DENVER | Main Development Thread #7

[Arapahoe]

Originally Posted by The Dirt

You know what I think will improve aesthetics without onerous new regulations? Competition. When you have hundreds of developable sites, you now have many more competing developers, and buyers will now get choices on what to buy rather than having to pick one one ugly, blocky townhouse with 5 different materials and window sizes, just because it's in their desired neighborhood (and maybe just barely in their budget). Developers that build ugly crap will have to compete with developers that build better looking stuff. Right now, it's a seller's market and that means that people are desperate enough to buy prison-grade architecture just so that they can live on a seedy block just because it's a 1/2 mile of Sloan's Lake.

I hear we are short 20-30 thousand homes, so not likely you can get choosy without someone getting an offer in on anything that is somewhat affordable.

[The Dirt]

30k shortage in Denver proper. I heard 3-5 million nationally.

[Jefficator]

Originally Posted by CONative

Might be a longshot...

I'm completing a study for my company. Anyone know where I can get numbers on the national housing shortage and the percentage of that shortage that are affordable single-family homes??

Your best resource would be the Harvard Joint Center for Housing Studies:
https://www.jchs.harvard.edu/

[TakeFive]

Originally Posted by bunt_q

I'd build a unit on my alley if it wouldn't get me crucified. Literal crucifixion. Right there in the alley. Boom, end o' me.

I am also holding my old crappy house down by DU as a rental - that's my hedge in case I want to scrape myself a McMansion someday. But if I had fourplex zoning, it would start to look awfully tempting to go build a small project on that (rather large) lot...

Ahh, I wondered what happen to that DU property. I used to date a gal (briefly) that lived in similar one-story place near DU.

I can identify with a lot of this

Originally Posted by laniroj

We often forget that up until the crazy administrative growth of permitting starting in the 90's, normal folks used to develop stuff all the time. Some row homes on an end block, a mom and pop shopping center, etc etc. Development doesn't have to be reserved for the sophisticated money, we could open it up to the average American household if we wanted to. Talk about equity...that's equity.

But honestly the good ole days (which I clearly remember) were not as idyllic as you seem to suggest.

I may have previously mentioned (but short memories) that I'm familiar with boatloads of 3, 4 & 5-plexes. Most of them in So Aurora and Centennial (especially along Arapahoe Rd) had a front brick 1st story with (usually) double-car garages in the back where there was a drive between complexes. They were called Townhomes; what a concept.

Write Corp, Richmond and (I think) Bill Walters built lots of this stuff. They were actually very nice. But the magic was they bought lower cost land (zoned for multi-family) on large sites where they could efficiently pack in the units. One complex in the DTC didn't use brick but while not high end they were very nice - think location, location, location.

There was only a small number of independent builders who built one-off fourplexes in areas less attractive because the land costs were so low.

[TakeFive]

Originally Posted by laniroj

As pertains housing, you're not wrong as to the level of activity but I don't look to one or ten or fifty projects to validate my beliefs on housing - that's what we call confirmation bias IMO.

When I think of confirmation bias I think of propaganda from the left or the right that loves to use correlation whether relevant or not. They also love to conflate different issues.

Rather, I look at data and interpret the objective result.

People are rarely objective and they misuse data constantly. For example, they'll use general data that says little about your area of focus and be misleading as a result.

To Bunt's point, we also don't produce it necessarily where people "want" to be...

Yes, I mentioned to mhays that many decades ago it was proclaimed that "they're not making any more land" and rather than being a smart-ass response it really goes to the heart of reality for Denver neighborhoods.

We could open the floodgates so to speak with what Ken suggests, allow tri/four plex on every lot and meaningfully upzone (quickly) large swaths of transit corridors and arterials. This would help make available more land for development to more developers...

It won't even come close to the panacea you're envisioning.

Take a 'crummy' or 'small' home site in (pick your neighborhood) Wash Park or two places next to each other (or two or three sites) and it may be possible to build a fourplex and I'd be fine with that; they could easily look better than what is replaced

But you also complained about the high cost of construction; that applies also to fourplexes, likely even worse. So forget about attaining any significant degree of affordability but is four units better than one? Sure, where you can find something that can at least pencil at strong rents. May I suggest that won't be as easy as you think?

I used to think West Wash Park was ideal for upzoning but then I recalled those that lived there that I used to play volleyball with. They were like guard dogs and mama bears in protecting their 'hood.

I mean really, seriously

Can you see bunt being his own general contractor? He'd probably be out there with a slide rule trying to figure out why there's water bubbling up in various places.

It would be like whistling in the dark.

[TakeFive]

Originally Posted by Agent Orange

If we're talking wish lists though - I'd like to see higher density above fourplex on corner lots and near transit stations/high frequency bus routes. I'm curious if laniroj could speculate on what the economics of small one/two lot apartment buildings might be if zoning and parking rules allowed them. I'm thinking of all the 3 story walk up apartment buildings you see from the 40s-60s in Central Denver.

Could zoning reform make those 12 unit walk ups viable again at a cost competitive with 5-on-1 megablock construction? A modern version of those were built over by 17th and Park back in 2016 or so before the "small lot exemption" was gutted.

I've stated numerous times that upzoning along major transit routes makes all the sense in the world.

I wouldn't personally be fond of those "outside walk-ups" generally but perhaps in some areas.

And (again) in areas like Virginia Vale or U-Hills you'd be more likely to accomplish much more due the more reasonable costs of homes/land. But nowhere that's considered desirable in Denver will the land costs be cheap. I'm also assuming we're not looking for energy-totally inefficient clap-trap construction.

[SirLucasTheGreat]

I do not think that I have seen anyone post about this yet. Not surprised to see D'baca as the only one voting against this designation.

Former Denver Post printing facility officially ‘blighted,’ paving the way for massive redevelopment in Globeville



https://denverite.com/2021/11/29/former-...for-massive-redevelopment-in-globeville/

[COtoOC]

I've wondered if cities like Denver have a housing shortage (and high prices) because they grew too fast. Meaning, home building just couldn't keep up with the pace of population growth for decades, which results in high prices and not enough housing.

Compared to cities that had a more steady population increase over the decades (KC Metro for instance) and home building was better able to keep up with the slower demand.

[laniroj]

Originally Posted by The Dirt

...Right now, it's a seller's market and that means that people are desperate enough to buy prison-grade architecture just so that they can live on a seedy block just because it's a 1/2 mile of Sloan's Lake.

Prison Grade Architecture. My new favorite one liner. Maximum or minimum security though?

[laniroj]

Originally Posted by TakeFive

...But you also complained about the high cost of construction; that applies also to fourplexes, likely even worse. So forget about attaining any significant degree of affordability but is four units better than one? Sure, where you can find something that can at least pencil at strong rents. May I suggest that won't be as easy as you think?...

I mean really, seriously

Can you see bunt being his own general contractor? He'd probably be out there with a slide rule trying to figure out why there's water bubbling up in various places.

It would be like whistling in the dark.

Yes, 4 units is better than 1. Agent Orange also hit the nail on the head - parking minimums and FAR ALWAYS drive density (not height limits) so those would need to be reformed/removed as well. Many many sites would pencil if the zoning flood gates were to open and construction cost is a transitory issue (our Fed's favorite buzz word) that should eventually reach some sort of equilibrium. It will take time, 2 yeas is about how long it takes to get any project to a state of construction in normal times let alone with a new zoning code and surging inflation, which the construction/development industry has been dealing with for 7-8 years, not just 12 months.

There are an incredible number of well off households (haves vs have nots) all throughout the City of Denver and I can see many of them chasing a 5% return and a nest egg for their families vs keeping cash in the bank losing money at 3-4% each year because of our (transitory) inflation - there I go again with that buzz word. The rent for a trip-four plex will certainly be less than a 5-story apartment unit and a drop in the bucket compared to a high rise apartment. That's what we call housing diversity - it's not that every unit produced is purely affordable or luxury, it's that a range of units are produced that meet the needs of more people (not less). This is where both sides of the pro/anti development spectrum get it wrong. All units are good units because this country has a hell of a diverse economy and population base and we need to check A,B,C, and D on our bubble test to pass the development class.

[laniroj]

Originally Posted by TakeFive

...I'm also assuming we're not looking for energy-totally inefficient clap-trap construction.

For those on this forum not familiar with building codes, we have made enormous progress with energy consumption over the last 10 years. I only have speculation to rely on and I'm certainly not an expert in this field, but I would generally say that buildings today are at least 30% more efficient than they were just 10 years ago. This has come at a steep cost and is definitely a factor in the cost of construction currently, but it's important to understand that even the cheap looking stuff that gets slapped up is still light years ahead of every other building that came before it from a consumption standpoint (including raw materials).

[laniroj]

Originally Posted by CONative

Might be a longshot...

I'm completing a study for my company. Anyone know where I can get numbers on the national housing shortage and the percentage of that shortage that are affordable single-family homes??

If you really want to crunch data, you could look at US Census data for total households and median income, then overlay that onto total housing units and break it down between renter vs owner units. Applying the median household size to the total population will get you a number of housing units needed overall which will allow you to compare that to the number of existing housing units to determine shortfall (if there is one technically in the data). You could also apply weighted adjustments for something like job growth over the past decade (we need a house for every 3 jobs) and adjust the shortage accordingly.

Or you can just read the Harvard Joint Center for Housing Studies annual report as Jefficator suggests.

[TakeFive]

Yes, History is a very good Explainer

Originally Posted by COtoOC

I've wondered if cities like Denver have a housing shortage (and high prices) because they grew too fast. Meaning, home building just couldn't keep up with the pace of population growth for decades, which results in high prices and not enough housing.

Compared to cities that had a more steady population increase over the decades (KC Metro for instance) and home building was better able to keep up with the slower demand.

Going back 30 years the migration and growth patterns have been fairly consistent. The South, the SW and the West have experienced tremendous growth. Then there's the more granular...

Early but especially the mid-2000's

Home construction was 'out of control' in Inland California, Nevada, Arizona, Florida and ofc Texas. Subsequently, these areas became the most overbuilt (except Texas) as the Great Recession approached.

Earlier in the decade there was the great tech meltdown which wobbled things for a bit of time.

During this time Denver had it's own unique path. Following Denver's Great Recession of 1980's and subsequent recovery the 'tech meltdown' came later to Denver via the communications industry - think cable TV and fiber optics. As a result Denver's home construction was much more conservative going into the Great Recession resulting in little (if any) excess inventory.

The early 2010's

The Wall Street crowd assessed future potential growth and became enamored with urban centers and transit. Arizona, Nevada and Florida were targets for accumulating foreclosures but NOT for NEW construction. After safer investment/construction in key coastal cities, they looked around and found Seattle and Denver (out west). While Denver didn't have the depth of tech that Seattle quickly developed it did have tech and a much more diverse economy than in the past.

Denver's Urban Revolution

A key component of Denver's urban growth and development was the hype around the FasTracks initiative highlighted by the Denver Union Transit Center and overall rail map - whether deserved or not is a different question. In contrast to previous recoveries developers built very little 'entry-level' housing in the suburbs; all the energy was for downtown density.

It's worth reiterating and pointing out that Denver hadn't gotten overbuilt, was an attractive location and city - for investment. And if you think back to 2009-2012, early downtown construction was modest, like in 4 & 5-story buildings. But then the Great Millennial hype and migration made Denver a favorite destination and the momentum just grew and grew.

But let's face it, Urban Construction and Development ain't cheap.

Some cities like Kansas City and Minneapolis come to mind had more moderate growth but a deeper and older stock of housing which is one key to maintaining more affordable housing.

[Agent Orange]

Originally Posted by COtoOC

I've wondered if cities like Denver have a housing shortage (and high prices) because they grew too fast. Meaning, home building just couldn't keep up with the pace of population growth for decades, which results in high prices and not enough housing.

Compared to cities that had a more steady population increase over the decades (KC Metro for instance) and home building was better able to keep up with the slower demand.

So Denver metro grew a bit over 17% this past decade and the same growth rate in the 00s. But in the 90s it was over 30%, so I don't think growth is the only factor. Also metros like Raleigh-Durham, Austin, Las Vegas, even Atlanta in the 90s and 00s grew even faster than that, and yet they didn't become significantly unaffordable.

[Arapahoe]

BREAKING NEWS

Amacon has paid their $1.2 million building permit fee and construction permit has been issued today.

[wong21fr]

Originally Posted by Agent Orange

So Denver metro grew a bit over 17% this past decade and the same growth rate in the 00s. But in the 90s it was over 30%, so I don't think growth is the only factor. Also metros like Raleigh-Durham, Austin, Las Vegas, even Atlanta in the 90s and 00s grew even faster than that, and yet they didn't become significantly unaffordable.

All of these metro's in those pre-2010 time periods were growing and were accommodating most of the growth due to the pace of homebuilding in suburban subdivisions. But suburban subdivision development suffered greatly from the 2008 Financial Crisis and has never recovered due to a multitude of factors (tract homebuilder bankruptcies, less accessible capital, increased mortgage qualifications, etc.). So the US lost a large chunk of it's homebuilding capacity and it wasn't replaced by another mode of development (multifamily, shantytowns, a new frontier, etc.) in-kind.

We lost a significant percentage of new housing capacity and have never gotten it back. Some markets had a good chunk of excess capacity in stalled development and existing stock that had been foreclosed upon while others, such as Denver, didn't have a ton of excess supply to dip into. So the realization of the supply restraints have been disproportionately experienced.

[wong21fr]

Originally Posted by Arapahoe

BREAKING NEWS

Amacon has paid their $1.2 million building permit fee and construction permit has been issued today.

Aww hell yeah doggy.

[Agent Orange]

Originally Posted by wong21fr

All of these metro's in those pre-2010 time periods were growing and were accommodating most of the growth due to the pace of homebuilding in suburban subdivisions. But suburban subdivision development suffered greatly from the 2008 Financial Crisis and has never recovered due to a multitude of factors (tract homebuilder bankruptcies, less accessible capital, increased mortgage qualifications, etc.). So the US lost a large chunk of it's homebuilding capacity and it wasn't replaced by another mode of development (multifamily, shantytowns, a new frontier, etc.) in-kind.

We lost a significant percentage of new housing capacity and have never gotten it back. Some markets had a good chunk of excess capacity in stalled development and existing stock that had been foreclosed upon while others, such as Denver, didn't have a ton of excess supply to dip into. So the realization of the supply restraints have been disproportionately experienced.

That's a very good point. Not only the loss of construction workers/firms post GFC, but it is of course a lot easier to build greenfield, suburban neighborhoods but post 2010 or so, Denver metro growth has had a more brownfield, urban focus than in the past. But those stats do go to show, I think, that if building and permitting were more streamlined in a way that approaches the transparency and simplicity of greenfield development (politically impossible ofc), that growth doesn't have to lead to stark price increases.

I wonder if places like Atlanta and RDU (and the Front Range for that matter) might have grown even faster in the last decade if we had a more resilient, pre-2008 ecosystem of contractors and construction workers. I suspect Americans have become less mobile because fewer and fewer cities (with jobs) are true bargains anymore.

[bunt_q]

Originally Posted by wong21fr

and it wasn't replaced by another mode of development (multifamily, shantytowns, a new frontier, etc.) in-kind

I disagree. We have greatly increased our supply of shantytowns, especially since 2020.

[wong21fr]

Originally Posted by bunt_q

I disagree. We have greatly increased our supply of shantytowns, especially since 2020.

But nowhere near the degree or the location needed. A shantytown of 4,000 to 5,000 out near DIA on the north side.... problem solved.