DENVER | Main Development Thread #7

[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

Move-in Special

New Special Available! Lease Now & Live Up To 10 Weeks Free!

[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-partners-breaks-ground-on-295-unit-kaia-residences/

Route 40 on east Colfax is also under construction:

https://milehighcre.com/new-apartments-under-construction-in-downtown-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.

[laniroj]

Originally Posted by wong21fr

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

Hopefully they over-chlorinate the hell out of this new place too! The smell of chlorine and birthday parties really brings me back to my childhood! This new concept looks great and I'm sure the (over)active denver population will take to it in spades.

[TakeFive]

April was a Good Month

Originally Posted by rds70

Route 40 on east Colfax is also under construction:
https://milehighcre.com/new-apartments-under-construction-in-downtown-denver/

I had the strangest and vague idea that I had read about this some time ago.
Maybe it was a dream?
Nope; I found it - the Breaking News

Slipstream Properties, KTGY Bring Rehab and Development to Denver’s Capitol Hill Neighborhood
Dated: October 24, 2013 -- By Joshua Ayers

New Route 40 Mixed-Use Development

Slipstream Properties is poised to capitalize on the resurgence of Denver’s Capitol Hill neighborhood with the development of its Route 40 community, a mixed-use property comprised of an existing three-story, 1930s era building and a new five-story mixed-use structure. The development is located on East Colfax Avenue between Corona and Ogden Streets.

According to the recent project release

Englewood-based Consolidated Investment Group (CIG), a leading-edge real estate investment company managing a large, international portfolio, has announced the start of construction on Route 40, a multifamily property located at 1040 E. Colfax Avenue in Denver. The new seven-story building will include 210 apartment units, 5000 square feet of retail space, and robust amenities...

The architect for Route 40 is Boka Powell and the general contractor is Symmetry Builders. Gables Residential will manage the property.

I'd be curios of the backstory; none-the-less this time it's "For Real."

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Originally Posted by rds70

808 Lincoln had a groundbreaking today:

https://milehighcre.com/trailbreak-partners-breaks-ground-on-295-unit-kaia-residences/

Here's a rendering courtesy of Trailbreak via BLDUP

Kaia Residences -- 808 N Lincoln St

[TakeFive]

Originally Posted by wong21fr

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

In my closet I have a box of Celebrity Sports "tickets" that I figure one day will be worth $millions.
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As apartment vacancy rates rise, Denver rent prices for new leases are going down
Apr 29, 2025 By Wanya Reese -- 7Denver News

DENVER — Supply and demand — the concept apartment industry leaders say is leading to rent prices going down across the Denver metro area. Rent prices are at their lowest rate since the opening quarter of 2022, the Apartment Association of Metro Denver said. Industry leaders said, we are in a renter's market, which is good news for consumers who are currently looking to rent.

Denver7 listened to a vacancy and rent report conference where presenters revealed many apartments are offering specials, giving consumers the chance at free rent or steep discounts. Those experts explained that apartment owners have to make concessions as they work to increase occupancy rates for their apartment buildings. Looking at the numbers, the vacancy rate is 7% in the Denver metro area and the average rent price is down from last quarter.

It depends on where you live

In Arapahoe, Denver, and Jefferson counties, industry experts are seeing vacancy rates on the rise while places like Adams, Boulder and Douglas counties see the opposite

I recently read a piece stating that Austin had the larges rent drops followed by Denver followed by Phoenix. Why Phoenix? Like mentioned above there a parts of the Metro Phoenix where rents are strong, growth is good while in the City itself there's growing vacancy.

[TakeFive]

CBRE

Denver Office Figures Q1 2025
April 9, 2025

The Denver metro office market continued to face headwinds in Q1 2025 as evidenced by negative total net absorption of 813,000 sq. ft. ... Total vacancy increased slightly to 26.8%, while sublease availability continued its downward trend... While leasing fundamentals are expected to gradually improve, owners of distressed assets with low occupancy and limited capacity for improvements will face significant challenges.

Denver Downtown Office Figures Q1 2025
April 15, 2025

Leading market indicators pointed to the Downtown office market inching another step closer to recovery as more occupiers have solidified their space needs through signing longer-term leases. The total vacancy rate increased by a slight 30 bps (basis points) quarter-over-quarter and was up 230 bps year-over-year to reach 35.3%.

No new construction projects were in the pipeline for the third consecutive quarter, following the completion of 1900 Lawrence in mid-2024. As we progress through 2025, the market is expected to further stabilize, but recent heightened economic uncertainty could lead to some companies’ growth plans being put on hold until the impact of tariffs becomes more apparent.

The Denver Gazette broke this story:

TIAA to lay off 84 workers in downtown Denver ahead of office closure
May 2, 2025 By Bernadette Berdychowski / The Denver Gazette

As financial services firm TIAA prepares to close its downtown Denver office next year, layoffs have begun. TIAA will begin laying off 84 workers from its downtown office beginning July 1, according to a filing to state officials required by the Worker Adjustment and Retraining Notification Act (WARN).

Last August, the firm notified workers it would relocate 1,000 workers from Denver to Frisco, Texas — where the company built a new 15-story corporate center next to the Dallas Cowboys headquarters and practice facility. It meant the company would leave three years before its lease at 1670 Broadway expires in 2029, as downtown continues to struggle with rising vacancies.

I found this statement interesting.

The company said in its WARN letter on Tuesday that it plans to close down the downtown office in summer of 2026 and is looking for a smaller office “elsewhere in Denver.”

[TakeFive]

This is an interesting/fun development

Play Hooky at the Historic Evans School, Now a Beer Garden and Café
April 21, 2025 By Cynthia Barnes -- Westword

This new project by City Street Investors makes the grade.

Want to recapture the teenage thrill of cutting class and drinking beer? Now you can — right on campus, with nary a principal or truancy officer in sight. After sitting empty for fifty years, the historic Evans School in the Golden Triangle now welcomes kids of all ages to the Schoolyard Café and Schoolyard Beer Garden (although beer is still limited to those over twenty).

Photos courtesy Marc Piscotty

The Schoolyard Beer Garden and Schoolyard Café are the latest project of City Street Investors, the team behind the redevelopment of Denver's Union Station, Hangar 2 Lowry and Edgewater Beer Garden, among other places; it purchased the property in 2019. "It's hard to believe that in such a great location, that building could sit basically unused for half a century," says Joe Vostrejs, one of City Street's founders and principals. "We were very excited to get it."

"We plan to lease out the balance of the first floor to as many retail- and wellness-related uses as we can," adds Vostrejs.

[TakeFive]

Despite the Headline the article is pretty good

Denver’s 16th Street Mall faces ongoing vacancies and low traffic
Cinco De Mayo By Carly Moore -- KDVR

This is a nice Update:

Ten of the 13 blocks of 16th Street Mall are expected to open by May 31. Intersections of Tremont, Court and Cleveland are set to open later this year.

DENVER (KDVR) — According to a new annual report, the 16th Street Mall is still struggling to fill vacancies, and it’s also dealing with decreased foot traffic. The Downtown Denver Partnership said the retail vacancy rate is about 30%. Empty storefronts still line 16th Street Mall, and the vacancy rate is twice as much as the rest of downtown’s average of 15%. There are 45 spaces that are empty right now along the mall.

Obviously the construction is an understandable issue. But only recently has the city started to make things a little less onerous for retailers in general. To compensate for City stupidity has been expensive.

Through the city, the Downtown Denver Partnership provided nearly $644,000 in grants to 60 businesses in 2024 to help keep them afloat during the multi-year construction projects.

“Two of our biggest challenges to business, we know, are both the perception and reality of public safety, as well as the ability to do business and get your permits and move through the city. We know this, and it’s challenging for the entire city.

[TakeFive]

Denver CRE Leaders Welcome City's Efforts To Speed Permitting
May 06, 2025 By Jonathan Rose, Denver

Mayor Mike Johnston’s overhaul of Denver’s permitting process has been met with cautious optimism from local developers — but a wait-and-see approach remains among the development community.

At Bisnow’s recent Denver Construction and Development event held at Flatiron Crossing in Broomfield on April 23, developers, general contractors and other commercial real estate players welcomed Johnston’s new 180-day target for permit reviews. They called it a step toward restoring Denver’s competitiveness amid growing national and local pressures.

Obviously, things are easier to 'see' in hindsight. It's also fair to say that it's never a bad time to be business-friendly.

But they were quick to point out that the problems go deeper than just timelines.

“When you're competing with cities like Phoenix and Dallas that are high growth and more pro-business, large investors with big checkbooks are going to prioritize ease and certainty.”

“We're actively hearing from some people that [they’re] going to take a pass on Denver right now for a variety of reasons,” Vostrejs said. “It's not just this. Some other issues, other regulations, minimum wage, all sorts of things that are making us a little less competitive.”

By way of example the AZ Governor invited Google's Waymo to set up shop in the state back in 2015.

CNBC carried the updated story yesterday.

The “Waymo Driver Integration Plant,” a 239,000 square foot facility outside of Phoenix, will assemble more than 2,000 Jaguar I-PACE robotaxis, the Alphabet company said in a statement.

The plant will be “capable of building tens of thousands of fully autonomous Waymo vehicles per year,” when it is fully built out, Waymo said. The company also said it plans to build its more advanced Geely Zeekr RT robotaxis that feature its “6th-generation Waymo Driver” technology later this year at the plant.

Note: This is not something that Colorado lost out on due to 'snow'; rather it's one example for the advantage of being business-friendly. For the unaware Waymo is all-electric.

[TakeFive]

Affordable Housing always Welcomed

Affordable Housing Targeting Single-Parent Families Opens in Denver
May 6, 2025 -- Mile High CRE

Denver’s first investment in city-funded housing vouchers has taken shape with the grand opening of Warren Village at Alameda, an affordable housing community targeting single-parent households. Warren Village at Alameda provides 89 income-restricted apartments, including 79 supportive housing units with wraparound services for households exiting homelessness.

Warren Village at Alameda -- 1390 W. Alameda Ave.




Images courtesy Warren Village

Warren Village has been serving Denver families for decades; this is their third location.

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Developer proposes 5-story affordable housing, child care center in Denver
May 5, 2025 By Cassidy Ritter (Denver Business Journal)

DENVER — A national developer envisions turning a parking lot in Denver’s Capitol Hill neighborhood into affordable housing and a child care center. Developer Gorman & Co. submitted plans to Denver to convert the approximately 1.17-acre lot at 901 N. Grant St. into a five-story building.

Concept plans submitted last month call for 147 units with a second-level amenity deck and a 7,500-square-foot early learning center on the ground floor.

[TakeFive]

Speaking of Trailbreak Partners

Trailbreak Partners Completes 123-Unit Ridian Apartments
May 7, 2025 -- Mile High CRE

Trailbreak Partners, a Denver-based commercial real estate investment and development firm, has completed the construction of Ridian Apartments, a 123-unit Class A multifamily community located at 3295 N. Eliot Street in Denver’s sought-after Highlands neighborhood. Construction on Ridian Apartments began in mid-2022, and the community is now ready to welcome its first residents in the coming weeks.

With a mix of studio, one-bedroom, and two-bedroom units averaging 670 square feet, the residences include custom flooring and cabinetry, stainless steel appliances, quartz countertops, walk-in closets, in-unit laundry, oversized windows and private balconies in select units.

Courtesy Trailbreak Partners