DENVER | Main Development Thread #6

[COtoOC]

Originally Posted by TakeFive

Despite the one recent weak jobs report overall the employment landscape continues to tighten and wages are heading higher even if modestly. An increasing number of employers, including small businesses, are reporting difficulty in finding qualified employees. That would seem to be a sign that rates will drift higher.

Ironically, the 30-year average for fixed-rate mortgages has recently fallen to a 3-year low. Call it 3.75%.

Looking around the bend however I foresee more waves of retail closings. The "Amazon effect" is real and growing. I expect more older suburban malls and strip centers to be closed creating a redevelopment opportunity in some cases. The Aurora Mall comes to mind in Denver. Many Denver area malls have already been redeveloped.

Inflationary pressures are building driven by the turnaround in crude oil prices. rising housing costs and wages. That would normally indicate higher interest rates.

The pending bugaboo is Brexit but nobody knows what the impact would be. Uncertainty always makes markets nervous though.

With respect to potential alternative yields it's worth noting that developer's ROI is being squeezed by higher costs, notably land and labor costs. Additionally the supply side is reaching an oversupply in many urban markets even if modestly.

I've wondered if they won't tear down the Aurora mall and do a BelMar type development there, considering the LR now loops around it.

[EngiNerd]

Originally Posted by COtoOC

I've wondered if they won't tear down the Aurora mall and do a BelMar type development there, considering the LR now loops around it.

I think the Aurora Mall is still reasonably well utilized all things considering but redevelopment is probably on the table since the light rail will pass right through it.....now SW Plaza on the other hand, even after their recent "revitalization", is still a ghost town.

[TakeFive]

A little off-topic but it's slow around here anyway.

Originally Posted by EngiNerd

I think the Aurora Mall is still reasonably well utilized all things considering but redevelopment is probably on the table since the light rail will pass right through it.....now SW Plaza on the other hand, even after their recent "revitalization", is still a ghost town.

I thought about SW Plaza afterwards. I believe that's the last mall that Jordan Perlmutter built. I wondered if maybe that was owned by General Growth Properties, the second-biggest U.S. mall owner. So I looked it up and found this in the Denver Business Journal back in April of 2014.
"Owner GGP outlines renovation plans for aging Southwest Plaza"

Then this morning I found this:
"Billions in Debt Coming Due"
June 16, 2016 by Sarah Mulholland and Rachel Evans - Bloomberg

General Growth defaults on $144 million Lakeside Mall mortgage
About $47.5 billion from U.S. borrowing spree coming due

The default by the second-biggest U.S. mall owner may be a harbinger of trouble nationwide as a wave of debt from the last decade’s borrowing binge comes due for shopping centers. About $47.5 billion of loans backed by retail properties are set to mature over the next 18 months, data from Bank of America Merrill Lynch show.

So add potentially billions of retail/mall debt atop of the billions of debt in the oil patch that are defaulting. Even so I don't see any systemic or contagion issues; it's just a matter of there being winners and losers.

Lastly, there's this headline in today's MarketWatch:
"Mortgage rates flirt with fresh lows as the flight to safety boosts housing, Freddie Mac says"
June 16 by Andrea Riquier - MarketWatch

Rates tumble as investors flee to safe assets, a boon for housing

In this case a benefit to real estate developers and buyers.

[EngiNerd]

Yes a benefit to developers, because they know they can charge more because buyers will get qualified easier for a bigger loan when the interest rates (payment) are relatively low. If interest rates were up around the more historically average 6-7%, I couldn't believe that the housing prices would be anywhere near what they are right now, because affordability would be much much lower and developer wouldn't be able to sell.

I just got approved for a 3.5% interest on a new home, rates are still extremely low.

[RyanD]

Some infill news:

AMLI Riverfront Green has started with new renderings:



The colored brick is supposed to be glazed, so it should look pretty cool!







New rendering / progress at Alexan Cherry Creek:







16 Chestnut is now underway! New renderings coming soon! (older aerial)








701 Sherman aka 7/S Denver Haus is complete!

[CherryCreek]

[QUOTE=RyanD;7476419]Some infill news:

AMLI Riverfront Green has started with new renderings:

The colored brick is supposed to be glazed, so it should look pretty cool!










I really like 701 Sherman and the new drawings for Riverfront Green.

The volume of multi-family coming on line is so amazing. It would be interesting to take the numbers from 2012 to 2016 and compare them to the prior periods. It feels like there's been more constructed in the past 4 years than the prior 10, but maybe I have a short memory.

[comoneymaker]

Riverfront green still sucks and will suck until they add 15 more floors.

[TakeFive]

Originally Posted by EngiNerd

Yes a benefit to developers, because they know they can charge more because buyers will get qualified easier for a bigger loan when the interest rates (payment) are relatively low. If interest rates were up around the more historically average 6-7%, I couldn't believe that the housing prices would be anywhere near what they are right now, because affordability would be much much lower and developer wouldn't be able to sell.

I just got approved for a 3.5% interest on a new home, rates are still extremely low.

Courtesy: Pinterest

BTW, it may be a very long time before we see interest rates of 6-7%.

Janet Yellen in this week's announcement that for now the FED is not raising rates but maybe in July referenced concerns over Brexit but also indicated the complexity of raising rates in a very low global rate environment. Also after raising the overnight bank rate earlier this year rates drifted higher and then did a U-turn, obviously.

These low rates also show how much capital is sloshing around out there which is good for commercial RE developers too.

Originally Posted by comoneymaker

Riverfront green still sucks and will suck until they add 15 more floors.

Would you settle for ten more floors? Stay tuned.

[EngiNerd]

Originally Posted by comoneymaker

Riverfront green still sucks and will suck until they add 15 more floors.

Because of the required setbacks and FAR limitations per zoning for any of those buildings fronting Little Raven, especially those between 17th and 19th, it would be difficult for them to go much above 80' (which is probably about what they are at).

[TakeFive]

Yes - Some great double groundbreaking news.!!

courtesy: interpretation via tumblr

Originally Posted by RyanD

Some infill news:

AMLI Riverfront Green has started with new renderings:

Isn't this your favorite plot of dirt that has forever been behind a fence?

Originally Posted by RyanD

16 Chestnut is now underway! New renderings coming soon! (older aerial)

I didn't think we'd have any more groundbreakings in the 1st half of this year.
We got two of em.

[comoneymaker]

Originally Posted by TakeFive

Courtesy: Pinterest

Would you settle for ten more floors? Stay tuned.

Yes. Yes I would. Can't imagine it would change with construction starting and these new renderings still keeping it at 7. Just seems like such of a waste of space for that prime spot to be building so low. Unless they can't for obstruction of views from the other buildings around it. I could see that.

[wong21fr]

Originally Posted by comoneymaker

Yes. Yes I would. Can't imagine it would change with construction starting and these new renderings still keeping it at 7. Just seems like such of a waste of space for that prime spot to be building so low. Unless they can't for obstruction of views from the other buildings around it. I could see that.

Look at the PUD for Riverfront Park. IIRC this building is making maximum use of the zoning for the site.

[TakeFive]

Okay, I'm jealous

"Developers start work on second Skyhouse tower"
Oct 16, 2015 by Will Boye - Charlotte Business Journal

Novare Group, Grubb Properties and Batson-Cook Development Co. are hosting a grand opening for the first 24-story SkyHouse tower at North Church and West 10th streets this week. The development team has been planning a twin tower at Church and Ninth, on the opposite side of a parking deck that will serve both buildings, and they broke ground this week. Construction is expected to take 18 months.

Probably hard for Novare Group and partners to find an additional site in downtown Denver that would appeal to them, given all the various height restrictions. I wonder if they'd consider Glendale or the Tech Center?

[Agent Orange]

Originally Posted by TakeFive

Okay, I'm jealous

Meh don't be. I call them Skytrailers. My old city (Tampa) had three of them and it gets old quick. Especially when you drive down the interstate through another city or two and keep seeing the same tower. Are the height restrictions so bad in Denver that there aren't many sites that will allow a 25 story tower? Damn mountain views.

[DenverInfill]

Originally Posted by TakeFive

Okay, I'm jealous

"Developers start work on second Skyhouse tower"
Oct 16, 2015 by Will Boye - Charlotte Business Journal

Probably hard for Novare Group and partners to find an additional site in downtown Denver that would appeal to them, given all the various height restrictions. I wonder if they'd consider Glendale or the Tech Center?

What height restrictions?

[RyanD]

Awww it's so cute!

1709 Chestnut





The rest of the crane should be up today and the second tower should be going up this weekend!

[TakeFive]

Originally Posted by Agent Orange

Meh don't be. I call them Skytrailers. My old city (Tampa) had three of them and it gets old quick. Especially when you drive down the interstate through another city or two and keep seeing the same tower. Are the height restrictions so bad in Denver that there aren't many sites that will allow a 25 story tower? Damn mountain views.

Skytrailers... Guess we might need them to employ some Colotechture or a different facade.

Originally Posted by DenverInfill

What height restrictions?

Weelll, we had been just talking about Riverfront Park and we all are aware of LoDo restrictions. The Golden Triangle might appeal to them but I could have sworn there were height restrictions there or is it just certain blocks?

What about the land across from Coors Field at 22nd and Blake. No restrictions there?
In any case, the "zoning guy" I am not. I just read the comments of those much smarter than I.

[RyanD]

Here is a mega awesome tool for all your questions about heights / restrictions, etc. Denver Zoning overlaid on Google Maps:

Denver Zoning Map

[TakeFive]

Friday's Headline

"Colorado's unemployment rate ticks up and economy slows"
Jun 17, 2016 by Monica Mendoza - Denver Business Journal

The state's economic growth showed signs of slowing in May when it added just 300 payroll jobs and the unemployment rate jumped to 3.4 percent. It was the second month for the state to see an uptick in the unemployment rate

You gotta love headlines (not really). How about a little context?

But when compared to this time last year, the unemployment rate is still lower than 3.9 percent reported last May.

Thank you. Some ripple effect from the oil patch was a given and so far this is very minor. Also consider that Arizona lost 19,400 jobs in May with the unemployment rate at 5.5 percent. While worse than usual Phoenix is coming off a record breaking tourist "high season' and there's little concern. In fact, the area seems to be benefitting from an affordability edge that apparently Utah has lost.

In any case, IMO unemployment ideally would be somewhat over 4 percent.

[TakeFive]

Originally Posted by RyanD

Here is a mega awesome tool for all your questions about heights / restrictions, etc. Denver Zoning overlaid on Google Maps:

Denver Zoning Map

That's interesting, helpful.

So the land across from Coors Field is Zone District: PUD: 329, Neighborhood context: Special PUD, Zone Description: Former Chapter 59 Zone, Ordinance Year: 1993, Ordinance: 27 --- Dang, piece of cake.

At least there's this:

View Code by Article

• Article 1: General Provisions (PDF)
• Article 2: Using the Code (PDF)
• Article 3: Suburban (S-) Neighborhood Context (PDF)
• Article 4: Urban Edge (E-) Neighborhood Context (PDF)
• Article 5: Urban (U-) Neighborhood Context (PDF)
• Article 6: General Urban (G-) Neighborhood Context (PDF)
• Article 7: Urban Center (C-) Neighborhood Context (PDF)
• Article 8: Downtown (D-) Neighborhood Context (PDF)
• Article 9: Special Contexts and Districts (I-, CMP-, OS-, M-) (PDF)
• Article 10: General Design Standards (PDF)
• Article 11: Use Limitations and Definitions (PDF)
• Article 12: Zoning Procedures and Enforcement (PDF)
• Article 13: Rules of Measurement and Definitions (PDF)

Not sure I want to understand all the in's and out's to Denver's zoning code. Think I'll leave it to the experts.