DENVER | Main Development Thread #7

[twister244]

What I would be looking at is MSA trends. Yes Denver is slowing down a bit, but is the MSA in general slowing as well? Or, is this simply a shift of more people choosing cheaper suburban rents, holding out hope that eventually more housing stock will come into Denver.

[TakeFive]

That's the Spirit!!

https://www.denverite.com/x-projects-coming-south-broadway-denver-no-x-will-shock-35919/

“Having spent a lot of time in the Baker neighborhood and building relationships down there, it seems people want a little bit of sophistication to come in and kind of help the neighborhood be more established,” Chapyak said. “They don’t want it to turn into RiNo, and we don’t either.”

[comoneymaker]

“Block 162 will be the only significant high-rise structure entering the marketplace in 2019-2020.”


???? 🞵🞵🞵 block 162 🞵🞵🞵🞵🞵! I would rather it doesn't get built.

[corey]

That Davis Partnership designed skyscraper is bad 🞵🞵🞵! I love the base, the round sides, and the top. I'm calling it the "Lipstick Building."

[Robert.hampton]

Originally Posted by Denver

Have you ever worked on a major development project? Releasing a a rending early is a 🞵🞵🞵🞵 up- but of everything that can wrong it is pretty minimal.

Further when a development team: files with the city, takes core samples, goes under contract with a land owner, and hires an architect it reasonable to think the project is moving forward. Is there something I have missed that overshadows these facts?

I've worked on as many major development projects as this entire team has.....which is my entire point. I have no doubt the project is trying to move forward, as many failed projects in the past have.

Since you are so experienced in developing projects --- would you partner with these guys on a development of this scale? A couple of guys with no track record, no experience in the market, and currently working for a 'payroll company' with no apparent clients, and an address that traces back to an optometrist office?

[seventwenty]

Well when you put it like that why wouldn't I invest?

[CPVLIVE]

Originally Posted by TakeFive

Population growth slows in Denver
May 25, 2017 by Mark Harden - Denver Business Journal

Is this a change from last year? I get confused between city and MSA's.


FWIW, Phoenix topped all U.S. cities for population growth and is now the 5th largest city. Lot of people down here.

Comment:
Something I've groused about before is Colorado not supporting higher education nearly as much as Arizona does. This year's AZ legislature found yet another $billion to support university construction projects. ASU especially has added - I've lost track - lots of new academic buildings over the last decade. They've doubled their engineering dept and are still going. In fact they've grown all of their STEM degree programs dramatically.

Given the Colorado and metro area's dynamic economy it's hard to be too concerned. Plus, I'm not sure AZ has gotten as much direct benefit as they had hoped for - yet, but if you believe in the process they ultimately will. ASU has become a strong recruiting focus for Silicon Valley and there is significant evidence of growing synergies between Silicon Valley and Silicon Desert.

To be fair metro Phx does have a significant position in hardware like microprocessors, memory chips and electronics. But at least in one market segment, Arrow Electronics (Denver's larges Fortune 500 company) is kicking Avnet's 🞵🞵🞵🞵 so there's that.

Phoenix is a strange beast. I lived there for a couple years so I read their section once in a great while to see what's new. The posters are constantly downplaying the influx of blue hairs looking to ditch the cold in regards to their population growth saying their contribution is minimal. I don't know how else to explain the fact that while Arizona has almost 1.5 million more people, Colorado has a greater nominal GDP to the tune of 6% or so.

[CherryCreek]

Reading this article (http://denver.cbslocal.com/2017/05/23/hail-storm-may-8-insurance/ ) about how the recent hail storm will be the most expensive in Colorado history, it occurred to me that this is going to be pretty significant short term stimulus to the local economy (as if we need it). Much of the $1.4 billion in damages is covered by insurance and most of the associated repair work will likely all occur over the next six months.

Thats a huge amount of cash injected into the local economy, much of it into area (construction related labor) that is already stressed to find sufficient employees. When it rains, it pours... and hails!

[seventwenty]

Yeah about that. www.investopedia.com/ask/answers/08/broken-window-fallacy.asp

[CherryCreek]

Originally Posted by seventwenty

Yeah about that. www.investopedia.com/ask/answers/08/broken-window-fallacy.asp

Reading that, the Broken Window Fallacy doesn't seem to apply. It would only apply if the cost of repairs was all borne by the parties suffering the damages. Then this would be correct - no net gain to the local economy.

In this case, instead, insurance will pay for much of this - insurance money pouring in from outside of the state. This means that perhaps a billion plus proceeds of insurance will flow into the local economy. This will supplement, not replace the spending that the insureds would otherwise have made.

For example, if my roof has 20K in damages and its covered by insurance, 20k in materials and labor will be expended in the local economy on my behalf. I will spend nothing, and continue to spend as I had planned prior to the hailstorm. While viewed from a national perspective, perhaps the insurance payments to me represent the allocation of capital from elsewhere in the U.S. that is now unavailable to generate wealth and thus, from this macro level, the overall US economy has no net gain. But the local economy may, I would think, if the funds come from outside the local economy.

Thus, net gain. Am I wrong?

[wong21fr]

Originally Posted by CherryCreek

Reading that, the Broken Window Fallacy doesn't seem to apply. It would only apply if the cost of repairs was all borne by the parties suffering the damages. Then this would be correct - no net gain to the local economy.

In this case, instead, insurance will pay for much of this - insurance money pouring in from outside of the state. This means that perhaps a billion plus proceeds of insurance will flow into the local economy. This will supplement, not replace the spending that the insureds would otherwise have made.

For example, if my roof has 20K in damages and its covered by insurance, 20k in materials and labor will be expended in the local economy on my behalf. I will spend nothing, and continue to spend as I had planned prior to the hailstorm. While viewed from a national perspective, perhaps the insurance payments to me represent the allocation of capital from elsewhere that is now unavailable to generate wealth and thus, from this macro level, means the overall economy has no net gain. But the local economy may, I would think, if the funds come from outside the local economy.

Thus, net gain. Am I wrong?

It will be a short-term boost. The broken window fallacy doesn't immediately apply, but will in the longer-term. The insurance claims from this storm will result in insurers adjusting homeowners insurance rates upwards and there will be a reduction in disposable income as homeowners pay more towards their insurance in the future. It might also decrease the number of consumers who can afford to purchase their home as the higher insurance rates might push them out of the for-sale market.

So, short-term boost. Long-term downward pressure on the local economy.

[CherryCreek]

Originally Posted by wong21fr

It will be a short-term boost. The broken window fallacy doesn't immediately apply, but will in the longer-term. The insurance claims from this storm will result in insurers adjusting homeowners insurance rates upwards and there will be a reduction in disposable income as homeowners pay more towards their insurance in the future. It might also decrease the number of consumers who can afford to purchase their home as the higher insurance rates might push them out of the for-sale market.

So, short-term boost. Long-term downward pressure on the local economy.

So I suppose if insurance rates were perfectly adjusted to account for this storm, they would balance out the costs expended in the short term to make repairs. In some ways, then, we are "borrowing" money from the future (i.e., we will have to pay it back through higher insurance rates) to spend it now - classic stimulus!

Overall probably a bad thing, because an economy with 2.4% unemployment doesn't need any stimulus.

[TakeFive]

Originally Posted by CPVLIVE

Phoenix is a strange beast.

I don't know how else to explain the fact that while Arizona has almost 1.5 million more people, Colorado has a greater nominal GDP to the tune of 6% or so.

Phoenix is a collection of different worlds, no doubt. The retirees while not adding much to productivity do add stability. The same could be said for the large lower socioeconomic residents that do power the service sector and make life easier.

The Great Recession impacted Phoenix similarly to the 1980's in Denver. Politics initially made everything worse. Things are changing. They're determined to diversify - big time.

The SE metro area, specifically Chandler, is where the hardware business is, employing upwards of 50,000. For example, Intel's new warehouse, Fab 42, when it's completed early next decade after $7 billion in investment, will be one of the first 10 nm (nanometer) fabrication facilities in the world for microprocessors along with Taiwan.

There's a gazillion H-1B visa employees from India down here that work in tech. If they don't work in Chandler they may work for American Express or similar companies in Scottsdale. They congregate in apartment complexes (my son lived in one) and quickly grow families. Their custom is to walk every day, rain or shine. They're great neighbors and reliable.

On the whole Phoenix and Denver don't seem to compete much with each other. That's never my point. Phoenix/AZ's ambition is to better compete with Texas. They're replicating the Texas model of investing heavily in their university system. Plenty of green shoots are starting to pop up. Whether Colorado should invest more in their university system is an open question.

[mhays]

Colorado and Washington both rely on graduate in-migration. That's both a sign of not doing enough (in WA at least) and kind of helpful because we get the benefit without the cost.

We also rely heavily on donations. Both CU and UW have recent nine-figure donors.

[seventwenty]

Originally Posted by wong21fr

It will be a short-term boost. The broken window fallacy doesn't immediately apply, but will in the longer-term. The insurance claims from this storm will result in insurers adjusting homeowners insurance rates upwards and there will be a reduction in disposable income as homeowners pay more towards their insurance in the future. It might also decrease the number of consumers who can afford to purchase their home as the higher insurance rates might push them out of the for-sale market.

So, short-term boost. Long-term downward pressure on the local economy.

In addition to that, you have people like my buddy. He's waiting for his hail damaged car to be written off, and he will have a car note once he gets a new car. And husband insurance may never higher. Plus he, like others, has to pay a deductible but. Other people who have to pay a deductible for their home, car or business.

Not to mention Colorado Mills being closed. What about those workers? Sure many can work at other stores. But commutes cost money. And longer commutes cost more money. Plus some might be out of work for a bit.

What about the inventory write offs? Some will be covered by insurance. And some will be deducted in taxes. But there still may be a financial cost.

What about government costs, whether it's clean up, inspections, damaged or lost equipment, etc.

Sure insurance can mitigate the broken window fallacy but I'm not convinced that the broken window fallacy is eliminated.

[ejwill04]

The owners of the Hub project in RiNo sold the property back in April. I wasn't sure if that meant any changes to the project. However, I found this link from the new owners and it appears to be the same renderings with a status of active.

http://www.beaconcapital.com/property/The-Hub/3313167

[Denver Dweller]

http://www.denverpost.com/2017/05/26/denver-federal-center-station/

[Matt]

Just playing around in Photoshop...



Larger Version: https://c1.staticflickr.com/5/4199/34549796010_cebb0cd1df_o.jpg

[pablosan]

It looks like it belongs there!!! It must be built, just as it is.

[Tykendo]

Originally Posted by pablosan

It looks like it belongs there!!! It must be built, just as it is.

It really does. Reaching for the stars. It shows, Denver is on the move.