Committee meeting. “It'll be a partnership between the city and the state that we're building something for the full community to use.”

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

I was reminded what time of year it was last night when I saw some gals sitting courtside in their Western Wear at the Nuggets game. Always loved the National Western Stock Show.


Courtesy Kevin J. Beaty/Denverite 2022

[TakeFive]

Apartments in Denver suburbs trade hands for $103.25 million
Jan 9, 2025 By Justyna Tomtas – Reporter, Denver Business Journal

The apartment complex last sold for $139.3 million in 2021.

A one-off transaction that isn't that meaningful.

What I found interesting is the buyer is Bell Partners from Greensboro, NC. They own other metro complexes in Denver.

The seller appears to have been Highmark Residential whose corporate office is in Dallas. Highmark Residential is an affiliate of Starwood Capital Group. Starwood is one of Wall Street's Big Boys.

Just some real estate roulette I assume.

[wong21fr]

Originally Posted by TakeFive

I'm confused as to how close they are in getting funding.

It's a state project, not a city one, and is funded primarily by the institutions. MSU Denver is the primary funder of the student housing using their bonding capacity. IIRC, Urban Ventures is handling the workforce housing with the largest funding portion coming from the Colorado Affordable Housing Finance Fund.


Funding has either been granted or committed to.

[TakeFive]

Questions Without Easy Answers

Many things are newsworthy; some news is compelling.

How many tenants whose leases will be rolling over decided the recent tragedy along the 16th Street Mall was "the last straw?" Some employers feel a responsibility to not only keep employees happy but also safe. I'm reminded of the employee leaving work last August that ended up being shot in the stomach over a stupid hat along the 16th Street Mall. Perhaps some tenants including those who like being downtown will decide to move to Platte Street or into RiNo?

"An ounce of prevention is worth a pound of cure"

I don't understand why the city doesn't use Private Security downtown except that in the past they were used as a substitute for cops; that can be problematic. Keep it simple. It's not unusual to see a guy in a car or truck with a bright yellow beacon on top driving around - especially in retail areas (down here). For starters just being visible has value. It does serve as a deterrent, can change the pattern for where some people 'congregate.' Admittedly this is being done by the Private Sector.

Not a perfect answer but perhaps such visibility might have prevented a group vising Denver last summer who decided to walk from the Embassy Suites to Larimer Square to eat. Along the way Hubby was bonked on the head and knocked down. Not seriously hurt he declined to press charges but did express being shocked and dismayed "that something like this could happen in downtown Denver."

What about the Denver City Council?

City Council has been mighty busy passing ant-business policies.
Does that mean Denver will become an Urban Wonderland?
Beats the Hell out of me; I'm just a nuts and bolts guy, a pro-business fellow. Clearly we don't speak the same language.

[wong21fr]

Originally Posted by TakeFive

I don't understand why the city doesn't use Private Security downtown except that in the past they were used as a substitute for cops; that can be problematic. Keep it simple. It's not unusual to see a guy in a car or truck with a bright yellow beacon on top driving around - especially in retail areas (down here). For starters just being visible has value. It does serve as a deterrent, can change the pattern for where some people 'congregate.' Admittedly this is being done by the Private Sector.

The Downtown Denver Partnership provides 24/7 private security in the Business Improvement District area. Not sure how many were on duty over the weekend. The attacks mostly occurred in the areas of the Mall that are under construction and these are NOT attractive areas to walk through (dark, narrow, etc.). That the police arrested the guy a day later in an open portion of the Mall where they could cruise around in a police cruiser speaks volumes to how much visibility you have into the construction areas. Now ask me the last time that I saw a dismounted officer walking the Mall or around downtown...

As for issue of the why this guy was out walking the streets at all, I have a lot of questions for Bridges of Colorado and Wellpower as they were the ones who pushed for his release from jail and into their oversight for mental health treatment which seems to have not occurred at all. Seems like a huge dropped ball and I hope that the new DA Walsh walks back Beth McCann's policies on not charging for lower-level offenses. Kind of tough to enforce the law if there's nothing done past arresting someone.

[TakeFive]

Turning the page to some Good News

Seven-story hotel breaks ground in RiNo
January 15, 2025 By By Thomas Gounley | BusinessDen via The Denver Post

AC Hotel -- 3680 Brighton Blvd


Courtesy Allen Sigmon Real Estate

Crews have begun building an AC Hotel at 3680 Brighton Blvd., next to the Rev360 office building. The hotel will be seven stories and have 128 guestrooms, according to the project’s site development plan, which also shows about 2,500 square feet of restaurant space on the first floor.

Lance Sigmon, of Albuquerque-based Allen Sigmon Real Estate Group, said the development team is made up of his firm, Alliance Investments, Hamant Patel’s Lotus Hotels and Prakash Sundaram’s TMS Management.

Insurance broker to shift downtown office to 1900 Lawrence
January 12, 2025 By Matt Geiger -- BusinessDen

One of America's largest insurance brokers is on the move in Denver. Marsh McLennan is planning a 12,000-square-foot office on the 19th floor of the newly built 1900 Lawrence St. office tower, according to recently filed construction documents with the city.

Nice to see 1900 Lawrence get a new tenant. Marsh McLennan will be moving over from the 17th Street Plaza at 1225 17th St. BTW, the 17th Street Plaza will be sold. This was part of Sam Zell's (RIP) REIT legacy holdings which are being liquidated.

Construction Begins on Affordable Housing Project 901 Navajo
January 13, 2025 -- Mile High CRE

Alliance Construction Solutions (ACS) has started construction on 901 Navajo, a transformative development that combines affordable housing and health-focused services in Denver’s La Alma-Lincoln Park neighborhood. This significant project is made possible through a collaboration led by Mercy Housing, with design by RATIO Architects, support from the Denver Housing Authority, and partnership with the Native American Housing Circle.

Courtesy RATIO Architects

[TakeFive]

Side Pocket Topics

Will it stay or will it go? Sports marketing expert explains options for Empower Field at Mile High
Jan 10, 2025 By: Colette Bordelon -- 7Denver News

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

Forget the Fed

Why CRE Debt Is Unlikely To Get Much Cheaper In 2025
January 15, 2025 Matt Wasielewski, National/Bisnow

Bond analysts have a word of advice for commercial real estate owners waiting for the cost of debt to come down significantly: Stop.

The yield on 10-year Treasury bonds, used to benchmark all sorts of real estate debt, has risen roughly 100 basis points since the Federal Reserve began monetary easing in September. The movement reflects broad anxiety among bond traders, and a significant retreat in yields is unlikely without severe economic pain.

Partly it reflects some Trump energy and confusion as well as what happens to the already high national debt.

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

FWIW

For Me, with Barrett-Jackson starting on the 18th and the TPC two weeks later, high season beckons. It's my time to drive so you won't likely see much from me until sometime in June. ENJOY

[wong21fr]

Another bit of good news as Lumen Technologies announced a move to downtown from Broomfield.


Lumen Technologies to auction 55-acre suburban campus, move employees to Denver


This represents a couple thousand employees at least relocating and will more than make up for the loss of TIAA to the suburbs of Dallas.