DENVER | Main Development Thread #7

[Fritzdude]

Originally Posted by coolmandan03

I don't think you're grasping the cost of underground parking. Especially underground parking that is only used 81 games per year (and most weekdays that lot is mostly empty)

Let's look at average numbers. An underground garage costs approximately $25K per car space. Between Lot A and Lot B, there are around 3300 spaces aside from the current multi-level garage. That leaves about 10 blocks of simple ashpalt that is being used sparingly throughout the year. You could theoretically put these 3300 spaces below ground for around $82M and sell the land above it for development. Or put in incentives to 'share' the parking for residents.

$82M might seem like a lot, but for context, a full block sold for $27M last year in RiNo. Meanwhile, the Rockies are sitting on contiguous sea of 10 blocks that could be added to the market, which is booming. The math seems to work out. Imagine what one devloper, like East/West could do with 10 blocks in this area.

[bunt_q]

Originally Posted by Fritzdude

Let's look at average numbers. An underground garage costs approximately $25K per car space. Between Lot A and Lot B, there are around 3300 spaces aside from the current multi-level garage. That leaves about 10 blocks of simple ashpalt that is being used sparingly throughout the year. You could theoretically put these 3300 spaces below ground for around $82M and sell the land above it for development. Or put in incentives to 'share' the parking for residents.

$82M might seem like a lot, but for context, a full block sold for $27M last year in RiNo. Meanwhile, the Rockies are sitting on contiguous sea of 10 blocks that could be added to the market, which is booming. The math seems to work out. Imagine what one devloper, like East/West could do with 10 blocks in this area.

$25k for underground space? I’m seeing more than double that.

[Fritzdude]

Originally Posted by bunt_q

$25k for underground space? I’m seeing more than double that.

Yes, it would be more expensive if you have multiple levels. But excavating a single level underground ‘garage’ that achieves the efficiency of scale by doing a very large project would ultimately keep cost ratios lower. But, even taking your estimates with costs at double this amount, the math still works assuming you can get market rates for the land. Plus, the Rockies would continue to have a great asset for years to come, which will continue to bring in revenue. In addition to games, the need for private parking options will only increase.

[bunt_q]

Originally Posted by Fritzdude

Yes, it would be more expensive if you have multiple levels. But excavating a single level underground ‘garage’ that achieves the efficiency of scale by doing a very large project would ultimately keep cost ratios lower. But, even taking your estimates with costs at double this amount, the math still works assuming you can get market rates for the land. Plus, the Rockies would continue to have a great asset for years to come, which will continue to bring in revenue. In addition to games, the need for private parking options will only increase.

Not really - we had to value engineer out a 12 acre one story underground garage. It doesn't scale downward in the way you would think. I bet it's still double. Multi-story I have recently seen $70k.

Edit: Why do we care about below ground anyways? The hassles of condominiumizing for development above are definitely not worth it. You could do a giant above-grade structure and free up land much more easily.

[EngiNerd]

Originally Posted by TakeFive

It's possible things could change

Bye bye, San Francisco: The top 7 U.S. cities homebuyers are seeking to leave
Jul 24 2022 By Cheyenne DeVon via CNBC

Maybe some of the people who want to leave Seattle will come to Denver?

Didn't we already establish before that this article and its so-called "data" is very much a "correlation doesn't equal causation" scenario? Someone searching to move doesn't not mean that it actually happens, they provide no backup data showing correlation between what percent of searches to relocate actually result in actual moves. Basically meaningless statistics leading to a clickbait article.

[EngiNerd]

Originally Posted by bunt_q

$25k for underground space? I’m seeing more than double that.

This, $50k is more the reality today...maybe a little bit of a discount from that if you built 10,000 spaces all at once, but then it doesn't account for what will be on the "lid" of the garage

[TakeFive]

Part One: It's too easy to talk past each other

Originally Posted by DenverInfill

You don't get it. From 2000 through 2007, Colorado averaged 44,653 new homes per year, which was meeting population growth. Then the Great Recession came and that average plummeted; meanwhile, Colorado's population kept on growing.

Here's a table I made using the housing building permit counts from the data source you linked to above, showing annual housing permits from 2000 through 2021 for Colorado, along with the annual difference from 44,000--the average from 2000 through 2007. As you can see, we are 188,000 homes short of maintaining that average.

I need to understand things; the why of things. So I went back to this post to remind of that time period.

The Re-awakening of downtown Denver

A) December of 2005 saw the Grand Opening of the Hyatt Regency Convention Center Hotel. This followed the doubling in size of the Convention but it was the completion of the hotel that allowed for bigger conventions to start booking in Denver.

B) In 2009, Kiewit Western Co. was selected as the design-build contractor for the transit project. Construction at Union Station began in 2010 and the Grand Opening in May of 2014 and commuter rail service arrived in 2016.

Perhaps just as important the ball for the Union Station project started rolling in 2001 and 2002 which meant the buzz around downtown sort of escalated as the decade went along.

The Great Recession ran from December of 2007 through June of 2009. It was created from the excesses of RE development.

[TakeFive]

Part Two

From your posted numbers the bottom in Denver for new housing was in 2009 while 2010 & 2011 were mildly better. Then things started picking up in 2012.

Then I found this population growth specific to Denver Metro.
This is interesting as it shows accelerating growth from 1990 - 2000 as Denver bounced back from its Great Recession.

Then I found FRED which indicates that the Denver population was virtually static for 2009 before then re-accelerating thereafter.

Urban versus Suburban

This is actually quite important since families who moved, transferred to Denver likely chose the suburbs and presumably (most) could qualify for a loan so the new home construction was able to fulfill this demand. Then assume the typical family of three and it doesn't take as many housing units as it would for Millennials moving downtown which were more likely one housing unit per one person.

There's other very important things to consider

The animal instincts of builders is they're happy to build to whatever the demand is. But the Great Recession left some notable scars. Likely many families who transferred to Denver rented; perhaps they couldn't sell the house they left behind; perhaps they left behind a foreclosure and couldn't qualify for a new home.

With respect to the suburbs there became a scarcity of buildable lots and entitled land for new development. Many things take lots of time and the approval process for new entitlement became constipated during the 2010's.

With respect to downtown as the Millennial migration to Denver accelerated developers failed to keep up with demand due to the runway needed to entitle and build new projects. Plus in the early years developers started with more modest-sized project b/c nobody knew or could project the future demand for how much growth would happen in downtown Denver

Obviously, it's a lot easier to say in hindsight what developers 'should' have done but that's not how markets work.

[mhays]

Buyers will always leave expensive cities. College grads move in and rent, then often move out when they want to buy. It's an endless cycle.

As for supply and demand imbalance, no it's not just developer lag. It's difficulties and costs baked into the system. Land prices are high due to insufficient zoned capacity. Entitlements are too onerous. And so on.

Also, fundamentally, the size and complexity of today's housing means a lot of wage hours by a lot of people. If they get living wages, stuff will be expensive. Foreign supply chains aren't so cheap or easy anymore.

If you want cheaper housing, you have to address the cost of new supply. Upzoning to spread land costs out would be a first step. Less square footage would be another (a personal choice, but heavily restricted by land use codes). A simpler, quicker, and certain entitlement process would be a third.

[TakeFive]

Yes Sir!

Originally Posted by EngiNerd

Didn't we already establish before that this article and its so-called "data" is very much a "correlation doesn't equal causation" scenario? Someone searching to move doesn't not mean that it actually happens, they provide no backup data showing correlation between what percent of searches to relocate actually result in actual moves. Basically meaningless statistics leading to a clickbait article.

I would agree that considering/looking is not the same as actually doing/moving. So as long as we understand that - the methodology then we can accept it for whatever value it provides.

We're already aware that many people who have moved to Denver have come from Cali, New York and Chicago. I offer Exhibit A - the over 40,000 people who showed up Tuesday evening to watch the Chicago White Sox play the Rockies at Coors Field. Yes, it felt like as many White Sox fans as Rockies fans.

Would I prefer actual data (that's reasonably accurate) as apposed to speculation? Sure! But what this seems to indicate is that many people in those cities are at least interested in considering a more affordable place/city to live. I hardly find this to be shocking. We know several from right here on this forum who did exactly that.

[TakeFive]

Well stated

Originally Posted by mhays

Buyers will always leave expensive cities. College grads move in and rent, then often move out when they want to buy. It's an endless cycle.

As for supply and demand imbalance, no it's not just developer lag. It's difficulties and costs baked into the system. Land prices are high due to insufficient zoned capacity. Entitlements are too onerous. And so on.

Also, fundamentally, the size and complexity of today's housing means a lot of wage hours by a lot of people. If they get living wages, stuff will be expensive. Foreign supply chains aren't so cheap or easy anymore.

If you want cheaper housing, you have to address the cost of new supply. Upzoning to spread land costs out would be a first step. Less square footage would be another (a personal choice, but heavily restricted by land use codes). A simpler, quicker, and certain entitlement process would be a third.

This is a good up-to-date take that I wouldn't disagree with relative to new projects. It also confirms some of what I said.

So far as zoning which I have a different view, I would add that this would be more of a long term solution assuming it worked (which I doubt).

[EngiNerd]

Originally Posted by TakeFive

Part One: It's too easy to talk past each other

I need to understand things; the why of things. So I went back to this post to remind of that time period.

The Re-awakening of downtown Denver

A) December of 2005 saw the Grand Opening of the Hyatt Regency Convention Center Hotel. This followed the doubling in size of the Convention but it was the completion of the hotel that allowed for bigger conventions to start booking in Denver.

B) In 2009, Kiewit Western Co. was selected as the design-build contractor for the transit project. Construction at Union Station began in 2010 and the Grand Opening in May of 2014 and commuter rail service arrived in 2016.

Perhaps just as important the ball for the Union Station project started rolling in 2001 and 2002 which meant the buzz around downtown sort of escalated as the decade went along.

The Great Recession ran from December of 2007 through June of 2009. It was created from the excesses of RE development.

In my opinion the "reawakening" of downtown this time around will be driven by the 16th Street mall reconstruction. If DDP is on their game (they usually are) they will use the reconstruction as a marketing opportunity to rebrand the downtown experience, tie in lots of events with it, and try to drive interest downtown once more. Right now, interest definitely is trending elsewhere than the city core based on my many conversations with downtown building property managers (my work allows me direct contact with a good percentage of them).

This means that we will have to suffer through a couple of years until that happens, but I think better things are coming once that project is finished.

[TakeFive]

Very well could be

Originally Posted by EngiNerd

In my opinion the "reawakening" of downtown this time around will be driven by the 16th Street mall reconstruction. If DDP is on their game (they usually are) they will use the reconstruction as a marketing opportunity to rebrand the downtown experience, tie in lots of events with it, and try to drive interest downtown once more. Right now, interest definitely is trending elsewhere than the city core based on my many conversations with downtown building property managers (my work allows me direct contact with a good percentage of them).

This means that we will have to suffer through a couple of years until that happens, but I think better things are coming once that project is finished.

Recently when I was perusing Denver Infill Roundups (love those Roundups) one thing that popped into my head was the disadvantage (as apposed to the advantage) of a nice downtown 'street wall,' is the lack of GREEN or landscaping; this brought me quickly to how wonderful the 16th Street Mall is in that respect. I also recalled the wonderful makeover of 14th Street.

The other critical piece that feeds into the 'Mall' is the CCC or convention center; so hopefully that comes back fairly strong soon. High Season for tourism in Denver (not the mountains) is probably mid-June through September; but the convention business when it's good is more spread out throughout the year.

Certainly, I've been looking forward to the 16th Street Mall redo.

[DenverInfill]

Originally Posted by TakeFive

Very well could be


Recently when I was perusing Denver Infill Roundups (love those Roundups) one thing that popped into my head was the disadvantage (as apposed to the advantage) of a nice downtown 'street wall,' is the lack of GREEN or landscaping; this brought me quickly to how wonderful the 16th Street Mall is in that respect. I also recalled the wonderful makeover of 14th Street.

The other critical piece that feeds into the 'Mall' is the CCC or convention center; so hopefully that comes back fairly strong soon. High Season for tourism in Denver (not the mountains) is probably mid-June through September; but the convention business when it's good is more spread out throughout the year.

Certainly, I've been looking forward to the 16th Street Mall redo.

The presence of a street wall and green landscaping are not mutually exclusive. It's easy to have both. In fact, since the city requires all new development to have trees and other landscaping along the sidewalk, downtown is getting significantly greener due to new development than it was when those site were empty lots. Of course, property owners have to maintain the landscaping, replace trees if they die, etc.


I'm glad you like the roundups!

[TakeFive]

Part Four

Wait... what happened to Part Three?
Not sure; I looked around, couldn't find it.

I want to focus on the period between 2010 and 2015 - (so try to focus like a razor beam on this period)

I clearly remember BG918 (hope things are well in Tulsa) being one of our 'caution flags' thinking Denver may be getting overbuilt, that a Recession may not be far off.

The Apartment Experts

Ah yes, these guys were (often) sure Denver would soon be waay overbuilt and vacancies would go through the roof. Problem was, they relied too much on historical data of new units, vacancy etc. To be fair population (and other) data lags by a year or so.

The Tech World View

In the 1st half of the 2010's it was Austin that sucked all the tech oxygen out of the air. More mundane tech companies looking to escape CA often ended up in Dallas due to generous incentives.

Yes, Colorado/Denver has always had a solid tech presence but those companies mostly landed in the suburbs. It was only in the 2nd half of the last decade that tech discovered downtown Denver.

The World of Developers

Take look at this list. While it doesn't change a lot from year to year I did intentionally picked out 2015.

The Lennar Multifamily Story (abbreviated)

Like many new-to-Denver builders LMC started in the suburbs. They built in Green Valley Ranch before they came downtown. They started with a modest project along Blake Street before building a nice-sized project in Uptown, then moving into Arapahoe Square before falling in love with the Golden Triangle. While LMC may be a star in Denver, it's also a typical 'cautious' approach to building in Denver.

Most of the developers on the Top 50 list have at least some presence in Denver. Some have been busy builders like Holland Partners, Mill Creek, Trammel Crow Res and more recently Greystar. Others have dabbled.

Carmel who's CEO grew up in Denver has only become more prominent in recent years. AMLI who's long had a local office only revved up more recently in the City although they've built in Denver over a long time.

The development of Brighton Blvd corridor was real slow early on; now it's On Fire. It just takes time to build momentum typically.

It is pretty impressive the number of National developers that have built in Denver. Still, it all just does take time.

Footnote: Just a reminder that all the population data being discussed is STATE data although presumably Denver metro comprises a majority of it.

[TakeFive]

Originally Posted by DenverInfill

The presence of a street wall and green landscaping are not mutually exclusive. It's easy to have both. In fact, since the city requires all new development to have trees and other landscaping along the sidewalk, downtown is getting significantly greener due to new development than it was when those site were empty lots. Of course, property owners have to maintain the landscaping, replace trees if they die, etc.

Okay; I wondered.

I also wondered how long a few of those might survive. Does Denver have landscape cops?

You've got to admit this is awesome

14th Ambassador Street - All photos courtesy of Confluence










This photo courtesy of SEGD

[DenverInfill]

The landscaping along the Market Station development is really nice. Here's a photo courtesy of JWalk's twitter account. Source.

[TakeFive]

^^ Yeah, that's nice. Market Station is nice!

Originally Posted by mhays

Land prices are high due to insufficient zoned capacity. Entitlements are too onerous. And so on.

If you want cheaper housing, you have to address the cost of new supply. Upzoning to spread land costs out would be a first step. Less square footage would be another (a personal choice, but heavily restricted by land use codes). A simpler, quicker, and certain entitlement process would be a third.

I see where Seattle is going to do a "Comprehensive Plan Update" to include looking at various zoning issues. No use getting into the weeds since they don't anticipate a plan being ready for voter approval until 2024 for 2025 implementation. But there is this:

Is Housing becoming more affordable in Minneapolis?

Housing production is rising and rents are falling.
May 11, 2022 by Christian Britschgi

Minneapolis appears to be a YIMBY (Yes in my backyard) success story of relaxed zoning regulations leading to increased housing production and declining rents.

In addition to the above piece, website Governing also has a good take on the single family zoning ban. It's a good/interesting read.

How Important Was the Single-Family Zoning Ban in Minneapolis?
May 26, 2022 By Jake Blumgart - Governing

The effort caught national attention, but the real story is the rest of the package of land use reforms that the city council passed to open up the housing market. However, opposition to further reform is growing.

Is this a sign of a YIMBY victory? Hold the phone; apparently we have different data sets at play.

The Twin Cities has the worst housing shortage in the nation
SEPTEMBER 18, 2021 By Jim Buchta - Star Tribune

This is too funny; this has a very familiar ring to it.

After more than a decade of underbuilding, the lack of housing poses a growing threat to the region's economic growth.

That distinction will come as no surprise to anyone who has tried to buy a home or rent an apartment recently in the Twin Cities. But rising prices and the persistent scarcity of entry-level homes and rentals poses a growing threat to the economic expansion of the region.

Pick you data and your outcome I guess, lol.

Note: There is an 8 month gap on above articles which hardly seems like enough for much to change.

[bunt_q]

Originally Posted by TakeFive

^^ Yeah, that's nice. Market Station is nice!



I see where Seattle is going to do a "Comprehensive Plan Update" to include looking at various zoning issues. No use getting into the weeds since they don't anticipate a plan being ready for voter approval until 2024 for 2025 implementation. But there is this:

Is Housing becoming more affordable in Minneapolis?

Housing production is rising and rents are falling.
May 11, 2022 by Christian Britschgi


In addition to the above piece, website Governing also has a good take on the single family zoning ban. It's a good/interesting read.

How Important Was the Single-Family Zoning Ban in Minneapolis?
May 26, 2022 By Jake Blumgart - Governing


Is this a sign of a YIMBY victory? Hold the phone; apparently we have different data sets at play.

The Twin Cities has the worst housing shortage in the nation
SEPTEMBER 18, 2021 By Jim Buchta - Star Tribune

This is too funny; this has a very familiar ring to it.


Pick you data and your outcome I guess, lol.

Note: There is an 8 month gap on above articles which hardly seems like enough for much to change.

It would help if you would post those chronologically. It's not inconsistent for there to be a severe shortage in September, and then to see increased construction the following May. Isn't that exactly the trend in headlines we would want to see?

[TakeFive]

I like this... it could happen.

Originally Posted by bunt_q

It would help if you would post those chronologically. It's not inconsistent for there to be a severe shortage in September, and then to see increased construction the following May. Isn't that exactly the trend in headlines we would want to see?

As I mentioned, after I learned what Seattle was looking to do, I decided to check into any updates on Minneapolis. It was a pleasant surprise to learn there were recent updates on the state of things.

I changed a couple of keywords when I found the September article (which is why it was out-of-order). That piece appears to be more of a broad-based take for all housing in the metro area while the other two articles are more focused on apartment inventory.

I also learned that apartment construction in Minneapolis has been trending higher since 2018 and here we are in Spring of 2022. So it's entirely possible that apartment inventory recently got ahead of demand.

Also interesting is I've wondered - what with all the apartments currently under construction in Denver if this might not happen here as well.

The last point is what affordable rents mean depends on who you ask but rents dropping would never be a bad thing.