DENVER | Main Development Thread #7

[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.

[wong21fr]

Originally Posted by laniroj

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.

Shhhh...... don't raise issues with the assumptions in the finance model. That ROI is solid as hell.

[mhays]

Developers would get very good at estimating how much parking their tenants will want. I bet they'd gravitate toward substantially less parking than they do now. It works that way in my area, which isn't all that different.

[wong21fr]

Mayor Johnston issues first Executive Order to reduce permitting times in Denver to 180 days:

Johnston establishing 180-day ‘shot clock’ for Denver permitting reviews
BusinessDen

Denver Mayor Mike Johnston is bringing a “shot clock” and “homeroom teachers” to the city’s permitting process.

-Johnston signed the first executive order of his administration Monday, bringing 280 city employees together into one “Denver permitting office” and pledging to review all applications within 180 days.

-That applies only to the city’s review time, though. Some permits go through multiple rounds of reviews and submissions, so the time the developer spends correcting or amending plans doesn’t count toward that 180-day window.

-Each submission will be assigned to a specific department employee who will guide applicants through the process. Johnston, a former high school principal, said they’ll act like homeroom teachers.

-If permit reviews are not completed by the 180-day mark, applicants can appeal to the department’s executive committee. If that group can’t make a decision or advance the permit within 30 days of meeting, then the city will refund the developer up to $10,000 in permitting fees.

I'm hoping that the champion approach and having the walk-up permit desk to address questions will be big improvements in the review process. It doesn't help with the byzantine zoning layers that have made development review so onerous, so that would be a great next step.

[TakeFive]

CRE Is 'At A Crossroads' After Loan Modifications Spike
April 22, 2025 | 1:38 p.m. ET Matt Wasielewski, National

The days of extend-and-pretend strategies, where loan terms are pushed out to delay refinancing or payoffs, are far from over, new data from CREDiQ suggests. “The CRE
sector is at a crossroads, with nearly $40 billion in modified loans signaling both caution and adaptability,” CREDiQ CEO Mike Haas wrote in an April 17 analysis.

Courtesy Unsplash/Acton Crawford

Capital markets continue to grapple with uncertainty, which is making extend-and-pretend strategies increasingly popular, Haas said. Capital markets and the broader
American economy have been rattled by President Donald Trump’s new tariff regime.

Debt markets and the broader commercial real estate sector have struggled to adapt in real time to shifting trade policy. Tariffs most immediately impact the cost of
imported materials, but investors, analysts and experts say the uncertainty being sown has added a new chill to already frozen markets.

SUPRESSION COMPRESSION

Update: While things may be 'thawing' some, so much economic activity has already been stunted for this year.

[TakeFive]

Denver Industrial Market Posts Solid Q1 2025 Gains Despite Seasonal Slowdown
April 17, 2025 -- Mile High CRE

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$600M Zyn Factory Goes Vertical As Airport Industrial Submarket Surges
April 21, 2025 By Jonathan Rose, Denver

Philip Morris International’s $600M Zyn factory is officially going up in Aurora. It is one of the largest industrial projects underway in metro Denver and part of a major wave of activity in the airport submarket.

The 800K SF campus near 56th Avenue and Harvest Road will include a 600K SF light manufacturing facility, office space and support buildings. It is slated to begin early operations by the end of 2025 and full production in 2026, according to a 2024 PMI press release.

Props to Aurora

“The facility has gone vertical, meaning the walls are up,” Aurora Economic Development Council President and CEO Wendy Mitchell told the Denver Business Journal.

She added that build-out alone is expected to generate nearly 5,000 construction-related jobs and $1B in economic impact. Once operational, the plant could support 500 full-time roles with average salaries around $90K a year.

Pending a public vote, the City of Denver being FLUSH doesn't need the sales tax revenue from Smoke Shops. Outside of the city limits others are happy to have the added revenue not to mention that these shops pay rent to their landlord who in turn pays property taxes.

[TakeFive]

Here's one 'we' missed

JE Dunn Construction Completes The Riv in RiNo
December 10, 2024 -- Mile High CRE

JE Dunn Construction has completed construction of The Riv, a new luxury mixed-use residential development in the heart of Denver’s vibrant River North Arts District. This conveniently located, 196-unit apartment community was designed by Shears Adkins + Rockmore Architects for Transwestern Properties and delivers 270,307 square feet of thoughtfully designed residential and retail space.

The Riv -- 3720 N Downing Street






Images courtesy The Riv

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[laniroj]

The last time this site was this quiet was fall of 2008. Yikes. Hopefully we seem some activity start to pick up. The lack of proposals is very worrying. Still some projects trickling through but very quiet.

[Fritzdude]

https://www.urwld.com/

This is a pretty big get for Denver and will anchor the new Fox Park in Globeville. That area is booming.

[rds70]

Originally Posted by laniroj

The last time this site was this quiet was fall of 2008. Yikes. Hopefully we seem some activity start to pick up. The lack of proposals is very worrying. Still some projects trickling through but very quiet.

808 Lincoln had a groundbreaking today:

https://milehighcre.com/trailbreak-p...ia-residences/

Route 40 on east Colfax is also under construction:

https://milehighcre.com/new-apartmen...wntown-denver/

[DenvertoLA]

It will be interesting to see how many of the projects that worked to get their site development plan approved before the new affordable unit requirement went into effect actually get built. I bet less than 1/3

[wong21fr]

Originally Posted by Fritzdude

https://www.urwld.com/

This is a pretty big get for Denver and will anchor the new Fox Park in Globeville. That area is booming.

This feels like Celebrity Sports Center redux with the caveat that the target demographic is a bit older.