DENVER | Main Development Thread #6

[PLANSIT]

Aren't most cities seeing a 20%-25% for-sale condo market share? And Denver is like < 5%?

If so, is it safe to assume that nationally, yes, for-sale multi-family development is hampered by financing and rental cultural shift, but locally, for-sale multi-family is hampered by financing, rental cultural shift, AND construction-defects issue?

[bcp]

i think you are spot on - less the rental cultural shift. The shift has been to live close-in, but it's been over-forced into apts. due to the lack of condos.

[TakeFive]

Originally Posted by Stonemans_rowJ

I caught this story on colorado public radio the other day: http://www.cpr.org/news/story/could-limiting-defect-lawsuits-bring-more-condos-denver

According to the author, new condo construction is at some of the lowest historic levels nationally (not just our state) and one person quoted in the article says it has less to do with defect lawsuits than it does with financing, market factors, etc.

Thanks for finding/linking; that's a great overview.

Originally Posted by mr1138

My gut feeling is that the problem has never been caused by only one factor.

He says that the lending industry is still majorly freaked out about giving construction loans for for-sale product. If a project isn't more than 50% pre-sold (he might have even said 75%), it hasn't been getting financing. There is still seen to be enormous risk in speculative condo projects like Glass House and Spire because of the cost overruns that result when a building has a ton of vacant units sitting there for several years (as was the case with many of the condo projects built across America before the recession).

It makes me wonder if the ice is finally thawing on the lending market, or if Union Station is simply seen to be such a hot market right now that the risk of units not selling is considered low.

Your gut is good and that's a superb comment.

Originally Posted by PLANSIT

Aren't most cities seeing a 20%-25% for-sale condo market share? And Denver is like < 5%?

If so, is it safe to assume that nationally, yes, for-sale multi-family development is hampered by financing and rental cultural shift, but locally, for-sale multi-family is hampered by financing, rental cultural shift, AND construction-defects issue?

It's my glaring weakness, but I've just never been much of a fan for statistics as necessary and useful as they are. Although Google is a friend of mine I could not (easily) find anything to verify your statistics. So may I ask do those percentages cover resales, new construction sales, conversions or all of the above and for what time period?

******************

Context is everything (especially in real estate). Time wise the condo market has been picking up. I did find this Business Insider article which source from CoreLogic: "US condo market staging a comeback" BUT:

Take Austin for example. With an ongoing tsunami of tech workers, many which are with established or already successful tech companies the large wave of tech workers probably averages what (totally guessing) $75,000 per year or more, oftentimes much more?

Miami would be the poster child but the same thing driving that market would also be at play in several other markets. The all-cash foreign buyer. On the left coast you might add the number of employees now able to cash in their stock shares (or at least collateralize them) b/c their company went public.

I also read elsewhere that (rapidly) rising land costs have made condo construction appealing especially in the luxury market.

Bottom Line: While I would guess that Denver hasn't missed that much this is certainly changing now. It is important to find a compromise fix - while at the same time I wouldn't want shoddy construction. It would certainly, I'd think, open the door to more condos downtown although I still wonder at what price points? Even more importantly going forward there would be more metro-wide condo construction. Olde Town Arvada comes to mind. Stapleton should be an obvious area. Etc.

[Denver Dweller]

http://insiderealestatenews.com/2014/12/29/rino-is-the-new-lohi-realtor-richards-says/

[Stonemans_rowJ]

Originally Posted by Riverfrontbrewer

I would guess close to 200 units plus 8-10 PH size units.....pp sq ft, easily high 4's - 650 depending on floor, size, etc

That sounds about right.

From a cursory glance at what's still listed at 250 Columbine, (albeit different neighborhood but the only other luxury new construction condo project) it looks like the cheapest place is an alley-side 2nd floor unit, listed at $450,000 for 914', or about $492/ft. From there it goes up to over $600/ft and maybe higher since many of them are under contract or being held back.

[sphinx88844]

Originally Posted by Stonemans_rowJ

That sounds about right.

From a cursory glance at what's still listed at 250 Columbine, (albeit different neighborhood but the only other luxury new construction condo project) it looks like the cheapest place is an alley-side 2nd floor unit, listed at $450,000 for 914', or about $492/ft. From there it goes up to over $600/ft and maybe higher since many of them are under contract or being held back.

My building at 1st and Logan still has a couple units left - but the realtor selling the building told me a couple of months ago that only the upper floors have units left (2 bed 2 bath $400,000 - that's what he told me)

[Riverfront Park]

Howdy,

A quick note on the B Block. I wanted to let everyone know that we haven't actually decided to move forward on a condominium project. We're focused on three things:

1. Understanding where we are on construction defect legislation.
2. Making sure our costs are in line.
3. Making sure we can find a capital structure that works.

We think there could be huge demand, and we would love to do condominiums, with really significant retail at the base. But, until we can get it all solved, we won't be able to do so.

Happy New Year

[TakeFive]

Even though it is a critical part of Denver's economy and commercial real estate market you'd have to agree that Times Sure Have Changed.

Mike Sunnucks has the Breaking Story at PBJ Right HERE:
"Marijuana cultivation build-outs most expensive in Arizona, Colorado"

Wei and BuildZoom writer Greg Clifton found that behind Colorado – where marijuana is legal – Arizona has some of the highest construction build-out costs in the U.S.

BuildZoom data found it cost $764,400 to convert a warehouse building on McDowell Road west of Interstate 17 into a cultivation facility.
It cost another $241,400 to convert another building at Encanto Boulevard and Interstate 17 into what is now Encanto Green Cross Dispensary.

Long, long time ago.... I might have sold some pot for typically $15 an ounce (baggie). Of course for Acapulco Gold you'd have to pony up $20. Memories of living in Four Mile Canyon.

Thanks to twilberding.zenfolio.comI think this might be my Ex. (I kid)

[denconyny]

Originally Posted by Riverfront Park

Howdy,

A quick note on the B Block. I wanted to let everyone know that we haven't actually decided to move forward on a condominium project. We're focused on three things:

1. Understanding where we are on construction defect legislation.
2. Making sure our costs are in line.
3. Making sure we can find a capital structure that works.

We think there could be huge demand, and we would love to do condominiums, with really significant retail at the base. But, until we can get it all solved, we won't be able to do so.

Happy New Year

Is that why the link to the webpage for this went down?

If so, I would think that maybe the webpage could still remain up with the project, and somewhere on the page just indicate somehow that this isn't yet a definite.....

[TakeFive]

Originally Posted by Denver Dweller

http://insiderealestatenews.com/2014/12/29/rino-is-the-new-lohi-realtor-richards-says/

I really think it would be better if each neighborhood develops its own distinctive personality rather than try to copy any other neighborhood.

[TakeFive]

Yikes! So they're getting rid of a bus station so that they can take care of winos?
Maybe somebody who knows what they're talking about should address this.

[wong21fr]

Originally Posted by TakeFive

Yikes! So they're getting rid of a bus station so that they can take care of winos?
Maybe somebody who knows what they're talking about should address this.

It's a bus station for Autobuses Los Paisanos. I think they can find another spot for the bus trip between Denver and El Paso (with a quick swim in the Rio Bravo).

[bcp]

why not Union Station?

[bcp]

Originally Posted by Denver Dweller

http://insiderealestatenews.com/2014/12/29/rino-is-the-new-lohi-realtor-richards-says/

Good summary...but hard to say this is very out on the limb for "calling it"

[wong21fr]

Originally Posted by bcp

why not Union Station?

I don't see why not. They'd have to set up a ticketing kiosk for their operations and pay RTD some rent monies, but it is certainly what the bus terminal is intended to do.

It would also make Bunt pleased to see more common people milling about Union Station.

[DownhomeDenver]

Of how screwed up are parking requirements are:

So Guardian Storage wants to build a self storage facility at 2249 Champa St. Currently the property has one story structures: low rent retail fronting champa and a derelict duplex fronting Park Ave. So the city denied the zoning because Guardian only wants to supply 11 parking spaces whereas the city requires 51 parking spots!!

Guardian has appealed the decision by the city stating that 11 spaces is almost double what they usually would provide. They listed out all of their developments in Colorado and Pennsylvania showing that historically the most parking they've provide for self storage has been 10 and that property is in Superior, CO.

Makes no sense to me that we would require a parking spot for each 1000 sq feet of gross area for a mini storage!?!? I hope they get approved for the variance, but just goes to show how archaic our parking requirements can be especially in downtown proper.

[TakeFive]

wong... Oh definitely, bunt and common folk go together like bricks and mortar.
BTW, I had to Google Rio Bravo to check my swimming tastes.

DownhomeDenver... is it possible they didn't want a mini-storage at that site and that was their "excuse" for denial?

[bunt_q]

Originally Posted by TakeFive

DownhomeDenver... is it possible they didn't want a mini-storage at that site and that was their "excuse" for denial?

My thoughts exactly. Also, it's not clear from your post what exactly they were requesting. You said they "denied the zoning" - does that mean this was not an allowable use under the old zoning, so they were requesting a change? (If that's the case, they should have just said no - no need to give a reason at all.) Or did they get a denial somewhere along the way in the development review process? Details matter.

[bunt_q]

Originally Posted by wong21fr

It would also make Bunt pleased to see more common people milling about Union Station.

And a Mexican popsicle cart with a little bell attached. Hells yes.

[Stonemans_rowJ]

They should consider putting the mini-storage next to the Hotel VQ micro apartments- they're going to need it!

Let me be the first to say, Happy New Year everyone! 2015 promises to be a good year for development in Denver.