DENVER | Main Development Thread #7

[TakeFive]

One of many Urban Myths

Originally Posted by mhays

By "peak" time is it night? That's what counts with housing. If they really mean work hours, maybe referring to potential commuter use, that's another issue.

I had to consult the RTD Study to answer that confusing reference. Since transit is a main focus "peak hours" refers to:

taking advantage of a State-mandated stay-athome order in April 2020, RTD counted parking utilization at 104 properties in April 2020
on a Tuesday through Thursday between 10 a.m. and 3 p.m.,

The Pandemic timing is a little funky but not sure it matters or makes a difference. They've done this type of survey before and I honestly have no clue what counting unoccupied parking spaces during the day at apartments proves? It all seems rather pointless and silly to me. They never survey, for example, how many tenants have jobs that could be accessed by transit? A lot of these properties - within a half mile of the station - are merely places to live irrespective of transit.

Bet you've heard of Donald Shoup
or at least his work? In 2005 Shoup authored a book entitled "The High Cost of Free Parking" which basically asserts that it causes higher rents in order to compensate. It's a very popular talking point. You can order his 'updated Edition' on Amazon. His work is also featured frequently on Strong Towns or other Urban sources.

It's a Myth
Virtually all of today's landlords utilize an algorithm-software program that is designed to create maximum income/rent at roughly 95% occupancy which assumes 5% vacancy-turnover costs.

It doesn't matter whether the cost of construction per unit (including amenities etc) is 20 Shekels per unit or 20 Bitcoins (now priced at $24,000 each) per unit. Landlords will generate whatever the market gives them; no more no less.

Originally Posted by mhays

That's parking-use report will hopefully trigger some new thinking both in public policy and in developer/financier expectations. Sometimes it's useful to have a study.

I can agree 100 percent.

Problem is that after reading through the Executive Summary, most of the many claims that are made can't even pass the Smell Test. Similar to other 'studies' I've read, they start with desired "outcomes" and then proceed to collect supporting data to make various assumptions that don't compute. As typically the case it's the things they don't consider that (would) speak the loudest.

To date, Denver developers of downtown apartments or nearby to downtown projects near transit stations have yet to be convinced that parking isn't important. I'd like to think much less parking is needed but developers are a lot smarter than I am and it's their $millions they put "at risk." Now imagine imposing the same standards on suburban locations and it becomes humorous.

[mhays]

It sounds like it's not very useful data then.

[TakeFive]

Source

Box of Chocolates for anyone who can provide the developer-construction info for The Metro a 415-unit apartment built in 2011:

2121 Delgany St -Denver, CO 80202




Images courtesy Security Properties

Runner-up Winner gets a Chicken Dinner.

[bunt_q]

Originally Posted by TakeFive

Source

Box of Chocolates for anyone who can provide the developer-construction info for The Metro a 415-unit apartment built in 2011:

2121 Delgany St -Denver, CO 80202

It is older than that. And come on, that's not even from the first decade of DenverInfill - https://denverinfill.com/2010/01/investors-pay-55-million-for-the-metro.html

[TakeFive]

Do you typically do a half-assed job?

Originally Posted by bunt_q

It is older than that. And come on, that's not even from the first decade of DenverInfill - https://denverinfill.com/2010/01/investors-pay-55-million-for-the-metro.html

I have to admit I couldn't even find anything at DenverInfilll so you did do one-step better.

Since none of the info I requested was listed I started clicking links, none of which worked.

Since this was a 'ULI' award I checked on their site for awards from 2004 to 2015. Nothing.

Sine the named award was "sponsored" by NAHB, I checked on their site. Nothing accessible before 2017.

At the least YOU are the frontrunner for the runner-up Chicken Dinner prize.

[EngiNerd]

Originally Posted by TakeFive

Do you typically do a half-assed job?


I have to admit I couldn't even find anything at DenverInfilll so you did do one-step better.

Since none of the info I requested was listed I started clicking links, none of which worked.

Since this was a 'ULI' award I checked on their site for awards from 2004 to 2015. Nothing.

Sine the named award was "sponsored" by NAHB, I checked on their site. Nothing accessible before 2017.

At the least YOU are the frontrunner for the runner-up Chicken Dinner prize.

A decade ago, when David Martin was with Lincoln Property Co., he helped develop the 415-unit Metro at 2121 Delgany St., near Denver Union Station, a new breed of first-class apartment communities in downtown.

http://www.signatureflip.com/sf01/article.aspx/?i=3229

The Metro is located at 2121 Delgany St. and was completed in 2003. MEPT acquired the asset from CBRE Global Investors in November 2012 for $90.8 million, or $218,795 per square foot. Previous owners include DWS and Lincoln Property Co. The property has six buildings on 5.7 acres and occupancy of about 92.3 percent. Situated in the Ball Park neighborhood, The Metro provides residents with convenient access to the downtown core. It is within walking distance of Union Station, the central hub of Denver’s regional transit system. The asset has efficiency, one-, two- and three-bedroom units with rents ranging from $1,288 to $4,494 with an average of $1,855, according to Yardi Matrix data.

https://www.multihousingnews.com/post/security-properties-rockwood-acquire-938-unit-portfolio/

[TakeFive]

Prizes are in the mail


Source

Originally Posted by EngiNerd

http://www.signatureflip.com/sf01/article.aspx/?i=3229

https://www.multihousingnews.com/post/security-properties-rockwood-acquire-938-unit-portfolio/

I figured somebody had to come along that was smarter than me; that CREJ piece is niiiice (I miss Rebchook's work). I did see LPC's name come up with one link but it didn't offer much. Property has an interesting history.

I'm familiar with the current buyer/manager, Security Properties. Both they and Weidner are from Washington/Seattle area and are fine with older and/or more basic properties - so long as the location is good.

[TakeFive]

Breaking ground in February 2021


Courtesy MOA Architecture - Ryan Companies via Mile High CRE

https://milehighcre.com/new-age-in-place-community-coming-to-denver/

“The Acoya brand is focused on a premier living style through meaningful experiences that include cutting-edge, high quality programming,” said Rob Leinbach, principal, Cadence Living. “This is the third Class A community under the Acoya brand and our first outside of Arizona — we look forward to continued expansion in the years to come.”

In response to the increased demand for more senior living, Ryan Companies US, Inc. and Cadence Living are expanding the Acoya brand into Denver. Construction will begin soon on a 156,622-gross-square-foot, 137-unit, age-in-place community — the partnership’s third Acoya location and first community in Colorado.

"Near Cherry Creek" this will be high end. Their last project was at Troon in Scottsdale, a high end golf course community. Given that Starwood Capital Group was their equity partner I'd guess the same for this project.

[Ejjwheel]

For whatever reason I have access to this BusinessDen article. It is always nice to see parking lots utilized to improve the neighborhood, whether through infill or adaptive reuse of the space, in this case for a public flex space:

https://businessden.com/2020/12/22/rocki...-from-coors-field-for-public-gatherings/

[Ejjwheel]

The architect that designed the exterior of that Acoya development is also involved in several interesting developments around down, from the tech center to north denver to RINO. Here is one of their potential projects in River North:


https://www.moaarch.com/project/the-charlie-blake/

[ams5280]

Originally Posted by Ejjwheel

The architect that designed the exterior of that Acoya development is also involved in several interesting developments around down

Not all of MOA’s designs are keepers. Looking at their design for the Gates factory, I am reminded of how bad it could have been...

Originally Posted by TakeFive

Bet you've heard of Donald Shoup
or at least his work? In 2005 Shoup authored a book entitled "The High Cost of Free Parking" which basically asserts that it causes higher rents in order to compensate. It's a very popular talking point.

Santa Fe Yards calls for 1,000,000 SF of office space, and almost as much space dedicated to parking. You can’t deny that ‘free’ parking, which as everyone knows isn’t really free, is incorporated into the costs to the developer and passed onto tenants.

Shoup’s is definitely a critique of the car-centric development and planning that needs all that parking, and it really is a shame that the a hefty chunk of new square footage in TOD neighborhoods is parking. I don’t think you can call it a myth that parking is expensive and, when baked into costs of both tenant and developer, creates higher rents even if the market demands it.

Viewplanes: Party Pooper for Denser Development
Speaking of Santa Fe Yards, I got to thinking about how much of Denver’s land that’s zoned for tall buildings and in areas likely to redevelop are In viewplanes for parks surrounded by SFH. Maybe I’m late to the party, but Broadway Station, Cherry Creak, the Stadium District are zoned or set to be zoned for tall buildings when development is still limited by height restrictions. Think we could get Hilltop on board with carving out some of the Cranmer Park viewplane?

[laniroj]

Originally Posted by mhays

That's parking-use report will hopefully trigger some new thinking both in public policy and in developer/financier expectations. Sometimes it's useful to have a study.

By "peak" time is it night? That's what counts with housing. If they really mean work hours, maybe referring to potential commuter use, that's another issue.

Peak time is typically measured AM and PM, 8-9AM and 5-6PM. I've done maybe half a dozen traffic studies and all have utilized those time frames.

[TakeFive]

Source


1055 19th St.


Photo courtesy of JLL via Mile High CRE


Greyhound Station block in downtown Denver sold to joint venture
Dec 28, 2020 By James Rodriguez – Reporter, Denver Business Journal

The Greyhound Station parcel — a full city block in downtown Denver that has been eyed by developers for years — sold Monday to a joint venture between Chicago-based Golub & Company and New York-based Rockefeller Group, the companies told Denver Business Journal.

The joint venture has yet to finalize its plans for the 2.5-acre site, but is envisioning a large-scale, Class A, mixed-use development. The parcel offers some of the most generous zoning in the city, allowing developers to go as high as 40 stories for residential, commercial, civic and entertainment uses.

Dave Smith and Laura Newman of Golub & Co.'s Denver office and Tom Weeks of Rockefeller Group led the acquisition on behalf of the buyers.

I suspect that this will move forward at COVID speed or very deliberately. They've yet to decide on an architect which would initiate the planning process.

I was curious about Rockefeller Group so I checked out their website. No Rockefeller's are left which wasn't a surprise. After reading "About" etc I still had a curiosity itch so checked out their Wikipedia page. As I suspected the company had sold and is now a subsidiary of Mitsubishi Estate Co. of Japan. Neither good or bad IMO.

My last guess is that both companies may be looking at this site as a "legacy" investment - for a long-term hold.

As previously mentioned this site had been under contract to Toronto-based developer First Gulf Corp.

But that was prior to the coronavirus pandemic. In the first week of July, local Golub & Co. leaders learned that First Gulf was no longer under contract, and immediately notified the JLL listing team of their interest in the property. By the end of the month, Golub & Co. was under contract for the site, with Rockefeller Group joining the deal later.

[TakeFive]

Originally Posted by Ejjwheel

For whatever reason I have access to this BusinessDen article. It is always nice to see parking lots utilized to improve the neighborhood, whether through infill or adaptive reuse of the space...

You can be our designated BusinessDen ambassador. I still live off a Business Journal work-around I've had for a couple of years.

Originally Posted by Ejjwheel

The architect that designed the exterior of that Acoya development is also involved in several interesting developments around down, from the tech center to north denver to RINO.

For only your 8th post here, you're getting up to speed very nicely.

Originally Posted by ams5280

Shoup’s is definitely a critique of the car-centric development and planning that needs all that parking, and it really is a shame that the a hefty chunk of new square footage in TOD neighborhoods is parking. I don’t think you can call it a myth that parking is expensive and, when baked into costs of both tenant and developer, creates higher rents even if the market demands it.

I understand and fully agree that Shoup is a "critique of the car-centric development and planning that needs all that parking". Essentially, he's making an ideological and political argument worthy of debate. But I have no opinion either pro or con. I'm not interested in this political debate. My forte is really 1) making observations and 2) reading tea leaves.

Tenants are interesting creatures - Aren't we All?

One tenant may love the granite countertops; another the energy saving appliances; someone else loves the color scheme and Pete loves the specific location. There are many, many reasons why a specific tenant will make a specific choice. Gen Z prospects may only care about how nice the amenities are, especially the pool area so they can socialize. Just give him (or her) a place to sleep is enough.

You could survey a thousand tenants and never find one person that made decision or even cared what the developer's cost of garage space is, or granite countertops or anything else. Before you know it apartments become 5 years old or even older. Why would a tenant give two chits what the development cost? What's the rent?

From the developers POV they can wish in one hand... but they know what they'll get is what the market gives them. These software programs do all the thinking; they don't know the construction costs either.

If you want to influence developers then think like they do, speak their language

Trying to sell them something to developers that they aren't buying is a fool's errand. Suggest and try to explain why they are leaving profit on the table or why they are lowering their return on investment. Convince them that they don't need all that garage parking. One thing worth respecting is that developers are risking Million of $'s. They like to think they are making wise and profitable decisions but they also know that Mr. Market can sometimes be a fickle lady.

[SirLucasTheGreat]

I'm glad that the Greyhound lot sold. A nice mixed use development there would be a good bridge between Arapahoe Square and the central business district

[rds70]

Originally Posted by BG918

I-25 & Belleview. I've also heard the long-awaited Kimpton Hotel will break ground around the same time at Chenango & Olive. So there will be three projects with tower cranes up in this small area soon.

Here is a rendering of the hotel - 190 rooms, 20 stories:

[TakeFive]

Population growth, 2019-2020

Slowest growth in 120 years, you say. I'm having trouble remembering back that far.

https://www.bizjournals.com/denver/news/2020/12/29/nation-population-slows-colorado-and-west.html

Population growth in the U.S. has slowed to its lowest level in at least 120 years, but Colorado and the West have continued to draw migrants from other parts of the country, according to new numbers from the U.S. Census Bureau.

“These statistics paint a portrait of a nation that is experiencing unprecedented growth stagnation, even before the Covid-19 pandemic hit,” said Brookings Institute senior fellow William Frey in an analysis published last week. “The exceptionally low growth rate from 2019 to 2020 reflects the pandemic’s impact over part of that year.”

Never heard of "Datawrapper" but it's ; it's interactive too. Check it out!

States that have experienced negative growth YOY:

East of the Mississippi
the biggest losers are New York, Illinois and West Virginia. Louisiana and Mississippi also lost population.

West of the Mississippi
California, Alaska and Hawaii all lost population.

States that have experienced the most growth YOY:

On the rainy side of the Mississippi
Both South Carolina and Florida are above 1%. Below 1% includes North Carolina, Tennessee and Georgia.

On the sunny side of the Mississippi
Idaho was the pacesetter and in descending order is Arizona, Nevada, Utah, Texas and Washington - all above 1%. Below 1% growth includes Montana, Colorado, So Dakota and Oregon.

Observations
Migration to Sunbelt states and Western states (except California) is continuing a multi-decade trend. Affordability and warmer climates both seem to be good draws. Washington, Oregon and Colorado benefit from being less expensive than California but worth paying a little more than other states.

[bulldurhamer]

12 story apartment building planned for 3300 Blake. 12,000 sq ft retail.

looks like it's going through permitting, but the site is no longer for lease and there's some kind of soil testing or something underway.

[SirLucasTheGreat]

Exciting to see more density come to RiNo. What neighborhood are you all interested to see develop post-COVID?

[EngiNerd]

Originally Posted by SirLucasTheGreat

Exciting to see more density come to RiNo. What neighborhood are you all interested to see develop post-COVID?

River Mile is the most interesting of the proposed new downtown area developments, will be interesting to see that one develop even though it may mean the loss of Elitch's.