DENVER | Main Development Thread #7

[TakeFive]

Does anybody recall how much I like the convention business?

Prior to FasTracks and the Great Recession's Great Millennial migration to urban centers, the Colorado Convention Center expansion and new Convention Hotel (mid-2000's) was easily the biggest catalyst to growth of downtown Denver.


All images courtesy of the CCC

I digress:
Last weekend I picked up a guy with a property management company out of Toronto whose company was in town for their annual awards banquet at the JW Marriot Desert Ridge. Interestingly, he mentioned they were moving their HQ to Cocoa Beach FL. Later I googled and learned that Cocoa Beach is the safest part of FL from Hurricanes.

This week there was a big insurance convention at the JW. The convention business is definitely getting back to business.

https://www.denvergov.org/Government/Age...cts/Colorado-Convention-Center-Expansion

The expansion of the Colorado Convention Center includes a new 80,000 square foot column free multipurpose room and outdoor rooftop terrace with sweeping views of the city skyline and mountains. The project will be the largest ballroom in Colorado and expand one of the largest buildings in Denver. On the ground floor, there will be lobby renovations and seamless integration with the existing building, while offering attendees safe and easy access to an additional 150,000 square feet of meeting space, 600,000 square feet of exhibit space and a 5,000 seat Bellco Theatre.

Here's the key part, sure to raise the appeal of the CCC.

The improvements will serve the needs of modern day convention-goers and differentiate the facility from others, ensuring it remains an attractive and global competitor. ... The project is anticipated to be completed in late 2023.

• Technology improvements and inviting networking spaces that position the CCC as the industry leader.

Note: Dravitz recently included the CCC in DenverInfill's recent Downtown Roundup AUG 2022 including this awesome photo:

[Robert.hampton]

Originally Posted by bunt_q

Top 10% of what? I can probably figure that out for you if I understand better what breakdown you’re looking for.

What would be a better approach do you think, to better reach the users? A sales tax? If that’s your proposal I think we will have to agree to disagree.

My overriding hypothesis is that a small number of households will carry the vast majority of the burden on this fee. So the questions is, what share of the revenue will come from the property owners that carry the highest 10% of the fee burden, and what share of the revenue will come from the property owners that are liable for the bottom 10% of the fee burden (total fee by property).

As for my proposed solution - assuming this is the right approach, I would suggest that every property should pay a flat, reasonable fee. Say $80 per year - every apartment, condo, duplex, townhome, SFH included. The remainder you can allocate based on a loose, proxy-based guesstimate of liability and costs as suggested in the ordinance. Essentially something that would raise the median cost a bit while reducing the mean cost.

And I would also veer away from promising voters something you know the city won’t deliver as a result from this fee.

[TakeFive]

Originally Posted by wong21fr

You know that metric is based upon total revenue for all Walmart and Sam's Club Stores? It's a bit of BS though Walmart is still the largest retailer by grocery related sales.

Costco is still the shining beacon on the hill. It's revenue per store is huuuuuuge.

Jeremy's mom is a Costco member so I joined Sam's Club to cover all the retail bases. I mostly use it for my gas purchases (which are deductible for me) and 5% cash back which I can use as a credit to buy instore stuff.

What's amazing is the volume of goods that are sold to small businesses including restaurants. Ofc down here there's a gazillion Mexican food places from the hole-in-the-wall on up. Both stores carry some basic clothing (for example) which is affordable while at the same time offering an upscale selections of many things. Sheets, for example, may be a bit higher thread count and they'll throw in a couple of extra pillow cases (compared to Walmart's very nice "Hotel-branded" sheets); it's not worth the extra $30 price IMO; I have like 5 different 100% cotton sheet sets to go with my various 'seasonal' quilts.
------------------------------

For those who may wonder what DOTI does with all their time

Try clicking here. You can spend a few days studying the hundreds of projects they are responsible for.

I saw where they floated about $360 million in bonds this spring for projects which will all be challenged by higher costs from inflation. Perhaps the good news - bad news is that they may need but be able to use IIJA funds just to be able to complete many of their more recent projects along with those still promised to voters.

[EngiNerd]

Originally Posted by bunt_q

Trying to categorize 18,187,845 linear feet of sidewalk (which the City's data does not track by width) into a fee structure that can be administered, understood, and is somewhat equitable, is not easy.

Heh, that's 24.3 million cu-ft or roughly 900k cu-yds of concrete assuming average 4" thick slabs, 4' wide (which is probably a good average), which is a lot of concrete, but not an earth shattering amount. Plus not all sidewalks will need replacement.

For reference, I remember reading the TREX project using 1million cu-yd or so of concrete, so it's on par with that. Plus it's not like this is going to be all at once pour by any means, our local batch plants should have no issue keeping up with that demand.

Fun (nerdy) fact, Burj Khalifa used about half that much concrete .

Fun fact #2, I just added up the volume of concrete at DEN runways (runways only, nothing else) and came up with roughly 21.5m cu-ft of concrete given that they are 17" thick. So if you want to visualize how much concrete is required for all Denver sidewalks, then take all the runways at DEN stacked end to end, and multiply that by about 5!

[mishko27]

Originally Posted by TakeFive

Does anybody still buy groceries

It does seem like younger people eat out a lot or do pickup.

Does Denver even have many Albertson's/Safeway stores?

Albertsons merger with Kroger could be announced this week
OCT 13 2022 - CNBC


Walmart is now the top grocer in the U.S. by revenue. Costco does substantial business.

Sam Hill will still have Trader Joe's which a lot people like. Whole Foods has its fans. I shop Sprouts Farmers Market on occasion. A few Natural Grocers scattered around. That's about it, I guess.

I hope that this gets blocked by FTC. Denver only has two mainstream grocers - Safeway and King Sooper's. I don't count Walmart and Target, or specialty grocers like Sprouts or Whole Foods. There are plenty sizeable cities in the country where Kroger and Albertson's are the only two grocers (Seattle, San Diego, etc) and it would monopolize the market if they merge.

We need ALDI and LIDL here, badly.

[bunt_q]

Originally Posted by TakeFive

That did cause a double-take bit of hubris.

I wasn't sure if she was referring to a city-owned concrete plant or just assuming this would be a result of the private sector? The idea of 'manufacturing' efficiencies a bit hilarious especially since I can envision many different engineering challenges as they go, not to mention neighborhood objections.

That was a response to the City saying there is a “concrete shortage.” Which is nonsense unless you are buying it 10 yards at a time, like DOTI’s tiny sidewalk contractors do. Versus a project that needs 100,000 yards like a runway or a highway job. It’s a good quote I think - anybody who does major projects for a living would recognize what DOTI has been doing vs what DOTI would have to do going forward are apples and oranges. It’s the difference between bidding to Jim’s Concrete versus bidding to Kiewit (and having them subcontract half the installation to all of the Jims out there, and self-performing the rest).

By the way, CDOT publishes data on all of this. Jobs >$20 million average twice as many bidders as jobs <$10 million, and see lower unit prices. It’s not rocket science - it’s well known.

The City is grumpy about this initiative, but they do bundle for efficiencies too. Ask them what they’ve been telling the neighborhood-level project planning efforts - whatever they are calling that participatory budgeting initiative. They’ve been saying “try and find projects we can bundle with other projects (parks says this a lot), otherwise we can’t afford them.”

Pennsylvania’s rural bridge program is my personal favorite example. Same idea, a lot of the same challenges sidewalks face.

EDIT: Re: neighborhood objections… yes. Although DOTI already has a pretty brutal established approach on this - look at their website. They’ve been tearing up landscaping in the right of way for curb ramps for years.

[bunt_q]

Originally Posted by EngiNerd

Heh, that's 24.3 million cu-ft or roughly 900k cu-yds of concrete assuming average 4" thick slabs, 4' wide (which is probably a good average), which is a lot of concrete, but not an earth shattering amount. Plus not all sidewalks will need replacement.

For reference, I remember reading the TREX project using 1million cu-yd or so of concrete, so it's on par with that. Plus it's not like this is going to be all at once pour by any means, our local batch plants should have no issue keeping up with that demand.

Fun (nerdy) fact, Burj Khalifa used about half that much concrete .

Fun fact #2, I just added up the volume of concrete at DEN runways (runways only, nothing else) and came up with roughly 21.5m cu-ft of concrete given that they are 17" thick. So if you want to visualize how much concrete is required for all Denver sidewalks, then take all the runways at DEN stacked end to end, and multiply that by about 5!

How many yards did you get? I think your math is off. I did the same math and the missing and deficient sidewalks are about the same as the 6th runway. Or maybe if you’re doing all of them, I see. I was only doing the amount that would need to be done in the first decade (which is what the City says there’s not enough concrete for.)

But yes on par with TREX makes sense. Of course we would not replace all of the sidewalks right away. So that’s a 50-year (actually 75-year) concrete volume. The first 10 years is about 1/3 of that.

[RyanD]

Originally Posted by wong21fr

Costco is still the shining beacon on the hill. It's revenue per store is huuuuuuge.

Yeah Costco is getting more the main staple for groceries in my household. Just checked out the business center on Alameda for the first time yesterday and it further solidified that KS / Safeway are ridiculously more expensive than ever. Tie that in with a merger where they can price gouge, I will become even more of a Costco loyalist. Colorado deserves better with grocers, it's super sad.

[TakeFive]

Originally Posted by mishko27

I hope that this gets blocked by FTC.

We need ALDI and LIDL here, badly.

I suspect Kroger will have a tough time getting approval to buy Albertson's; they claim they'll be able to lower prices afterwards.

My son loves ALDI's. But then he and mom also buy at Costco.

WinCo (employee owned) would be nice option; their HQ is in Idaho (naturally) so they're mostly a west coast company but they do have stores in AZ, NV and OK so who knows.

[EngiNerd]

Originally Posted by bunt_q

How many yards did you get? I think your math is off. I did the same math and the missing and deficient sidewalks are about the same as the 6th runway. Or maybe if you’re doing all of them, I see. I was only doing the amount that would need to be done in the first decade (which is what the City says there’s not enough concrete for.)

But yes on par with TREX makes sense. Of course we would not replace all of the sidewalks right away. So that’s a 50-year (actually 75-year) concrete volume. The first 10 years is about 1/3 of that.

Yeah mine was a total based on the length of sidewalk number you posted, 18,187,845 linear feet. Certainly I'm sure not all of that needs to be replaced all at once, and my average width was a guess.

[COtoOC]

Originally Posted by TakeFive

I suspect Kroger will have a tough time getting approval to buy Albertson's; they claim they'll be able to lower prices afterwards.

My son loves ALDI's. But then he and mom also buy at Costco.

WinCo (employee owned) would be nice option; their HQ is in Idaho (naturally) so they're mostly a west coast company but they do have stores in AZ, NV and OK so who knows.

IF this goes through, what's the likelihood that some other big chain would come to Denver? There are instances like in Mayfair where you have a Safeway across from a KS, and both are very busy. They'd shut one down and then you'd have one store that was constantly out of stock to overcrowded.

I remember back in the day in SoCal when there were probably 5 different grocery store chains.

[spr8364]

Originally Posted by COtoOC

IF this goes through, what's the likelihood that some other big chain would come to Denver? There are instances like in Mayfair where you have a Safeway across from a KS, and both are very busy. They'd shut one down and then you'd have one store that was constantly out of stock to overcrowded.

I remember back in the day in SoCal when there were probably 5 different grocery store chains.

I spent 11 weeks this past summer in Niiza, Saitama, Japan, and was amazed that I had walking access to about 6 different grocery store chains from where I was staying. I think I counted about a total of 12 grocery store chains that I could find in my various travels. They were all reasonably priced and varied in size from about a normal Colorado-sized grocery to mom-and-pop sized.

[laniroj]

Originally Posted by TakeFive

Does anybody still buy groceries

It does seem like younger people eat out a lot or do pickup.

Does Denver even have many Albertson's/Safeway stores?

Albertsons merger with Kroger could be announced this week
OCT 13 2022 - CNBC


Walmart is now the top grocer in the U.S. by revenue. Costco does substantial business.

Sam Hill will still have Trader Joe's which a lot people like. Whole Foods has its fans. I shop Sprouts Farmers Market on occasion. A few Natural Grocers scattered around. That's about it, I guess.

Safeway (Albertsons) and King Soopers (Kroger) are really the meat and potatoes options for every day goods - they're not competing with the others you listed which are all niche grocers (even target and costco are niche). If they merge, we really do need something like a Publix to enter the Colorado market to compete (won't happen). Once this merger completes, we'll have one grocery options and walmart, but it's always nice to have a third option. IMO, safeway is generally a step down from king soopers which is generally a step down from publix.

[mishko27]

Originally Posted by spr8364

I spent 11 weeks this past summer in Niiza, Saitama, Japan, and was amazed that I had walking access to about 6 different grocery store chains from where I was staying. I think I counted about a total of 12 grocery store chains that I could find in my various travels. They were all reasonably priced and varied in size from about a normal Colorado-sized grocery to mom-and-pop sized.

I was born and raised in Slovakia and my hometown of 40,000 people has a far greater variety of grocers than Denver. Tesco, Lidl + Kaufland (both owned by Schwartz Group), Billa, Fresh, Coop Jednota, Milk Agro, CBA - those are just the national chains. Then you have various smaller regional chains, small coops, mom and pops, and specialty grocers. This arguably applies to retail in general, there are half a dozen different electronics stores in the city as well.

It baffles me that a metro area with over 3 million people has two mainstream grocers.

[COtoOC]

Originally Posted by mishko27

I was born and raised in Slovakia and my hometown of 40,000 people has a far greater variety of grocers than Denver. Tesco, Lidl + Kaufland (both owned by Schwartz Group), Billa, Fresh, Coop Jednota, Milk Agro, CBA - those are just the national chains. Then you have various smaller regional chains, small coops, mom and pops, and specialty grocers. This arguably applies to retail in general, there are half a dozen different electronics stores in the city as well.

It baffles me that a metro area with over 3 million people has two mainstream grocers.

I know, but it's not much better in most cities. Where we lived in CA, they're down to Vons and Albertsons (both the same, owned by Albertsons), Ralphs (owned by Kroger), and then Stater Bros., which is a SoCal-specific chain.

I was recently in Kansas City and they have Price Chopper and HyVee, so only 2 chains. I don't think either of those are owned by Albertsons or Kroger.

[laniroj]

Originally Posted by Robert.hampton

...As for my proposed solution - assuming this is the right approach, I would suggest that every property should pay a flat, reasonable fee. Say $80 per year - every apartment, condo, duplex, townhome, SFH included...

To be transparent, do you own a corner lot or somethin?!?! A flat fee is entirely too difficult to administer. The only way to achieve somethin resembling your structure is a sales tax. The conundrum is this- folks want sidewalks now but a passable sales tax can generally only improve them incrementally over time, unless it's a large sales tax with a short horizon...but then it is unlikely to pass...so we're back at square one. I think each property owner should be proud to take care of their own sidewalk to contribute to a beautiful and accessible city. Yes there is the money thing but most fixes are simple and not a big burden. There are maybe 10% of sidewalks which are egregiously expensive to replace due to decades of slumlords and slumowners not paying to keep up with their property (I hope that's not you)!

[TakeFive]

Very Interesting

Originally Posted by COtoOC

I was recently in Kansas City and they have Price Chopper and HyVee, so only 2 chains. I don't think either of those are owned by Albertsons or Kroger.

HyVee is an employee owned local grocer while Price Chopper is also a locally owned store.

My biggest concern with a Kroger-Albertson's marriage is their potential to 'monopolize' a significant portion of the grocery supply.

[TakeFive]

Color me Impressed

Not Denver related but Boise ID based Micron Technology just signed a lease in Longmont. H/T BusinessDen.

https://www.userwalls.news/n/broe-group-drives-350m-investments-northern-colorado-3950275/

DENVER, Oct. 18, 2022 /PRNewswire/ -- Broe Real Estate Group (BREG), the wholly-owned subsidiary of the multi-billion-dollar private investment firm, The Broe Group, has signed Micron Technologies, Inc. as lead tenant for its 25-acre Longmont innovation campus known as MAX Technology Center. Micron Technology joins a list of industry giants leasing Colorado properties with Broe Real Estate Group in 2022, including Home Depot, Lineage Logistics, AON, and Charles Schwab.

I was unaware that Micron has had an R&D facility in Longmont since 2012.

While this pales in comparison to Micron's recent announced plans to invest up to $100 billion in a Megafab in Central New York, I didn't know that any tech hardware companies had a presence in Colorado. Just a guess that they like Longmont as a sister location to their HQ in Boise for R&D. This is a good thing.

[TakeFive]

What could possibly go wrong?

Real estate investment companies selling Phoenix metro homes for $100,000 less than what they paid
Oct. 18, 2022 By Gary Harper - AZFamily

PHOENIX (3TV/CBS 5) - The Phoenix-metro area has led the nation in home price increases for nearly 3 years in a row.

In April when the real estate market started to shift downward, On Your Side learned that Open Door bought a North Phoenix home for $710,000 and immediately listed it for sale at $753,000 in an attempt to profit. In just five short months, the same company dropped the sales price 8 different times on that same home just to attract a buyer in the new real estate climate. The same home is currently listed for sale at $584,000. If it sells for that amount, Open Door will have lost $126,000. Sposato says he believes the home will probably sell for a lot less.

It works until it doesn't

Along with my often general criticism of Statistics, let's add or emphasize that historical data it not necessarily the best predictor of the future.

Fun segment on NPR today

which reviewed the Stagflation years under Paul Volcker who was Fed Chairman from 1979 to 1987 when interest rates went as high as 20%. No this is not a prediction of what is likely to happen this time but it is instructive. Also different city real estate markets can/will be different and different sub-markets within in cities will also vary.

[TakeFive]

What about rents?

The Widely Used Algorithm Helping Apartment Landlords Jack Up Rents
October 17, 2022 By Joseph Gordon, Bisnow San Francisco Bay Area

Relentlessly rising rental rates for apartment dwellers in much of the U.S. could be partially a result of the industry's reliance on a commonly used algorithm to help determine pricing, according to a report from ProPublica.

ProPublica found property management companies are increasingly reliant on RealPage's YieldStar software to calculate pricing for their apartments. ... Sources in the report suggested that machine-driven pricing pushes rents higher than they might otherwise be because of the removal of the human element from generating the number.

What does this mean for Denver rents?

A weaker home buying market presumably means more demand for apartments.

Is Denver building too many apartments?

It wouldn't seem so but migration and local economic conditions are always important. Additionally, while supply chain issues seem to be improving it is still taking longer and longer to complete (especially) downtown projects. Despite the number of units under construction, all the projects in RiNo are likely to crawl to the finish line over the next couple of years. It's hard to project how many new projects will break ground.

Who knows what goes with the overall economy; it's possible there's more pain coming than current conditions would predict. But rental algorithms can respond quicker to changing market conditions either up or down.