DENVER | Main Development Thread #7

[TakeFive]

Send in the Cavalry


Photo: RJ Sangosti/MediaNews Group/The Denver Post via Getty Images

Horse cops, a kiosk and more: Mayor Mike Johnston has another safety plan for downtown Denver
Apr. 02, 2025 By Kyle Harris -- Denverite

The new plan will see more police patrolling the city center, including a dedicated new team, as well as a permanent new kiosk to be staffed by police on the 16th Street Mall.
It will also bring back horse-mounted patrols to downtown, among other changes.

The announcement comes ahead of Coors Field’s opening day on Friday and the partial reopening of the 16th Street Mall next month. It also follows a high-profile
stabbing spree earlier this year — part of what Chief Ron Thomas described as a 2025 “spike” in violent crime, following last year’s drop.

Johnston was joined at the announcement by the city’s new district attorney, John Walsh, the Denver Police Department and the Downtown Denver Authority,
along with downtown boosters, lobbyists and business leaders.

"Business owners respond"

Derek Friedman is the owner of Sportsfan, which made headlines for slapping a 1 percent “Denver Crime Spike Fee” on all purchases in 2022. He purchased his shops
in 2014. Back then, he said, the Mall felt safe.

The new safety plan, as he tells it, is a return to how public safety was handled on the Mall a decade ago

Shoplifting has always been a problem for retail. And as he sees it, crime has not been totally solved. But things are getting better

My only comment is "it's nice to have a 'pragmatic' Mayor."

[TakeFive]

Let's Piggyback on the Mayor's new plan

Initial credit goes to Blake Aued -- Streetsblog

Former Streetsblog editor Angie Schmitt fears a different doom loop...

“We’re Not Going to Retreat from our Public Spaces"
Mar 31, 2025 By Angie Schmitt -- Unpopular Opinions

I borrowed the above headline from a local news article. It struck me as a profound response of the problems we’re currently facing in “cities,” or public life.

Since the pandemic, American social life has been undergoing a maliase. Some of the old norms around public comportment ... seem to have gotten lost. And it’s had a serious impact on the quality and vitality of public spaces, from transit stations to parks, to roads. Which in turn has weighed on the health of major cities.

One way this anti-social wave is manifesting itself is a surge in reckless driving and speeding. But it also applies to other widely discussed trends like increased annoying or even violent behavior on public transit systems.

A doom loop?

The initial reaction on the part of a lot of “urbanist” types was to hand-wave away this kind of thing, even though a lot of “normal” people are really bothered by it. I think that was a big mistake. People don’t feel comfortable being out in public spaces, and they are retreating into homes and online worlds. This in itself undermines public spaces, which have fewer “eyes on the street,” and are less welcoming, less regulated, less “safe” feeling as a result.

If we’re not careful, we’re going to enter a “doom loop”-like cycle where our already (sort of pitiful) public realm becomes even more jaundiced, with widespread social effects — from increased isolation and loneliness to breakdowns in Democratic ideals around cooperation and tolerance for differences etc.

Any recommendations?

We also need government to prove right now — especially in “blue cities” — that it has an effective answer to public problems. Ideally, our public spaces should feel controlled enough that venturing outside, riding a bike, taking a walk, doesn’t just feel not scary — it should built trust, build people’s sense of security and well being.

FWIW:

I have no need to 'promote' rideshare (for example). But when you work the streets you learn a lot about people -- all sorts of people as to their needs, wants, their prejudices etc. Angie does a nice job of articulating what most of us want to pretend isn't really the Real World we live in.

It's a good reason to appreciate a 'pragmatic' Mayor Mike.

[AHS1983]

Originally Posted by TakeFive

These guys don't need the money and aren't asking for any; Bowlen needed the money.

Sometimes the municipality may chip in with some infrastructure though.

Just because the Walton-Penners don't need the money doesn't mean they won't extort metro taxpayers like Bowlen did.

[TakeFive]

Anything is possible

Originally Posted by AHS1983

Just because the Walton-Penners don't need the money doesn't mean they won't extort metro taxpayers like Bowlen did.

My personal opinion is that Empower Field was a great investment.

Just as a reminder the Broncos put up 25% with the balance coming from one of your pennies on every ten $ you spend. It was an extension of the previous tax and approved by metro area voters in 1998. The loan was paid off in 2012.

[AHS1983]

Originally Posted by TakeFive

Anything is possible


My personal opinion is that Empower Field was a great investment.

Just as a reminder the Broncos put up 25% with the balance coming from one of your pennies on every ten $ you spend. It was an extension of the previous tax and approved by metro area voters in 1998. The loan was paid off in 2012.

Simply bump up ticket prices and leave taxpayers out of it. Thanks.

[TakeFive]

Who can keep up with this stuff?

In November we posted news from BusinessDen on the sale of 621 and 633 17th Street office towers for a bargain of $7 million. Now BusinessDen is reporting another sale of these properties.

Downtown towers sell for $3M; 700-unit residential conversion planned
April 4, 2025 By Matt Geiger -- BusinessDen

“These buildings in Denver represent an opportunity to make good on my thesis that we have all of the square footage we need to build the housing we need,” Luzzatto said. He paid $3.2 million for 621 and 633 17th St., a source familiar with the deal told BusinessDen.

Here's some AI/BusinessDen info on this deal:

Asher Luzzatto, a real estate developer, plans to convert two office towers in Denver into a 700-unit residential complex, aiming to create a vibrant block with retail spaces on the ground floor.

• The Plan: Luzzatto, who runs his family's real estate business, The Luzzatto Co, intends to transform the two office towers (621 and 633 17th St) into a residential complex, with at least 700 apartments.
• Scale: The buildings total around 970,000 square feet
• Funding: Luzzatto plans to cobble together disparate funding sources to make the development happen.
• Luzzatto's Background: Luzzatto, 37, splits his time between Los Angeles and Taos and is known for his real estate ventures.
• Seller: Denver-based E2M Ventures sold the property to Luzzatto, having purchased it last November.

Best of Luck

[TakeFive]

akin Golden Triangle is open for business

akin Golden Triangle -- 955 Bannock Street




Images courtesy OZ Architecture

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[TakeFive]

Back-To-Back RiNo Defaults Highlight Denver Office Market Fragility
April 02, 2025 By Jonathan Rose, Denver

Two office properties in Denver’s River North Art District have run into financial trouble in quick succession. It is the latest sign that Denver’s once-buzzy creative corridor is facing mounting challenges in a shifting commercial real estate landscape.

The owners of The Hub North at 3660 Blake St. surrendered the property to their lender last month via a deed-in-lieu-of-foreclosure transaction. The building holds 102K SF of office and 8,500 SF of ground-floor retail. Just a few blocks up, Industry RiNo Station, a 150K SF office building at 3827 Lafayette St. that was developed in 2017, has stopped making payments on its $60M loan, according to a loan report provided to Bisnow by Trepp.

Jonathan also summarizes previously reported issues with some of the retail space.

There's also this:

And the news comes as office rentals struggle across Denver’s urban core. Twenty-three percent of the city’s CMBS property loans are delinquent, according to a recent Trepp report provided to Bisnow. Forty-seven percent of all CMBS-backed buildings have a vacancy rate above 25%.

The city’s overall office availability rate, which includes sublease space, was about 30% in the fourth quarter, according to Savills data. Downtown Denver had the highest availability, at 40.8%, while the RiNo and Lower Downtown submarkets had a combined rate of 34.5%. All of those areas had increasing rents in the $45-per-SF range.

Note: Different brokers have different methods of calculating vacancy; I assume 'sublease space' in one difference. FWIW, I'm not sure specific numbers are necessarily all that important. What's important is to find new tenants.

[wong21fr]

Originally Posted by TakeFive

Who can keep up with this stuff?

In November we posted news from BusinessDen on the sale of 621 and 633 17th Street office towers for a bargain of $7 million. Now BusinessDen is reporting another sale of these properties.

Downtown towers sell for $3M; 700-unit residential conversion planned
April 4, 2025 By Matt Geiger -- BusinessDen


Here's some AI/BusinessDen info on this deal:

Best of Luck

They've also registered to draw on the $570M DDA fund. Give-em $25-50M and let's see what they can do.

[TakeFive]

Interesting Headline

U.S. stocks poised for biggest two-day wipeout in history as market losses since Inauguration Day verge on $10 trillion
April 4, 2025 By Joseph Adinolfi -- MarketWatch

The Good News on a bad news day is that the home builders are up ~ 5% or more. That's because the all-important 10-year treasury bond yield has dropped to ~4%. Here's to hoping that interest rates continue lower; this could definitely give home builders a boost not to mention other CRE loans.

[AHS1983]

Trump planning to use NREL land near Boulder for private AI data center and power plant, building on prior Biden order

https://coloradosun.com/2025/04/04/nrel-private-data-center-colorado-doe-chris-wright/

[TakeFive]

Westside buys downtown’s Lincoln Crossing at 90% discount
April 7, 2025 By Thomas Gounley -- BusinesDen

On Friday, April 7, 2025, Westside Investment Partners acquired the Lincoln Crossing complex at 1775 Sherman St. and 1776 Lincoln St. in Denver at a 90% discount.

Image courtesy LoopNet

It was indicated that the property was updated in 2022 but not sure how much. BTW, last year we updated that Westside had bought the Denver Club building in 2022. Presumably Westside was aware of this property and when the opportunity presented itself they were ready to go. No feedback on their intentions for the property.

[AHS1983]

Originally Posted by TakeFive

Westside buys downtown’s Lincoln Crossing at 90% discount

The price was $10 million. That's crazy low.

[TakeFive]

Denver’s reluctant landlords: Lenders taking growing number of office buildings
April 8, 2025 By Thomas Gounley -- BusinessDen

As the first quarter drew to a close, at least 25 major office properties across the Denver area were outright owned by a lender, thanks to a foreclosure or deed-in-lieu of foreclosure, or effectively controlled by one, due to the appointment of a receiver.

Of course there's a big difference from a downtown office tower and a suburban building.

In any case it then becomes the burden of the lender to decide what to do? On many of these super deals you have to assume that lenders just want to get the bad loans of their books. I'd assume there's still a number of properties where the lender has yet to make that decision. Another interesting year for office buildings?

I'm not sure what the impact the stupid 'tariff' economy will have on the CRE landscape?

[TakeFive]

Downtown Office Towers Set for 700-Unit Conversion
April 8, 2025 -- Mile High CRE

Two prominent office towers in the heart of downtown Denver are slated for a major transformation. Denver-based real estate investment firm E2M Ventures (E2MV), alongside national real estate firm The Luzzatto Company, has announced the successful acquisition of 621 and 633 17th St., totaling over 973,000 square feet. The Luzzatto Company plans to redevelop the office towers into the largest multifamily project in Denver, making it one of the largest and most high-profile office-to-residential conversion projects in the country.

This is rather interesting.

“The potential for 621 and 633 17th Street to become a dynamic, mixed-use development within downtown Denver is immense,” said Marc Perusse, founder of E2M Ventures, the seller of the properties.

E2M Ventures is a private equity firm in Denver. They acquired more than just the two office buildings.

E2MV originally acquired the buildings in November 2024 as part of a broader transaction that also included a 916-stall, 250,000-square-foot, parking garage at 1820 California St. and the adjacent 1.15-acre Lighthouse surface lot. While the Lighthouse Lot has since been sold, E2MV plans to retain ownership of the parking garage—soon to be rebranded as Park Place at 1820 California—as a long-term asset in partnership with Cress Capital.

The article is sort of the typical PR puff piece. That said I have no clue the probability of success so this will be interesting to follow. I'm most interested to learn what type of units they want whether upscale, affordable etc.

[wong21fr]

Originally Posted by AHS1983

The price was $10 million. That's crazy low.

This purchase price enables residential conversion for the property which I believe is one of the higher-rated ones for conversion as identified by the Denver 2023(?) Study.

There's at least a half dozen office to residential projects in the pipeline for downtown now:

1. Denver Dry Goods
2. Petroleum Building
3. 621 633 17th Street
4. 910 16th Street
5. 810 16th Street
6. 475 17th Street

There's others that have been proposed that are stale or dead, but the above seem to have the most traction at this time.

[TakeFive]

On an optimistic note

Trailbreak Partners To Break Ground At Former Cap Hill Brewery Site For $150M Multifamily Project
March 28, 2025 By Jonathan Rose, Denver

A construction fence has gone up around the site, the Denver Business Journal reported, and Trailbreak expects to break ground by the end of April.

No affordable units included?

Kaia will not include affordable or income-restricted units, as the site is exempt from Denver’s affordable housing requirements.

The comments of Mr. Trailbreak are quite interesting.

Trailbreak co-founder Doug Elenowitz recently told Bisnow he sees “turbulence” ahead in the multifamily market but believes local players are positioned better than national developers to make moves in the current environment.

“Over the past year, we’ve gained better visibility into the new normal of higher interest rates, have seen inflation moderate, and have started to see price discovery stabilize, giving local groups more confidence to step in,” Elenowitz said in November.

[TakeFive]

I believe it was laniroj who said "For the patient, TOD will come."

The only thing noteworthy about Dry Creek Station is that it lies between Arapahoe Station and County Line Station. The only reason for nearby office buildings is that they were built when you could be profitable in the middle of nowhere.

Colorado city reimagining what 800 acres of land along I-25 corridor will look like
April 10, 2025 By Ashley Portillo -- CBS News Denver

The area the Colorado city is focusing on is called Midtown Centennial near the Dry Creek light rail station and Ikea. The city's long-range vision is turning the area from aging office buildings and commercial spaces into a vibrant, diverse mixed-use district.

With the shift in working environments and market trends, a new opportunity comes to make the area a more walkable, mixed-use district and downtown area. The vision includes expanding housing, bringing in more businesses and adding parks. It also includes making the area more pedestrian and cyclist friendly.

King added Centennial doesn't have a true downtown, so this is a unique opportunity for the city. It's taking a proactive approach and understanding what the future looks like. "It's a place where people can live, work and play, all within the same environment, and it really becomes the heart of the city. It becomes the heart of Centennial," said King.

[TakeFive]

Donald Shoup (RIP) just rolled over and smiled

Denver proposes eliminating parking requirements for new housing developments
April 11, 2025 By Jasmine Arenas -- CBS News Denver

A proposal in Denver would eliminate parking requirements for new housing developments and streamline zoning rules.

The proposal aligns with a recent state law that bans many cities from enforcing parking minimums near public transit lines, which is set to go into effect this summer. However, Denver wants to do this citywide. Under current city regulations, developers must provide at least one parking space per apartment unit. That requirement could disappear as early as this summer under the new new proposal.

The city argues that changing the rules could help lower housing costs. Parking is expensive. City planners estimate that 10 spots can cost around $500,000 to build, and 100 spaces can run up to $5 million.

Actually, if you amortize the cost of parking over five years it's a nothing burger.

But looking ahead (with the way things are going) I see more and more people wanting to live without a car. This could presumably encourage more "missing middle" units which would be especially nice.

[laniroj]

Originally Posted by TakeFive

..Actually, if you amortize the cost of parking over five years it's a nothing burger...

Having trouble following your math. $5mil on 100 units requires $2mil of equity. At a modest 8% annual return, that's $133 per unit per month of rent. I'm sure a good many people would love if their rents were to drop a good 8-10%. Unfortunately, people don't make investments which don't yield returns.