DENVER | Main Development Thread #7

[COtoOC]

Originally Posted by vblack

Downtown Denver parking lot eyed for 81-story building sells to different developer

It says the new proposal will be "a lot more realistic", so probably a 40 story box?

[laniroj]

Originally Posted by SnyderBock

If we do not implement a universal basic income very swiftly (by Washington standards), then we will face the potential of another great depression. Especially if the trade wars persist much longer.

Since you asked, I'll address the one real estate related point in your generally non-development related post. New units are expensive, period. Anything built new is expensive, period. The days of spacious and well located units in metro Denver going for $1,200/month are over, they won't return. The days of new condos all through the center city are over, they're not coming back in the near term - lenders still haven't loosened up lending requirements enough for this to happen. That said, there are still a PLETHORA of <$300k condos for sale in Cap Hill, Cheeseman, and Speer that are all located in fantastic walkable neighborhoods with decent transit - maybe you should buy one! These are facts. Yes, they are tough to face, but the old Denver many of us loved is gone and a new Denver is emerging. Hopefully, you are a part of that rising tide. If not, I'm not sure what you are doing wrong, but maybe if you make some changes you, too, can participate in it versus insisting on universal basic income and yearning for something in the rear view mirror...just sayin.

[laniroj]

Anyone else read this? Not sure if this is because the market is reaching a turning point or because nobody can get a damn permit from a municipality to build housing. Not good for housing affordability on the Front Range...those jobs are still growing and the population is still increasing. This might set us up to whether any slowdown/recession well.

https://www.denverpost.com/2019/08/21/new-home-construction-denver/

[twister244]

Originally Posted by laniroj

Since you asked, I'll address the one real estate related point in your generally non-development related post. New units are expensive, period. Anything built new is expensive, period. The days of spacious and well located units in metro Denver going for $1,200/month are over, they won't return. The days of new condos all through the center city are over, they're not coming back in the near term - lenders still haven't loosened up lending requirements enough for this to happen. That said, there are still a PLETHORA of <$300k condos for sale in Cap Hill, Cheeseman, and Speer that are all located in fantastic walkable neighborhoods with decent transit - maybe you should buy one! These are facts. Yes, they are tough to face, but the old Denver many of us loved is gone and a new Denver is emerging. Hopefully, you are a part of that rising tide. If not, I'm not sure what you are doing wrong, but maybe if you make some changes you, too, can participate in it versus insisting on universal basic income and yearning for something in the rear view mirror...just sayin.

Yeah, I tend to agree with this. Also.... if you look hard enough, you can find apartments for under $1200, they just won't be super luxurious places next to Union Station. As stated, there are PLENTY of condos at a reasonable price in Cap Hill, which is walkable, and close enough to transit. I agree that Denver has become pretty expensive, but luckily things have leveled off over the last year or so (couple years ago on the rental front). As an owner, I am ok with that as I need time to build equity and not have to worry about escalating prices. The keys going forward to make sure we implement zoning and city policies that favor housing construction on ALL levels to accommodate folks that want to live in the city. Yes, it was good to see the Coloradan bring condos to the US neighborhood when everything else was apartments. But..... those units were so absurdly expensive that I feel like it didn't really address the housing needs for most folks.

[Robert.hampton]

Originally Posted by COtoOC

It says the new proposal will be "a lot more realistic", so probably a 40 story box?

This is the developer's biggest project to date. Judging by the rest of their portfolio they aren't into daring, interesting, or exciting design.

[wong21fr]

Originally Posted by tommyboy733

A lot of density going up around the station! Sooooo many other residential projects.

Indeed. Thanks for the photo tour, it's appreciated!

[SirLucasTheGreat]

Originally Posted by Robert.hampton

This is the developer's biggest project to date. Judging by the rest of their portfolio they aren't into daring, interesting, or exciting design.

My money is on a 25 - 35 story hotel next cycle given the proximity to the convention center.

[TakeFive]

Originally Posted by laniroj

Anyone else read this? Not sure if this is because the market is reaching a turning point or because nobody can get a damn permit from a municipality to build housing. Not good for housing affordability on the Front Range...those jobs are still growing and the population is still increasing. This might set us up to whether any slowdown/recession well.

https://www.denverpost.com/2019/08/21/new-home-construction-denver/

Couple of things per the article.

End of last year we had a mini 'crash'; market cratered and interest rates popped. It gave everybody the jitters and new home builders still had inventory. Finally, finally builders aren't just looking to build for the upscale crowd; they're looking to build for more entry level product which by definition is smaller.

Purportedly the next big thing will be out by DIA; it's been a slow slog to get through planning, entitlements etc and build the necessary infrastructure. Presumably that is an area where land is more readily available and at a more affordable price.

Many builders (like Richmond) prefer to continue to build SE or NW Broomfield area where the demand is easier to deal with. Lennar has a nice 171 acre site called Murphy Creek in the vicinity of the Denver Arapahoe Disposal Site landfill and they want to make some changes to the original plan that dates to 2002. Naturally objections arise from neighbors.

To summarize there's significant ongoing planning/permitting but the availability of 'lot ready' land to build on in areas designed for better affordability is limited presently.

Originally Posted by SirLucasTheGreat

My money is on a 25 - 35 story hotel next cycle given the proximity to the convention center.

True, a hotel is right in their wheelhouse so if they're in no hurry I'd agree with you. They have done mixed use that might provide other possibilities.

[TakeFive]

Here's my drive-by contribution


Photo by Robert Delaney via Westword

Denver Art Museum Renovation on Budget, on Track for June 2020
AUGUST 21, 2019 By MICHAEL PAGLIA | Westword

The Denver Art Museum’s iconic tower, where renovations are now under way, was designed by mega modern master Gio Ponti, with James Sudler, a Denver modern master, by his side. The result, which opened in 1971, is one of the finest buildings in Colorado, right up there with Walter Netsch’s Air Force Academy Chapel (itself about to be renovated) and I. M. Pei’s National Center for Atmospheric Research. These are internationally renowned structures in our own back yard.

All of this is being overseen by designers from Denver’s Fentress Architects, who have teamed up with Machado Silvetti of Boston, tapped for its expertise. Jorge Silvetti, a principal with that firm, is a Ponti enthusiast and scholar, and his understanding of the master’s aesthetic is revealed in the careful juggling he pulled off to successfully insert an addition immediately adjacent to the front of the iconic building.

Worth the read.!.!

[TakeFive]

Ran across an interesting article in Bloomberg while watching the Rockies

Originally Posted by laniroj

Anyone else read this? Not sure if this is because the market is reaching a turning point or because nobody can get a damn permit from a municipality to build housing. Not good for housing affordability on the Front Range...those jobs are still growing and the population is still increasing. This might set us up to whether any slowdown/recession well.

Photographer: Helen H. Richardson/The Denver Post via Getty Images via Bloomberg


‘It’s Just Dirt’: Anything Goes in Today’s Muni Bond Market
August 21, 2019 By Amanda Albright - Bloomberg

Last month, a risky, new deal hit the municipal-bond market. It came from a small borrower in Colorado that was looking to finance the construction of 1,200 luxury homes in the foothills of the Rocky Mountains.

It was an odd time for such a project. Denver’s decade-long housing boom was beginning to show signs of cooling and, moreover, rival developers had already raised record sums to turn vast tracts of land into new communities. “There’s no houses to see,” said Nicholas Foley, a municipal-bond fund manager at Segall Bryant & Hamill in Denver. “It’s just dirt.”

The article goes on to discuss today's Bond Market where the search for yield is tolerating higher risk.

Back to Denver...

Foley, the Denver-based portfolio manager, was once a big buyer of tax-exempt bonds issued to build new housing developments in his booming state, but he has since stopped amid signs that the market has gotten frothy.

Last year, such Colorado land districts sold $1.3 billion in bonds, the most since at least 2005. The securities, which are typically unrated, are repaid by assessments levied on homeowners and offer few protections to investors if the housing market goes south. In the case of the Castle Rock, Colorado development, even if the district skips interest or principal payments, it won’t count as a default, limiting bondholders’ legal power to recoup some of what they’re owed.

[EngiNerd]

Originally Posted by TakeFive

Here's my drive-by contribution


Photo by Robert Delaney via Westword

Denver Art Museum Renovation on Budget, on Track for June 2020
AUGUST 21, 2019 By MICHAEL PAGLIA | Westword

Worth the read.!.!

I got to learn about those curved glass facade panels on the DAM through my company, really cool process for creating and mounting them. They are extremely expensive too, as you can probably imagine.

[TakeFive]

Comment: The hum of sprawl is in the air

Per the Bloomberg article, with record amounts of capital already raised to turn vast tracts of land into new communities it's fair to say that Sprawl has not been relegated to the waste bin. And that's Okay; in fact it's needed or will be. I'm thinking of the Denver MSA plus Boulder.

Any sprawl will have virtually no impact on downtown Denver or other inner-ring suburban areas; they will continue to power forward (except in Lakewood ofc).

Not an example to emulate but by way of explanation, new sprawl is taking off again in metro Phoenix. Many of these areas I've never been to and don't anticipate going there. How many (besides me) have been to Parker or Castle Rock, for example? Meanwhile there's presumably as much growth in urban density down here as in Denver. The difference is it's spread among 1) Tempe 2) Phoenix downtown and 3) Scottsdale. Sprawl and urban infill are like two totally different worlds and places.

Originally Posted by EngiNerd

I got to learn about those curved glass facade panels on the DAM through my company, really cool process for creating and mounting them. They are extremely expensive too, as you can probably imagine.

Fun Fact.

[corey]

Great to see that Buzz Geller sold the 650 17th Street lot. I’m sure it’ll be a hotel. Now the dirt lot further up 17th REALLY needs to be developed. In the meantime they should fill the lot with food trucks/trailers or some other creative temporary use.

[The Dirt]

My vote is for a double decker tiny home village.

[bunt_q]

Originally Posted by SnyderBock

I find it interesting that the Zillow search doesn't show hardly any results at $1200 or less, in any of the Neighborhoods that I would ever choose to live in. Why isn't there a mix of income levels in all neighborhoods? Why do rentals at $1200 or less have to be segregated and concentrated in certain pockets nowhere near train stations? I think they severely overbuilt on luxury rental units and now the people who can afford those are buying homes in the suburbs. The people forced to live in shitty parts of the city, away from train stations and with long commutes to work are also forced to own cars. So you have to add car ownership onto rent. If these $1200 a month units were concentrated near train stations, they wouldn't have to own a car at all. Instead, the people who can afford to live near train stations, hardly even use the trains, because they own fancy BMW's, Mercedes and Crossovers. If you can afford to live near a train station, you don't need to. Furthermore, all these people renting $1200 apartments, are stuck renting, because there is a severe shortage of condo stock in the sub 250k range, which would be their price points.

Add to this the fact that the CEO's of Chase, Capital One and Discover have announced the Americans are accumulating credit card debt at rapid levels, in order to maintain their current lifestyles, so as a result they are closing inactive accounts +so they do not become active), slowing way down in credit line increases and becoming far more struck about who they approve for new lines of credit.

Plus there is that darn recession we are headed straight into. Trades wars cause recession (see warning from our government officials about the results of the last great trade war and the ensuing recession). Short term interest has eclipsed 10 year Treasury notes. A decades long run of wage growth less than half the rate of rises in cost of living and barely above the rate of inflation. Overbuilt market of Luxury homes and apartments and a shortage of affordable housing. Plus a slowing job growth sector that is about to have tens of millions of positions replaced by AI and automation, over the next decade.

I'm not trying to be an alarmist or strike fear into anyone's hearts. I have always been gifted with seeing the big picture and time and time again, everything ends up playing out just as I for saw. It is not mystical or supernatural. It is projections and forecasts produced by my brain analyzing all available data and variables, then constructing multiple sinarios that might play out, then predicting probabilities for each.

If we do not implement a universal basic income very swiftly (by Washington standards), then we will face the potential of another great depression. Especially if the trade wars persist much longer.

I dunno, stuff’s going pretty well for me. You should use those gifts and that supernatural brain of yours to go make some money. Stop stressing about the theoretical. Buy yourself some happiness, man.

Also, we luxurious folk don’t use discover cards. The rewards are shit.

[Matt]

Originally Posted by COtoOC

It says the new proposal will be "a lot more realistic", so probably a 40 story box?

Note to self: An 80-story building is "not realistic" in the downtown of a metro area of 4 million people, which also happens to be one of the fastest-growing in the country. Got it.

I've always known Denver to lack big-city drive and a cosmopolitan aspiration, but this podunk thinking has become absurdly ridiculous and is now pushing towards utter lunacy. Even the property owers/managers are lowering the bar down from reasonable expectations.

Even more dangerous is the narrative that Geller's comments set moving forward.

[mhays]

The economics driving an 80-story building are pretty tough.

It needs very high rents or sale prices per square foot -- for a lot of space all at once. Denver has plenty of land for cheaper buildings, which often have a similar view and good locations.

It also takes much longer to build, with more uncertainty before it starts. An unlike the early 80s, a condo or office would generally need to prelease or presell. Presales and three-year lead times don't go well together.

My city hasn't gotten one either.

[SirLucasTheGreat]

Originally Posted by mhays

The economics driving an 80-story building are pretty tough.

It needs very high rents or sale prices per square foot -- for a lot of space all at once. Denver has plenty of land for cheaper buildings, which often have a similar view and good locations.

It also takes much longer to build, with more uncertainty before it starts. An unlike the early 80s, a condo or office would generally need to prelease or presell. Presales and three-year lead times don't go well together.

My city hasn't gotten one either.

I'm not an engineer but isn't there something unique about our soil that makes vertical construction much more costly than some other environments?

[wong21fr]

Originally Posted by SirLucasTheGreat

I'm not an engineer but isn't there something unique about our soil that makes vertical construction much more costly than some other environments?

Nope. We're not that special IIRC.

Yes, there are expansive soils in the area, but the bedrock isn't super deep. Though it is sedimentary bedrock that isn't hard like granite which can present challenges that I believe are usually addressed by having the piers go deeper into the bedrock that if it was made of a harder material. But these are challenges that would make an 80-story building impossible. Rather it's the challenge of securing tenants in a sufficient quantity and time to meet financing requirements. If we had someone (company or individual) who wanted to do a vanity project and had the capital to make it happen it would probably be more likely that we would see such a project rise.

Here's holding out hope that one of the local unicorns goes from a $1B cap to a $100B cap.

[TakeFive]

"That area is just really up and coming and turning over," Bildstein said. "It’s kind of like a mini RiNo."
The reference presumably refers to the current industrial flavor.

https://www.bizjournals.com/denver/news/...ust-22.html?iana=hpmvp_den_news_headline

A developer looking to capitalize on growth along South Broadway has received a $16.1 million ground-up construction loan to move forward on planned condos at the corner of Jewell Avenue and South Bannock Street.

The building's 58 units will be a mix of one-bedrooms, one-bedrooms with a den, two-bedrooms and mezzanine units, ranging from $339,000 on the low end to $617,750 for the mezzanine units. Residents will also have access to secured parking and a roof terrace with a fireplace and community grills, according to the development's website.

This potential TOD area has taken some time but by golly it's seems to be gathering steam. This will be across the street from a 200-unit Greystar project the Encore Evans Station apartments.

A block to the south an eight-story apartment building has already been approved called Cherokee Flats by LCP Development.


Courtesy LCP Development via BusinessDen

Originally Posted by wong21fr

Here's holding out hope that one of the local unicorns goes from a $1B cap to a $100B cap.

A $billion here; a $billion there and pretty soon we're looking at a new tallest.