DENVER | Main Development Thread #7

[mhays]

Fair enough, I haven't read the whole history here.

But they have the basic facts right, on the basic points such as the lack of buildable infill capacity and the cost of scarcity.

[TakeFive]

Originally Posted by mhays

Fair enough, I haven't read the whole history here.

But they have the basic facts right, on the basic points such as the lack of buildable infill capacity and the cost of scarcity.

Actually that's not accurate either.

Their whole rap goes to older, well established specific neighborhoods and its existing zoning which I had nothing to do with. To that specific angle then there is lack of sites within some specific neighborhoods. But even in many older, historical neighborhoods there is some density being added. But in many cases it's the proverbial missing middle which doesn't move the needle that much but more is better than less certainly.

There is tons of infill 'land' available for more dense development. The scarcity goes more to the normally slow process to get sites entitled, permitted and then funded and built. It also reflects that those developers who like Denver (including Holland) only want so many projects on their plate at a time. In some cases smaller builders have had to work harder for funding or for subcontractors. You know as well as anyone that development takes years. It's no different in Denver from what you face in Seattle.

But scarcity of infill land is NOT the problem.

[mhays]

That's categorically wrong.

Any idea what land prices are for areas that allow high density, and the relevant trends?

[TakeFive]

Originally Posted by mhays

That's categorically wrong.

Any idea what land prices are for areas that allow high density, and the relevant trends?

Everybody seems to catch the tunnel vision virus. It's like the Coronavirus; it's just too easy to catch.

Yes, as I stated above land prices have been going up especially is certain locations. Of course that impacts the ability to build more affordable housing in those areas. But it varies; there's also plenty of other land where costs are more reasonable.

Originally Posted by CherryCreek

I just think that focusing on Curtis Park as a big part of the problem when you still have TONS of develope-able land in OTHER close in to downtown areas, such as Araphahoe Square, Golden Triangle, Cap Hill, River Mile, Mile Hi, Sun Valley, Brighton Blvd, north RiNO, Ballpark, etc., makes no sense.

Without touching the historical area of Curtis Park, with other changes to zoning and height restrictions elsewhere how much density could you still add to these close-in areas? 100,000 residents?

Feel free to read this post where I detailed 10 different urban rail stations with varying amounts of land for TOD. This should add a variety of housing at different price points but generally more affordable than the hot spots can.

[The Dirt]

Originally Posted by mhays

Fair enough, I haven't read the whole history here.

But they have the basic facts right, on the basic points such as the lack of buildable infill capacity and the cost of scarcity.

Don't worry, you're about the 5th person who TakeFive claims needs to improve their reading comprehension.

[TakeFive]

Barely relevant but totally hilarious

Somebody must of have put something in the drinking water before the last City Council election. Wasn't Amanda Sawyer wong's favorite new councilor?

7Denver News has the stories here and here.

Originally Posted by The Dirt

Don't worry, you're about the 5th person who TakeFive claims needs to improve their reading comprehension.

[bulldurhamer]

In today's episode of "Cars are dying", by pompous "urbanists" who believe in Santa Claus:
https://businessden.com/2020/02/11/downtown-parking-garage-sells-for-10-7m/

But keep screaming NO CARS. i'm sure it'll happen for you. :uhh

What other great ideas do you all swear are true should we hear? Here's a great job done by the denverinfill crew https://denverinfill.com/blog/2020/01/a-decade-of-infill-before-and-after.html

look for yourself. The fact of the matter is that there are dozens if not hundreds of undeveloped lots in the downtown and adjacent areas.

but sure, we are so desperate to tear down old established neighborhoods. the last places in town that we haven't torn down.

is it good urbanism or jealousy that they didn't get in first? hmm

we have a housing crisis, not a space crisis. this isn't new york.

[bunt_q]

Originally Posted by mhays

That's categorically wrong.

Any idea what land prices are for areas that allow high density, and the relevant trends?

Depends on where obviously. In RiNo, a hot warehousey area, around $180/sf. For a project-sized parcel with most infrastructure in and 12 story zoning.

There are hundreds of undeveloped acres within 2 miles of downtown with that sort of zoning and economics. Between RiNo, Arapahoe Square, and now River Mile. There will be 42 acres more at the National Western Center (edge of RiNo, but transit and river-adjacent), probably 15 story zoning, and that is assumed to be a 25-year buildout. If we had a housing crisis borne just of pent up demand, and the barrier was just no land to satisfy it, we’d have a lot more cranes than we do. Seems to me the housing crisis we talk about here is very localized; everybody wants to live in the same three areas, and that just doesn’t work. As for the other housing crisis - lack of options for the very poor - well, the U.S. market has never been able to figure that one out.

[Sam Hill]

Interesting...


A Sun Valley development along the South Platte River will have a huge parking garage (but maybe not forever?)

“I would love to be one of those people that agrees that we don’t need or should have less parking at all these buildings, but the reality is, everybody’s still driving their car in Denver,” Powers told Denverite. “We can pretend like that’s not happening, but it’s happening.”

Powers is interested in building a convertible parking garage — a parking structure built to become something more useful, like homes, if and when privately owned vehicles become less popular than public transit, bikes, self-driving cars or whatever other tech might change the status quo in the future.

"Convertible parking garage." I like it that idea.

[twister244]

Originally Posted by bunt_q

Depends on where obviously. In RiNo, a hot warehousey area, around $180/sf. For a project-sized parcel with most infrastructure in and 12 story zoning.

There are hundreds of undeveloped acres within 2 miles of downtown with that sort of zoning and economics. Between RiNo, Arapahoe Square, and now River Mile. There will be 42 acres more at the National Western Center (edge of RiNo, but transit and river-adjacent), probably 15 story zoning, and that is assumed to be a 25-year buildout. If we had a housing crisis borne just of pent up demand, and the barrier was just no land to satisfy it, we’d have a lot more cranes than we do. Seems to me the housing crisis we talk about here is very localized; everybody wants to live in the same three areas, and that just doesn’t work. As for the other housing crisis - lack of options for the very poor - well, the U.S. market has never been able to figure that one out.

Yeah, I agree here. I think the answers to some of these questions are somewhere in-between. Yes, Denver has tons of land. However, I suspect one issue was earlier last decade, developers and the city were simply unprepared for the level of growth that occurred. I suspect no city can adequately plan and anticipate going from 600k people to 700k people in one decade. I feel like that created a huge bottleneck that escalated prices quickly. Prices are still rising, but not to the extend we saw five years ago.

However, we need to be careful not to go into full NIMBY mode and try to protect every single ugly 🞵🞵🞵 post-war bungalow in this city. Yes, there are homes/buildings in some neighborhoods that shouldn't be scrapped, but not in neighborhoods west of downtown where they really don't have historical significance. Sorry..... but here in Jeff Park, I see houses getting scrapped all the time, and they aren't special.

Then there's the whole problem of zoning. We definitely need to make sure our zoning is up-to-date to reflect our growing needs. Folks who live here also need to understand this is a growing city, and will continue to do so. Trying to artificially cap that is a horrible idea, and doesn't benefit anyone (unless you own property).

And yes, we need to make sure we have affordable housing to mitigate the pain being put on those who can't afford the price increases.

Again, there aren't simple answers to all of this.

[coolmandan03]

Originally Posted by Sam Hill

Interesting...

"Convertible parking garage." I like it that idea.

So I do this for a living, and that's not really a thing. You can always rehab a garage into other usable space, but if's always cheaper/more efficient to rebuild a garage as something new. Garage have live and dead loads so different than habitats and work places, and people prefer to work/live with higher ceilings. An investment in a parking garage is a long term one.

[SirLucasTheGreat]

Regarding bulldurhamer's post, it is absurd that one can park in the center of downtown for a lower monthly payment than a regional RTD monthly pass. The reality is that the economics greatly favor driving in Denver. However, the fact that driving makes more sense now does not mean that Denver shouldn't strive to become substantially less car dependent going forward. I would be in favor of a revision of RTD's fare pricing rules, a carbon tax, congestion pricing, and adding more transit-only lanes in addition to the sweeping redevelopment of surface lots that we see today.

[bulldurhamer]

Originally Posted by bunt_q

Seems to me the housing crisis we talk about here is very localized; everybody wants to live in the same three areas,

pretty much...

[bulldurhamer]

Originally Posted by SirLucasTheGreat

Regarding bulldurhamer's post, it is absurd that one can park in the center of downtown for a lower monthly payment than a regional RTD monthly pass. The reality is that the economics greatly favor driving in Denver. However, the fact that driving makes more sense now does not mean that Denver shouldn't strive to become substantially less car dependent going forward. I would be in favor of a revision of RTD's fare pricing rules, a carbon tax, congestion pricing, and adding more transit-only lanes in addition to the sweeping redevelopment of surface lots that we see today.

i don't disagree.

[laniroj]

Originally Posted by TakeFive

Part Two:
Developers rule the roost and since it's their money (including investors) they build to profit potential and prefer as mhays can tell you what pencils out the easiest. So they started small and increased their density over time as the demand warranted.

Whether catering to upscale housing or 'luxury' apartments downtown we only get what they decide to build. End of story.

I don't have the slightest clue what you're getting at with parts 1 or 2. Are you implying that the real estate development industry is DECIDING not to make money on building more affordable housing? That would imply (unlike every other for-profit industry in a capitalist society which has ample risk takers willing to figure something out then take a risk to make money) that real estate developers of the world are conspiring together and simply choosing not to make money at the lower end? Nobody is taking up a massive market opportunity?

If that is your position, it's simply laughable. IT'S NOT POSSIBLE TO MAKE MONEY AT THE LOWER END AND THAT'S WHY IT'S NOT GETTING BUILT AND THAT'S WHY IT WON'T GET BUILT AGAIN - regardless of whatever millenials do or whatever recession happens. A combination of land costs, construction costs, labor costs, and time to execute are why the more affordable units aren't getting built. If you can't make 6% return on cost and peg to an 8-10% IRR (and you can't with lower end housing) why not just invest in a dividend fund that you can buy and sell in seconds, not years?

Now, if municipalities would rezone vast swaths of land and open up the land market, the land cost issue could get solved. Municipalities are picking and choosing winners by way of zoning. Leveling the land playing field would solve one component of the problem.

The other problem that is absolutely solvable is the regulatory burden, both with regard to how long everything takes now and how much it costs. Impact fees have risen dramatically this decade. My latest project has municipal fees equal to 13% of total project costs. Land is typically only 10-15%, at most. That 13% municipal burden requires $165 per month for me to hit a very low 6.5% return on cost and that doesn't even include all the design/landscaping/beauty contest minimums which also all cost money.

Lastly, if there was money to be made at the lower end (think suburban garden apartments) people would be doing it. Many did do this earlier in the recovery years of this cycle before costs got out of control. A lack of will to build at the lower end by developers is not why certain unit types or affordability levels don't get built, it's a matter of economics. There is no money to be made on those projects. There is so much money on the sidelines just dying to go to a project, it's comical - and it's why they will accept a 6% return.

Again, we have a generational housing crisis...right now, it's not something that only affects millennials. It's not ok now and it won't ok for a significant period of time until we make sensible changes to zoning and how we regulate - zoning being the much more important factor.

If you've never read it, I would encourage everyone to study up on Harvard's annual housing report. It's an excellent effort, fair analysis without a slant one way or the other, and it's been around for quite some time with good data tracking and trend analyses over time. According to the study, 38 million households nationwide, almost 1/3 of all households (home owners and renters) pay more than 30% of their income toward housing. Of those 38 million who are housing cost burdened, 18 million pay more than 50% of income toward housing.

^That is not ok and when people like you say everything is dandy, it really speaks volumes as to the arrogance and selfishness of a generation. People are in tough times and this is why things like Trump happen (love him or hate him). The economy has worked for every generation prior to Gen X, but it's largely not working and won't work for those who come after unless we solve the housing issue, which is totally in our control. If you don't have stable housing, you can't maintain stable employment, or income, or food, or healthcare, or health.

[TakeFive]

Best comment of 2020

Originally Posted by twister244

Yeah, I agree here. I think the answers to some of these questions are somewhere in-between. Yes, Denver has tons of land. However, I suspect one issue was earlier last decade, developers and the city were simply unprepared for the level of growth that occurred. I suspect no city can adequately plan and anticipate going from 600k people to 700k people in one decade. I feel like that created a huge bottleneck that escalated prices quickly. Prices are still rising, but not to the extend we saw five years ago.

All of your points are well taken.

[laniroj]

Originally Posted by mhays

That's categorically wrong.

Any idea what land prices are for areas that allow high density, and the relevant trends?

Yep, categorically wrong. There is a massive scarcity of land in Denver. TakeFive seems to think that just because land is vacant, it means it has a willing seller and appropriate zoning. Not to mention, most of the land he probably thinks is developable is old industrial ground likely not suitable for residential due to the decades of contamination his generation poured into the ground - at least not suitable unless you spend many millions removing the soil, pumping out and treating the groundwater and then taking it all to the hazardous waste dump - haha, that's super cheap to do, just look at Gates!

[laniroj]

Originally Posted by TakeFive

...But it varies; there's also plenty of other land where costs are more reasonable...

If you can send me a link to this land, I will legitimately try to buy it. Hell, if you're still a RE broker, you can earn a commission too. It's not like I haven't already tried to buy every single piece of property, just like every other developer! Oh wait, I have...

[TakeFive]

Under the radar and at the margin

BusinessDen has the news about a new hotel near Empower Field at Mile High.

One thing that has occurred to me is that over the last few years more and more locals have been able to join the construction parade. Since they're smaller projects including slot homes and they're scattered around we don't notice them. Whether it's apartments in Lakewood or new infill along So Broadway, Evans, So Santa Fe or along So Colorado Blvd there is activity that we may only note in passing. But all of it adds to the landscape and there's a cumulative affect with much still being planned.

[TakeFive]

Originally Posted by laniroj

Yep, categorically wrong. There is a massive scarcity of land in Denver. TakeFive seems to think that just because land is vacant, it means it has a willing seller and appropriate zoning. Not to mention, most of the land he probably thinks is developable is old industrial ground likely not suitable for residential due to the decades of contamination his generation poured into the ground - at least not suitable unless you spend many millions removing the soil, pumping out and treating the groundwater and then taking it all to the hazardous waste dump - haha, that's super cheap to do, just look at Gates!

I appreciate your perspective; you make sound observations. I didn't mean to say life is easy for builders.

BTW, Union Station Neighborhood comes to mind. And yes even Elitches will require some mitigation.

But twister244 does an excellent job of summarizing how we got to where we currently are.

Will the city add another 100,000 people over the next decade? It's certainly possible.