DENVER | Main Development Thread #6

[DenverPoke]

Originally Posted by Stonemans_rowJ

Some interesting further reading on housing prices:

I was watching 9news the other night and another story about how expensive rents are. The local media jumps all over these stories because it really fires people up and "sells." Their data is from Zumper.


With Zumper, Zillow, etc. the data tends to be all over the place and can be very inaccurate. But its easy for news outlets to just take the easy headline. Like this story in the Denver Post, condo prices up nearly 20% in 2015. If that headline doesn't grab attention, I don't know what does. The reality is the only new condos that closed this year were in Cherry Creek at 150 Columbine. So of course those sales are going to skew the data. "Same store" sales would be nowhere close to 20% appreciation.

Great post about discerning the data here (from City Observatory)

And finally, Ken's post from Denver Infill on migration to Denver is wonderful. Long term demand looks strong.

However, best analysis of current apartment and rental trends here:

great potential for softening apartment market.
1-3 month concessions currently on luxury units
vacancy estimated to be in the 7-8% range

amount of new apartment construction coming onto the market may cause conditions to weaken during the fourth quarter of 2015 and into 2016. In conjunction with potential oversupply is a decline in the rate of growth in employment in metro Denver, creating less demand for apartments. Over the long term Denver remains an attractive market for apartment investment but it is important to be cautious about what market conditions may entail in 2016.

Good reads, thanks for posting. Though I'm pretty sure James RE has been predicting a downturn in apartment construction for at least the last 2 years. I suppose they will be right eventually.

Another interesting note is that Denver/Boulder has among the lowest rental retention rates in the country, which to me means people are chasing concessions. I would think this would be an indicator that apartments are over-priced (duh) and some slowdown in both construction and rental rates may follow.

http://www.denverpost.com/business/ci_29139508/renters-denver-boulder-renew-leases-at-one-lowest

[DenverInfill]

Originally Posted by Stonemans_rowJ

However, best analysis of current apartment and rental trends here:

great potential for softening apartment market.
1-3 month concessions currently on luxury units
vacancy estimated to be in the 7-8% range

amount of new apartment construction coming onto the market may cause conditions to weaken during the fourth quarter of 2015 and into 2016. In conjunction with potential oversupply is a decline in the rate of growth in employment in metro Denver, creating less demand for apartments. Over the long term Denver remains an attractive market for apartment investment but it is important to be cautious about what market conditions may entail in 2016.

I wonder if the JRES report's comment bolded above was written before this was announced?

http://www.bizjournals.com/denver/blog/f...er-added-signicantly-more-jobs-than.html

[TakeFive]

Originally Posted by DenverPoke

Another interesting note is that Denver/Boulder has among the lowest rental retention rates in the country, which to me means people are chasing concessions. I would think this would be an indicator that apartments are over-priced (duh) and some slowdown in both construction and rental rates may follow.

That is very interesting even if not so surprising. Chasing concession a part; I'd also guess that to an extent Millennials come and Millennials go - as in move onto another city/place. I would guess that many land initially in downtown and may gravitate to the cheaper burbs once they've secured a job.

Originally Posted by Stonemans_rowJ

Some interesting further reading on housing prices:

However, best analysis of current apartment and rental trends here:

great potential for softening apartment market.
1-3 month concessions currently on luxury units
vacancy estimated to be in the 7-8% range.

I like JRES a lot but as DenverPoke points out they are habitually conservative/skeptical. I like that but it needs to be put into perspective.

For example, since his 3rd quarter update (which is very good generally) was published, this was released.

While I'm a macro kind of guy and do track macro trends, still, it is only a part of the picture.

Side note: I was ignorant about Lennar (from a recent comment) as they have a couple of significant projects under construction but out in the burbs.

They might want to drive by Alta Cherry Hills listed u/c as they've been renting apartments since early in the year.

With respect to Alexan West Highlands, Modera Observatory Park and York on City Park I know the sites were being demoed but not sure whether they've actually broken ground on their projects?

It's fair to say the market is "normalizing" as new complexes budget for rent incentives which until more recently have hardly been needed. I don't doubt that oil & gas layoffs have had an impact even if modest since they're such good paying jobs.

When you look at how scattered out all the projects are then which areas/neighborhoods are most vulnerable becomes more relevant. Plus affordable housing is it's own segment and in high demand obviously.

As I recently suggested the runway for new project delivery is well spread out through 2017 so it's hard to project.

I remain impressed with Denver's organic growth as well.

[Stonemans_rowJ]

Yes the report was released after the 3rd quarter.

Good news on the job front! That would seem to indicate good news for continued or increased demand.

That report just had a very cautionary tone, to monitor employment figures carefully, as well as possible fed action on interest rates...

[Stonemans_rowJ]

Originally Posted by TakeFive

That is very interesting even if not so surprising. Chasing concession a part; I'd also guess that to an extent Millennials come and Millennials go - as in move onto another city/place. I would guess that many land initially in downtown and may gravitate to the cheaper burbs once they've secured a job.


I like JRES a lot but as DenverPoke points out they are habitually conservative/skeptical. I like that but it needs to be put into perspective.

For example, since his 3rd quarter update (which is very good generally) was published, this was released.

While I'm a macro kind of guy and do track macro trends, still, it is only a part of the picture.

Side note: I was ignorant about Lennar (from a recent comment) as they have a couple of significant projects under construction but out in the burbs.

They might want to drive by Alta Cherry Hills listed u/c as they've been renting apartments since early in the year.

With respect to Alexan West Highlands, Modera Observatory Park and York on City Park I know the sites were being demoed but not sure whether they've actually broken ground on their projects?

It's fair to say the market is "normalizing" as new complexes budget for rent incentives which until more recently have hardly been needed. I don't doubt that oil & gas layoffs have had an impact even if modest since they're such good paying jobs.

When you look at how scattered out all the projects are then which areas/neighborhoods are most vulnerable becomes more relevant. Plus affordable housing is it's own segment and in high demand obviously.

As I recently suggested the runway for new project delivery is well spread out through 2017 so it's hard to project.

I remain impressed with Denver's organic growth as well.

I'm no expert, but I would think in the world of appraising/underwriting, conservative is better!

I believe all 3 of those projects have broken ground. Totally agree that certain neighborhoods are more vulnerable here, and also about oil and gas impact.

What's your opinion of the effect of a 1/4 point rate increase?

[awholeparade]

Anyone know what's planned at Larimer and Broadway?

[EngiNerd]

Cross posting this, time lapse of DIA Hotel & Train Station construction

• Video Link

[DownhomeDenver]

Originally Posted by awholeparade

Anyone know what's planned at Larimer and Broadway?

There was something in the major projects plan spreadsheet, but now I can't find it. I saw a bulldozer out there the other day.

[awholeparade]

Originally Posted by DownhomeDenver

There was something in the major projects plan spreadsheet, but now I can't find it. I saw a bulldozer out there the other day.

Yeah, about half the block is now gone.

[PLANSIT]

Originally Posted by awholeparade

Yeah, about half the block is now gone.

Parking Lot.

Not joking.

Site Address and Description

2420 Larimer St - 2015PM0000547 - Larimer Parking 2420

[awholeparade]

Originally Posted by PLANSIT

Parking Lot.

Not joking.

Unbelievable.

[TakeFive]

Originally Posted by awholeparade

Unbelievable.

Only a few blocks from Coors Field and with Concierge service and an offer for a hand wash and wax while you're at the game it could be a winner.

[bunt_q]

Originally Posted by awholeparade

Unbelievable.

Cars need homes too.

[fleury]

Originally Posted by PLANSIT

Parking Lot.

Not joking.

nm

[comoneymaker]

I had a dream Denver got a new tallest. It was a 900 ft block with no architecture and was brown and looked just like the Republic Plaza....wait that isn't a dream that is a nightmare!!! lol

[rds70]

New Block 162 renderings:



It looks like the cantilever over the Sage Building is gone:

[bunt_q]

Much less interesting. Eh, it's okay. Total filler buildings, and that's fine.

[DenverPoke]

So what are we looking at height wise, probably 500' for the office and 450' for the hotel? Office looks just slightly taller than Spire from the aerial.

[RyanD]

Mmmmm super boxy! Tasty tasty!! My favorite!

Love the chunky podium too! I love everything because it's taking a parking lot away on one of the most valued Denver lots! Wooooo!

It's like a City House in Union Station!

[TakeFive]

The weather outside is frightful

Via lovelace-media.imgix.net

I've had the occasion to read a Global Warming post or two. Trying to wear my "objective hat" and follow the ensuing vigorous debate was mostly over my head as I'm neither a scientist nor a geological or meteorological historian. Fair to say that the "deniers" are well funded, organized and thought provoking.

Consequently, I very much enjoyed reading this week 7News meteorologist Mike Nelson's take on the topic which was very readable and quite convincing.

GO BRONCOS