DENVER | Main Development Thread #7

[TakeFive]

This is a nice project

Continental Properties Breaks Ground on 272-Unit Multifamily Project at Peña Station Next
May 17, 2022 - Mile High CRE


Springs at Pena Station, courtesy of Brinkman Construction

Wisconsin-based Continental Properties, a national developer and operator of multifamily communities, retail, and hospitality properties, recently broke ground on a 272-unit multifamily project called Springs at Peña Station. The community will offer luxury-style apartment living on nearly 14 acres of vacant land at Peña Station Next.

Brinkman Construction is the project’s general contractor marking its third project with Continental in the Colorado market. Zimmerman Architectural Studios is the design team.

So why do I like this project? Partly for its unit mix.

• It's a solid location
• It will be a gated community
• Townhome-style units plus studio, one, two and three-bedroom apartment homes

There's an obvious need for new multifamily projects anywhere and everywhere. Apparently it took a Wisconsin developer to recognize a good opportunity.

Including this latest project, Continental Properties now own eight Springs properties in Colorado, according to its website. Construction completion is scheduled for the winter of 2024.

Interestingly, I only learned this by going to their website

Continental Properties has earned a spot on the National Multifamily Housing Council's (NMHC) list of the  Top 10 developers  in the country.

[rds70]

Interesting article (behind paywall) about the two AMLI projects planned along Broadway. The site between 8th and 9th on the west side of the street has already been discussed (16 stories, 336 units, 11,000 square feet of retail).

However, the project between 9th and 10th on the west side of the street is new. It would take the entire 1/2 block and contain 500 units in a 20 story building, with 7,700 square feet of retail. It would also contain 14 income-restricted units to get the additional Golden Triangle height.

https://businessden.com/2022/05/17/apartment-giant-amli-eyes-two-golden-triangle-projects/

[bunt_q]

Originally Posted by rds70

It would take the entire 1/2 block and contain 500 units in a 20 story building, with 7,700 square feet of retail. It would also contain 14 income-restricted units to get the additional Golden Triangle height.

https://businessden.com/2022/05/17/apartment-giant-amli-eyes-two-golden-triangle-projects/

Well this sounds like a Putinesque nightmare.

[rds70]

Another day, another concept plan submittal for a residential tower.

This one is proposed for 2091 Lawrence and two adjacent parcels to the west:

37 Story Residential Building with 500 units, Parking (350 Spaces), Retail and Amenity Space.

[TakeFive]

All the new Tall Boys being proposed

Originally Posted by rds70

Another day, another concept plan submittal for a residential tower.

This one is proposed for 2091 Lawrence and two adjacent parcels to the west:

37 Story Residential Building with 500 units, Parking (350 Spaces), Retail and Amenity Space.

This one is only two blocks from Dierks Bentley's Whiskey Row, woot woot.
-------------------------------

Didn't I mention recently I thought Denver was losing altitude?

https://denver.cbslocal.com/2022/05/17/denver-crime-housing-best-places-live/

DENVER (CBS4) – It used to be the source of bragging rights in Denver; a ranking in the top five of the best places to live in the country as ranked by US News and World Report. But, last year Denver dropped to 14th on the list. This year, the Mile High City is all the way down to 55th.

“Crime is one factor within that larger index that we look at where Denver doesn’t perform that well. It ranks 137th out of 150 for crime.”

[laniroj]

Originally Posted by RyanD

I think we all tend to forget that Empower has the acoustics of a dirty rag wrapped in a wet cardboard box, thrown down an alley with a broken couch. That stadium is an absolute travesty for concerts.

Yep. Same with Ball Arena as well, IMO. That being said, acoustics in a stadium are a relatively inexpensive thing to fix versus something like a roof.

[laniroj]

Originally Posted by TakeFive

All the new Tall Boys being proposed

There will probably be a flurry of stuff like this in the next month. Developers are trying to get in before the new linkage fees take effect - fees that add, over time, considerable cost which will likely stifle production (IMO) but we'll see how it pans out. Not sure how many of these "get it in before the fee goes up" projects will ultimately come to fruition, but a lot of solid large developers are behind these plans so the chances might be quite high.

[mhays]

For a few hundred affordable units per year, you'll raise rents for the entire private-sector rental market.

It's like this stuff was written to make landlords richer.

[Agent Orange]

Originally Posted by mhays

For a few hundred affordable units per year, you'll raise rents for the entire private-sector rental market.

It's like this stuff was written to make landlords richer.

Landlords and other home owners. Very few people, not least among them our elected leaders, seem to have any sense that there are economic costs to things like mandatory affordable housing requirements. They think it's just a small dent in developers' unlimited profits. It's really terrible policy if your goal is to bring housing prices broadly in line with construction costs, but even lots/most "YIMBY" types seem to uncritically accept affordable housing logic. Not sure what the best policy is to help struggling folks in the lower income bracket (vouchers, probably), but it's definitely not this.

[TakeFive]

Originally Posted by mhays

For a few hundred affordable units per year, you'll raise rents for the entire private-sector rental market.

It's like this stuff was written to make landlords richer.

https://denverite.com/2022/05/10/downtow...e-city-should-create-affordable-housing/

Some developers, like RiNo heavyweight Andy Feinstein, have been raging against mandating the construction of income-restricted housing and higher linkage fees.

“Anytime the government sticks its nose in the private market of homebuilding, they make the problem worse,” he said. “It always happens. It happens everywhere: Portland, Seattle, Chicago, Los Angeles.”

The plan will raise the cost of new construction, and either developers will cut costs — and therefore quality — or they will choose to build elsewhere or raise prices for renters and buyers, making the city even more unaffordable, he said.

Liberal/Dems are notorious for making life miserable and expensive for the private sector - especially at the Federal level. Infrastructure 'added' costs from red tape easily run 40% of project costs and can be even higher depending on the 'time value of money' ie inflation. Then Liberals turn around and complain about the high cost of transit projects, often using Europe as a comparison. Props to Biden for 'wanting' to expedite projects.

Originally Posted by laniroj

There will probably be a flurry of stuff like this in the next month. Developers are trying to get in before the new linkage fees take effect - fees that add, over time, considerable cost which will likely stifle production (IMO) but we'll see how it pans out. Not sure how many of these "get it in before the fee goes up" projects will ultimately come to fruition, but a lot of solid large developers are behind these plans so the chances might be quite high.

It will be interesting to see how much bloom falls from Denver's rose?

[rds70]

Originally Posted by TakeFive

It will be interesting to see how much bloom falls from Denver's rose?

Have people stopped moving to Phoenix yet? It was a dismal 67th best city on the list.

[Sam Hill]

Originally Posted by mhays

For a few hundred affordable units per year, you'll raise rents for the entire private-sector rental market.

It's like this stuff was written to make landlords richer.

Nope. Landlords will charge as much as they can possibly get away with charging, based on current supply and demand, regardless of whether a linkage fee might have occurred somewhere up the supply chain.

[bunt_q]

Originally Posted by Sam Hill

Nope. Landlords will charge as much as they can possibly get away with charging, based on current supply and demand, regardless of whether a linkage fee might have occurred somewhere up the supply chain.

And what do you think sets the upper bound of "what they can get away with charging" when the supply curve moves up. Rents are higher at all demand levels.

Or let me guess, you think rents are set my the maximum amount of greed the masses will tolerate before taking up arms?

[Sam Hill]

Originally Posted by bunt_q

And what do you think sets the upper bound of "what they can get away with charging" when the supply curve moves up. Rents are higher at all demand levels.

Or let me guess, you think rents are set my the maximum amount of greed the masses will tolerate before taking up arms?

Market rate rents are set by supply and demand and supply and demand only. That was the whole point of my post. Read my post again.

Landlords are going to charge the absolute most they can possibly get away with charging to maximize their profits. They aren’t going to attempt to charge even more than that to make up for a linkage fee that may have occurred somewhere up the supply chain.

[TakeFive]

Hopefully Soon but Fair Point

Originally Posted by rds70

Have people stopped moving to Phoenix yet? It was a dismal 67th best city on the list.

Years ago I would often state that Phx was 5 years behind Denver. That is now changing (too fast).

I've grown to like 'sprawl' less and less, since it's my 'job' to go wherever the App sends me. Sunday I drove the NW segment of the new '303' freeway for the 1st time. It goes thru miles and miles of desert. I also got to drive by TSMC's mew $12 billion construction site with 15 cranes running 24 hours a day.

One advantage down here is the politics has always been developer-friendly. Drove waaay out SW where there's lots of factories and warehouses (and land) and it's amazing the amount of new construction, both single family and multifamily.

(Unfortunately) job creation is very strong and the area is still viewed as being (relatively) affordable. So no they haven't stopped coming as there's nothing better than having a good job - up and down the food chain.

Likewise it's fair to say that so long as Denver is creating jobs, people will come. The next question is how long will they stay?

[TakeFive]

Originally Posted by Sam Hill

Market rate rents are set by supply and demand and supply and demand only. That was the whole point of my post. Read my post again.

Landlords are going to charge the absolute most they can possibly get away with charging to maximize their profits. They aren’t going to attempt to charge even more than that to make up for a linkage fee that may have occurred somewhere up the supply chain.

Welcome to our Algorithm World

I know from helping my son find a place that Landlords, like the airlines and lots of businesses use variable pricing. You can go on the computer and the price of the unit you're considering can go up (or down) from one day to the next. Too many vacant units and some people will score a bargain.... and so it goes.

[Sam Hill]

It occurs to me that someone will likely make the argument that supply will be reduced because of the hurdle of a 4% linkage fee. (I’ll have to look it up again, but if I recall, it’s 4%.) I’m going to go ahead and preemptively respond since I have a moment and I may not get another moment again soon (I’m at work).

I doubt supply or demand will budge due to these new regulations. On the demand side things are very tight obviously. But the supply side is a free-for-all. Build as much as you can as fast as you can as the margins are big and will only get bigger as rents continue to skyrocket. If anything, some developers may cut corners on quality to try to compensate, but I don’t think any of them are going to get scared away from the market.

[Sam Hill]

It occurs to me that someone already made the argument that supply will be reduced, but I didn’t read his post closely enough, lol!

[mhays]

Originally Posted by Sam Hill

Nope. Landlords will charge as much as they can possibly get away with charging, based on current supply and demand, regardless of whether a linkage fee might have occurred somewhere up the supply chain.

That's not how it works. When you add cost to development, supply will slow down until scarcity pushes rents higher.

Development cost is countless factors of course, and some can edge downward to counter an upward factor, but the net will be higher costs.

My point might not be intuitive, but it's a basic tenet of commercial real estate.

[mhays]

Originally Posted by Sam Hill

It occurs to me that someone will likely make the argument that supply will be reduced because of the hurdle of a 4% linkage fee. (I’ll have to look it up again, but if I recall, it’s 4%.) I’m going to go ahead and preemptively respond since I have a moment and I may not get another moment again soon (I’m at work).

I doubt supply or demand will budge due to these new regulations. On the demand side things are very tight obviously. But the supply side is a free-for-all. Build as much as you can as fast as you can as the margins are big and will only get bigger as rents continue to skyrocket. If anything, some developers may cut corners on quality to try to compensate, but I don’t think any of them are going to get scared away from the market.

Regardless of the economy, a large percentage of projects are ALWAYS on the edge between happening and not happening, usually via kicking the can down the calendar. Variations in cost absolutely have an effect.

PS, CoStar puts the Denver metro vacancy rate at 6.3% and projects 7.6% in a couple years due to too much new supply. They anticipate rent increases but much lower than the last 18 months.