DENVER | Main Development Thread #7

[TakeFive]

Larimer Square under contract


Photo courtesy Larimer Square via Eater Denver

North Carolina firm under contract to purchase Larimer Square in downtown Denver
Nov 10, 2020 By James Rodriguez – Reporter, Denver Business Journal

Asana Partners, a Charlotte, North Carolina-based real estate investment firm that owns several other retail properties in Denver, is under contract to purchase Larimer Square, current owner Jeff Hermanson confirmed Tuesday.

If the sale closes, it'll be the first time the iconic Denver block has traded in nearly 30 years. The selection of Asana Partners as a potential buyer was first reported by BusinessDen.

Hermanson, who is CEO of Larimer Associates, has owned the stretch of Larimer Street between 14th and 15th Streets through a variety of entities since 1993, according to property records.

Thomas Gounley/BusinessDen (as stated above) broke the story.

In addition to what Asana Partners has already done in Denver they have also acquired comparable properties in Atlanta. Asana website.

[Sam Hill]

Wow, I never knew the entire square was owned by a single owner.

[tommyboy733]

I disagree, I think presales were predominant pre-2010, however since then, many condos do NOT do presales. Most of the recent projects(Coloradan, McGregor Square, SoBo58, two of the projects in LoHi) only began sales after construction had started. I'm sure you can find counter examples, but without data I would estimate 75% of urban condos start selling after construction starts (but still before completion...), with only 25% selling units before breaking ground.

[tommyboy733]

I'll also add that as interest rates gets lower and lower, time value of money etc. it doesn't matter if you sell out your condos this year, next year, the year after that..... The net present value is only marginally lower and borrowing costs are getting lower.... Crazy. Even with all the chaos in the world. Where is the risk premium in all the world's debt?? Its hard to comprehend.

[TakeFive]

Good observations

Originally Posted by tommyboy733

I disagree, I think presales were predominant pre-2010, however since then, many condos do NOT do presales. Most of the recent projects(Coloradan, McGregor Square, SoBo58, two of the projects in LoHi) only began sales after construction had started. I'm sure you can find counter examples, but without data I would estimate 75% of urban condos start selling after construction starts (but still before completion...), with only 25% selling units before breaking ground.

However, I'll defer to mhays on this one. With larger projects - in this case two towers of 38-stories and 32-stories - financing is not as easy.

I'm reminded of another Canadian developer who started initial construction on their own dime in Austin but then lost part of their construction loan commitment when COVID-19 hit. Not necessarily a surprise but it sent them scrambling. And that project already had 45% of the condos under contract. Here's a summary of that project:

https://www.bizjournals.com/austin/news/2020/05/27/44-east-secures-construction-financing.html

MSD Partners LP and Little Rock, Arkansas-based Bank OZK are providing $194 million in construction financing for the 44 East condominium tower being built in Austin’s Rainey Street district, the project's developer said in a May 27 announcement.

The 49-story tower developed by Vancouver-based Intracorp is expected to be complete in 2022. More than 45% of the tower’s 309 condos have been sold.

MSD Partners is an investment advisory firm tied to MSD Capital LP, the private investment firm for Michael Dell and his family.

Prior to this happy ending...

Prior to the pandemic, Intracorp had been scheduled to close on the construction loan at the end of March or early April, Intracorp Senior Vice President/Managing Director Brad Stein told the Austin Business Journal. MSD brought Bank OZK (Nasdaq: OZK) into the deal in April.

Obviously having Michael Dell as your lead funding dog is unique; he can choose to do whatever he wishes with his $billion's. Still they needed 'some' conventional financing to complete the deal.

Amacon doesn't appear to be the biggest of developers. They have had, however, a successful track record of developing condo towers from Toronto area (Mississauga) to Vancouver B.C.

The other obvious issue is that currently the condo market in Denver is a tad soft (but that will change). Fair guess that Amacon is projecting the 1st tower's completion for 2023 so there's lots of time to heal from COVID.

Originally Posted by Sam Hill

Wow, I never knew the entire square was owned by a single owner.

I took note of that as well; it's why I included the clarification.

Hermanson, who is CEO of Larimer Associates, has owned the stretch of Larimer Street between 14th and 15th Streets through a variety of entities since 1993, according to property records.

[rds70]

Another interesting concept plan submission to the City for a site at 38th and Galapago, adjacent to the 41st and Fox station:

454 MF UNITS AND ASSOCIATED STRUCTURED PARKING ACROSS 1 BLDG WITH 2 TOWERS. APPROXIMATELY 491 STRUCTURED PARKING SPACES. ALL ASSOCIATED UTILITY MAIN REROUTES AND CONSTRUCTION AND BULIDING SERVICES LATERALS. RIGHT-OF-WAY DEDICATION FOR FUTURE HURON STREET AND FULL BUILD-OUT OF 39TH AVE. REQUIRED STREETSCAPE VACATION/DEDICATION FOR GALAPAGO STREET IMPROVEMENTS AND RIRO CONNECTION TO 38TH AVE.

Two 20 story towers with a max. height of 247 feet.

[mhays]

Originally Posted by tommyboy733

I disagree, I think presales were predominant pre-2010, however since then, many condos do NOT do presales. Most of the recent projects(Coloradan, McGregor Square, SoBo58, two of the projects in LoHi) only began sales after construction had started. I'm sure you can find counter examples, but without data I would estimate 75% of urban condos start selling after construction starts (but still before completion...), with only 25% selling units before breaking ground.

Same in my area, but the point is that few developers can do that. The ones that need to pre-sell have simply not built condos.

[rds70]

Some new information about the redevelopment of the Riverpoint office building. From the Denver Business Journal:

Earlier this year, construction wrapped up on Platte Fifteen, a roughly 200,000 square-foot office building at 2375 15th St. The building is roughly 85% leased after signing Robinhood to roughly 35,000 square feet in March and bringing in Athleta to take two retail bays on the ground floor.

Now the project's developer, Crescent Real Estate Holdings, is setting the stage for another office project across the street at 2300 15th St. The project, dubbed Riverpoint, will combine the adaptive reuse of an existing four-story building with the ground-up construction of an adjoining five-story structure.

The end product will be a single building with roughly 180,000 square feet of office space and 22,000 square feet of ground-floor retail.

......

Eaton said Crescent is working through the permitting and design process with the city, with plans to begin construction in mid-2021.

Like the developers of One Platte, Eaton said he's encouraged by Riverpoint's anticipated delivery date, which would likely be in the second half of 2023.

"We feel like we're also delivering in a best-in-class location," Eaton said. "We think tenants are going to be really migrating to sort of a low-rise office environment."

Eaton said Crescent is planning to build 100% on spec, a move that he called "a little bit contrarian" given the current pandemic.

"Our experience is Denver office is a spec building environment and most tenants won't really engage until they can see it's a real project," Eaton said.

Eaton said he believes the migration of companies out of coastal markets will continue, with Denver at or near the top of the list of potential destinations.

[TakeFive]

Connecting some dots

What do these properties have in common?

Denver City Center - 707 and 717 17th St.


Image courtesy of Brookfield Properties

The Grand Apartments - 17 Chestnut Street


Image courtesy of Saunders

One Platte - 1701 Platte Street


Image courtesy Nichols Partnership via Loopnet

Shorenstein

Perhaps an unfamiliar name but Shorenstein with its HQ at 235 Montgomery St, San Francisco is a long-time investor in CRE in various cities including Denver.

Shorenstein acquired the Denver City Center in 2013, a timely purchase they recently sold (January 2020) to Brookfield Properties because why not? It's one more piece of real estate along 17th Street for Brookfield.

October 17, 2015, Ken Schroeppel/DenverInfill created their "new project" post for 1709 Chestnut to be developed into apartments by Shorenstein. Ken also posted the "Final Update" of the now-named Grand Apartments October 23, 2018.

Before exiting Denver, Shorenstein became co-developer (and equity partner) with Nichol Partnership on One Platte which is currently under construction.

Originally Posted by rds70

Another interesting concept plan submission to the City for a site at 38th and Galapago, adjacent to the 41st and Fox station:

Two 20 story towers with a max. height of 247 feet.

That's quite the impressive proposal for 41st and Fox station TOD.

[TakeFive]

Source

Originally Posted by rds70

Some new information about the redevelopment of the Riverpoint office building. From the Denver Business Journal:

This piggyback's nicely on my recent post with respect to: Mixed Use and rail train transit.

Too much to list but a few recent highlights.

Report: Denver-Boulder among top U.S. life science clusters for the first time
Oct 21, 2020 By Jensen Werley – Reporter, Denver Business Journal

This was a Big Deal (to me). I can recall a decade ago when Life Sciences were all the rage and every city worked to get their share. A few years ago I wondered if Denver's share wasn't dwindling down to just a few so it's nice to see yet one more 'cluster' that is ascendant. Denver/Boulder is 13th among the top 13 - but I'll take it.

Confirmed: Company with average wages above $425K picks Denver for new HQ
Nov 4, 2020 By James Rodriguez – Reporter, Denver Business Journal

Healthpeak Properties Inc. (NYSE: PEAK), a real estate investment trust focused on health-care properties, has relocated its headquarters to Denver from Irvine, California, the company said in a release accompanying its third-quarter earnings statement.

Healthpeak previously said it would create 166 jobs in the Denver metro area if officials chose this region over Nashville or Dallas, which were also in contention to land the new headquarters.

Denver has also become a 'destination' for REIT's (real estate investment trusts). This reflects why DIA is so critical to Denver. Denver is becoming a more attractive HQ destination for mid-sized companies that do business all over country and like the access provided by DIA.

Is Denver now the hotspot for streetwear?

VF Corp. acquires New York streetwear company in $2.1B deal
Nov 6, 2020 By Ed Sealover – Senior Reporter, Denver Business Journal

VF Corp. (NYSE: VFC) announced Monday that it’s acquired Supreme, a classic skateboarding and streetwear brand that has grown into the areas of apparel, accessories and footwear and has partnered with VF brands on several projects in recent years.

I had posted earlier this year that VF Corp had raised a bundle for potential acquisitions.

Fun and Games

In cased you missed it you can still call "The Can" the can but it is no longer the Pepsi Center. Now it's Ball Arena. Fortune 500 company Ball Corp (HQ in Broomfield) has been 'hot' as the pandemic has caused a shortage of cans with people staying home. Ball also has a highly successful Aerospace division.

[bunt_q]

Has there ever been a Supreme drop in Denver?

[laniroj]

Originally Posted by TakeFive

...In cased you missed it you can still call "The Can" the can but it is no longer the Pepsi Center. ...

'The Can' would be SO FITTING considering Ball's production of aluminum beverage cans! I can't help but wonder if Ball also has some interest in doing a downtown office project with Kroenke. They have a huge and expanding presence in the NW corridor and I've got to think they may want a downtown presence for their younger workers. Would be a cool kickstart to the River Mile efforts.

[wong21fr]

Originally Posted by laniroj

'The Can' would be SO FITTING considering Ball's production of aluminum beverage cans! I can't help but wonder if Ball also has some interest in doing a downtown office project with Kroenke. They have a huge and expanding presence in the NW corridor and I've got to think they may want a downtown presence for their younger workers. Would be a cool kickstart to the River Mile efforts.

Who knows on that. For the naming rights it was originally supposed to be Ball becoming the official sustainability partner with Kroenke and the Pepsi Center name renaming. It then became bigger when Pepsi wasn't as enthusiastic about renewing the naming rights, though Pepsi is still the official beverage partner.

[rds70]

A building permit application has been submitted for the proposed 13 story hotel at 14th and Court across the street from the City/County Building.

The developer is Urban Villages and the architect is Studio Gang.

The permit application indicates 297 rooms and a height of 158 feet.

I still haven't been able to find a good rendering, only this elevation from an encroachment permit on the City's site:

[twister244]

Nice ^^^

So, am I the only one that is a bit unhappy with the recent real estate trends in Denver?

https://www.westword.com/news/denver-average-home-price-passes-625000-update-11839417

I kinda feel like we are approaching a tipping point where more and more people are going to be priced out of Denver in place of coastal folks moving in with equity. I bought my condo a couple years ago and was hoping to eventually upgrade to a townhome, but at this rate, it will never happen. I know rising housing values are great for homeowners, but at some point, it's not good for everyone overall, even with the lower property taxes compared to other cities.

[Sam Hill]

Originally Posted by rds70

A building permit application has been submitted for the proposed 13 story hotel at 14th and Court across the street from the City/County Building.

The developer is Urban Villages and the architect is Studio Gang.

The permit application indicates 297 rooms and a height of 158 feet.

I still haven't been able to find a good rendering, only this elevation from an encroachment permit on the City's site:

Looks like they're going to build a giant pipe organ.

[rds70]

A new project being reviewed by the Downtown Design Advisory Board this month:

Music/Box at 2215 California St. - 15 stories, 165 feet, 300 apartments, 225 parking spaces.

Architect is Shears Adkins Rockmore

[laniroj]

Anyone know what the status is on the El Jebel residential tower? I see scaffolding is up around the Temple but looks like no movement on the tower to the south? Log #2018PM0000199 - anyone have any intel?

[Robert.hampton]

Originally Posted by rds70

A new project being reviewed by the Downtown Design Advisory Board this month:

Music/Box at 2215 California St. - 15 stories, 165 feet, 300 apartments, 225 parking spaces.

Architect is Shears Adkins Rockmore

Not bad for a land barge! Certainly a step in the right direction for A Square and way better than the Alexan — piles down Welton.

[coolmandan03]

Now that Business Den is officially subscription based, what are your alternatives? There is no way I can justify $100 a year for mostly mansion listings and irrelevant news; 2 articles a day. For that price you can get print and digital of the Denver Post and that includes a digital subscription to the NY Times.