DENVER | Main Development Thread #6

[RyanD]

Originally Posted by Brainpathology

I'll just have to follow the travels of former residents here wherever they are fleeing to and see what they find.

HEY! WE HAVE A WHOLE THREAD FOR THIS! (Clicky)

[Brainpathology]

Which appropriately enough I have been following!

[bunt_q]

Originally Posted by bcp

um...because typically developers own the risk and the debt? we live in a free market capitalist country? "siphoning off profits"? that's kinda scary...again, if everybody wants price and profit controls, will there be protections during bad times from the same beneficiaries?

Nobody said anything about price controls. What I said was, now is the time to tax and regulate. Let's impose some design review requirements, and see if we can get projects that are not total garbage - a little masonry isn't too much to ask for in a building that'll rent over $3/sf. Let's impose a tax so we can fund intracity transit. Nobody is entitled to a windfall, which is exactly what these developers are reaping. They did not pay for the infrastructure and amenities investments in the city that made it so attractive. The residents being priced out today paid for those things over the last two decades. A city growing like ours has needs. And frankly, if we are going to be unaffordable, let's be unaffordable in a city that can meet those needs. Let's build streetcars out Colfax and Federal and Colorado to places where most of us can afford to live. That's what I mean by "siphoning" - when apartment developers are reaping a windfall not of their making, we take that opportunity to pay for things we need. I, for one, don't think a 5% impact fee imposed tomorrow would increase rents by a dime.

Same idea as raising the gas tax when gas prices are low - also something we should do.

[CherryCreek]

Originally Posted by bunt_q

Nobody said anything about price controls. What I said was, now is the time to tax and regulate. Let's impose some design review requirements, and see if we can get projects that are not total garbage - a little masonry isn't too much to ask for in a building that'll rent over $3/sf. Let's impose a tax so we can fund intracity transit. Nobody is entitled to a windfall, which is exactly what these developers are reaping. They did not pay for the infrastructure and amenities investments in the city that made it so attractive. The residents being priced out today paid for those things over the last two decades. A city growing like ours has needs. And frankly, if we are going to be unaffordable, let's be unaffordable in a city that can meet those needs. Let's build streetcars out Colfax and Federal and Colorado to places where most of us can afford to live. That's what I mean by "siphoning" - when apartment developers are reaping a windfall not of their making, we take that opportunity to pay for things we need. I, for one, don't think a 5% impact few imposed tomorrow would increase rents by a dime.

Same idea as raising the gas tax when gas prices are low - also something we should do.

I like this and agree. The city should and will grow. A lot of wise stake holders made huge investments and good decisions from 1985 to 2010 to set the stage for the current boom (airports, convention centers, stadiums, new highways, new viaducts, new parks, new museums, light rail, commuter rail, etc.). May the newer residents and stakeholders be as equally wise in planning for the future.

[TakeFive]

When you drop $5 billion of construction into downtown in 5 years and another $5 billion into a metro transit system it's hard to grasp just how strong the economic impact. It's not hard to see the new buildings and transit lines of course.

I'd guess over the last 9 months a half dozen companies from Silicon Valley/Bay Area have expanded into the valley. They might start out with 20-50 employees or 200-500 or more. One San Francisco company that moved here last November quickly grew to a 1,000 employees and recently announced they're leasing more space to add another 1,000 employees. There's some very interesting organic growth among tech oriented local companies as well. Maybe all those software designer graduates are starting to pay dividends? Metro Phoenix is a big place with a lot of people so at this point it's like "it's about time." But this is not my point anyway.

Once all those construction dollars fade away to a more sustainable level what is the underlying job market like? I appreciate it's a more esoteric discussion to project such things but I'll add this last thought. "The economy" often has a way of making the best economists and smartest demographers look stupid.

[mojiferous]

Originally Posted by bcp

This is the funniest post in YEARS! Better supply and demand equations driven by actual market data, rather than a "whim", is the new evil? You sir have provided a good laugh today!

Sorry, that probably sounded like I was railing against the basic concepts of the market and statistical analysis software.

I wasn't... I'm talking about things like this:
http://www.geek.com/news/amazon-algorithm-freaks-out-sells-book-for-23-6-million-1347813/
or this:
http://dealbook.nytimes.com/2012/08/02/knight-capital-says-trading-mishap-cost-it-440-million/

There is no need for collusion or antitrust nonsense in the apartment rental field if you have two algorithms stuck in a race condition and people willing to keep paying the price they set.

[TakeFive]

Originally Posted by bunt_q

I, for one, don't think a 5% impact fee imposed tomorrow would increase rents by a dime.

Same idea as raising the gas tax when gas prices are low - also something we should do.

Wasn't aware... I just figured they had an impact fee.
Agree on both points.

[mhays]

When you start adding costs and design requirements, costs go up. So you see less supply. Which translates to costs rising on older units too.

I'm in favor of design standards to a point. But there's no question that the process (design costs, holding costs, etc.) and higher construction costs can add significant price.

[bunt_q]

Originally Posted by mhays

When you start adding costs and design requirements, costs go up. So you see less supply. Which translates to costs rising on older units too.

I'm in favor of design standards to a point. But there's no question that the process (design costs, holding costs, etc.) and higher construction costs can add significant price.

"Can" add significant price. Not necessarily will. And if the market can not, or will not, bear those higher costs, developers will take a look and see if the project still pencils. And if it does, they move ahead. Which is what I think would happen in this market.

Supply and demand is not a one-for-one relationship. And there are circumstances when quantity supplied will not decrease at all in the face of a small increase in costs. That is where I'd argue the Denver market is today. That's not always the case, obviously, I am not saying it is. That is what I am saying I think the case is here, right now.

At least I'd like to see that studied and, if possible, tried out. We can always roll it back later if I'm wrong. (Until we bond off of that revenue stream, but that'd take an election.)

[bcp]

bunt - "not of their making"? who deserves the credit then for buying the land, organizing the project and debt, paying the interest, taking the risk, and getting something built? or are you really saying we should add extra taxes ("siphoning profit) just because denver is a hot market right now? keep in mind that denver made a lot of smart moves in order to ATTRACT outside capital. now we should punch them in the eye? aren't they contributing to the betterment of denver with each parking lot that disappears?

let's say in some far away world I agree with your philosophy here...developers deserve less profit since they did nothing to create a great-denver. ok, i'll play along:
- every new citizen that moves to denver should pay higher sales taxes, pay more for RTD rides, and pay higher property taxes. After all, they did not contribute to making it great before, they didn't help build the roads.
- local developers should pay less in income taxes. After all, they have been in denver for years and years, contributing to the general fund in lots of ways, and creating jobs. They have paid their due, lower their tax burden!

it doesn't take long for this philosphy to make less and less sense. and what you are describing is a race to the top - prices will go up and up. why? so that everything will be super pretty with bricks?

why not just let the free market do it's thing, and prices will come down a bit once supply / demand calibrate. if buildings that aren't of high-quality / design stop renting...well, then you'll see an adjustment in price and next-gen buildings.

better yet - why don't we make it EASIER for more homes to be built more quickly? what's the cost and wait for plan review and taps?
better yet - why don't we attract more and better jobs so that labor is scarce and pay increases?
better yet - why don't we accept that there are different levels of housing stock, and that real affordability is driven by quality / views / parking / location.

[bcp]

^ a caveat here...if a rezone, TIF, or substantial infrastructure is being requested....all reasonable options should be on the table.

[TakeFive]

Biennial of the Americas Festival in Civic Center Park

Biennial of the Americas Festival

http://biennialoftheamericas.org/

[TakeFive]

Originally Posted by seventwenty

There's an article in today's DBJ that dovetails nicely into this very insightful discussion:

Http://www.bizjournals.com/denver/news/2015/07/16/denver-in-top-10-in-u-s-apartment-growth.html

One more quote from the linked DBJ:

Across the country, 557,000 apartment units were permitted from June 2014 to May 2015, a 54 percent increase from the previous year.

All over the freaking country.

"Comments on June Housing Starts"
by Bill McBride on 7/17/2015, Calculated Risk

Even with the surge in permits this over the last two months - and strong multi-family starts in June - I think most of the growth in multi-family starts is probably behind us - although I expect solid multi-family starts for a few more years.

http://www.calculatedriskblog.com/

Note the exceptionally low level of single family starts and completions. The "wide bottom" was what I was forecasting several years ago, and now I expect several years of increasing single family starts and completions.

Being a blog friendly guy I thought I'd share the best source on the web. While Denver has its unique quirks (construction defects mess), it also falls in line with what is going on in most places.

[corey]

The Biennial Of The Americas is an example of what I love about the Denver arts and culture scene. Denver doesn't have to put on a major event like this, which is quickly growing in national and international stature. Cities that are supposed to be arts and cultural meccas like San Francisco don't have anything similar. I am really glad Hickenlooper was mayor at the right time to back things like this and the Clyfford Stills Museum. This legacy has grown exponentially including private sector institutions like Redline, etc.

[Denver]

A little something something to start off everyone's weekend. Here are some updated 1701 Chestnut Renderings. I really like how they tried to make the two parts look like distinct buildings. Thoughts?
All images from: http://sararch.com/







Check out http://denver-cityscape.com so see some previous renderings.

[TakeFive]

Originally Posted by corey

The Biennial Of The Americas is an example of what I love about the Denver arts and culture scene. Denver doesn't have to put on a major event like this, which is quickly growing in national and international stature. Cities that are supposed to be arts and cultural meccas like San Francisco don't have anything similar. I am really glad Hickenlooper was mayor at the right time to back things like this and the Clyfford Stills Museum. This legacy has grown exponentially including private sector institutions like Redline, etc.

I wholly agree. I see it as a nice economic development tool for the city and state as well. I especially like it's reach into South America as well as Mexico and Central America to the south. Note: JBS S.A. São Paulo, Brazil is the largest meat processing company in the world and its USA HQ is in Greeley.

[corey]

I see the State is again thinking of moving the State Fair from Pueblo. I'm sure this really pisses off Pueblo. It keeps losing money from what I understand. It is too far from the state's population center to attract more people. What if they held it at the Stock Show complex?

[Sam Hill]

Originally Posted by Denver

A little something something to start off everyone's weekend. Here are some updated 1701 Chestnut Renderings. I really like how they tried to make the two parts look like distinct buildings. Thoughts?
All images from: http://sararch.com/







Check out http://denver-cityscape.com so see some previous renderings.

I love it. I think it's an improvement.

[bcp]

Very nice

[bunt_q]

That's a big dang building. And classy, me likes. That's a whole lot of apartments.