DENVER | Main Development Thread #7

[TakeFive]

Why does it take so dang long to add density in Denver?
It just does and every project is different.
Well how long has this development taken?
Over five years from initial planning to shovels hitting the ground.


Groundbreaking photo courtesy of Kentro Group.


Rendering of Krisana Apartments Courtesy of Kentro Group

151 Affordable Units Break Ground on Former CDOT Site
March 8, 2023 - Mile High CRE

Kentro Group, a Denver-based, privately-held real estate investment and development firm, and Lexton McDermott, a multifamily real estate development leader based in Centennial, have broken ground on Krisana Apartments, 151 units of deed-restricted, affordable housing located on the former CDOT headquarters site at 4343 E. Arkansas Avenue, Denver.

According to the developer:

Current plans for the former CDOT property, known at “The DOT”, located at 4201 E Arkansas Avenue, include an activated park with a restaurant or beer garden concept, a multi-modal transit center, a modernized King Soopers grocery store, and a blend of affordable and market rate housing.

Desiree Mathurin/Denverite had an in-depth story including background. With respect to what resulted (including density) the Denver City Council along with the neighborhood were all directly involved. It is what is is.

[SirLucasTheGreat]

Looks like there's some very massive housing reform coming in at the State level. Among other changes, looks like Polis will be banning single family zoning in all of the "tier 1" cities.

Gov. Polis’ housing proposal would allow duplexes, townhomes, ADUs across many cities in Colorado
https://www.cpr.org/2023/03/22/gov-p...ownhomes-adus/

[TakeFive]

I saw this. Did you see this?

Blake Street Tavern to close doors in April after 20 years serving sports fans
March 17, 2023 - The Denver Post; credit Kyla Pearce (The Denver Gazette)

DENVER — Blake Street Tavern, an award-winning sports hangout, bar and eatery popular among locals and tourists, will shut its doors in early April.

After years of celebrating sports and bringing the downtown community together, the tavern announced it is closing on April 9 "to enjoy one last Rockies homestand with everyone," according to Blake Street Tavern General Managers Shelley Majeres and Rhiannon Arriaga Mackenzie.

Blake Street Tavern - 2301 Blake





I've been there a couple of times.

[TakeFive]

They're going to get rid of precious parking lot spaces
Can they really do that?

Nearly 300 new apartments planned near Blake Street Tavern
Mar 21, 2023 By Kate Tracy – Reporter , Denver Business Journal

As a long-standing downtown sports bar is set to close next month, its property appears to be poised for new apartment construction. Its landlord, Seattle-based Urban Renaissance Group, submitted plans this month to the City and County of Denver to construct a new five-story building mostly on the parking lot adjacent to the bar.

The proposed building would have 58 residential units and a 6,994-square-foot area for food and beverage businesses on the building’s ground floor. The new building would also provide 89 spaces of parking and would bring a total of 117,567 square feet of new development, according to the site plan. Plans indicate five separate retail food and beverage spaces on the proposed building’s first floor.

It's complicated

Urban Renaissance Group also owns the parking lots behind Blake Street Tavern at 1551 Park Ave. West and 1561 Park Ave. West, where the firm plans to build apartments as well. The group also purchased the nearby one-story office building at 2399 Blake St. for $33 million in 2018, according to previous reporting.

Urban Renaissance Group purchased the Blake Street Tavern building, along with the adjacent property currently occupied by the coworking company Spaces, in 2016 for $21.2 million, according to property records. The 0.97-acre property also includes the parking lot next to Blake Street Tavern. While Spaces’ building will remain, Blake Street Tavern’s annex where the Tailgate Room is located will be demolished to make way for the new building at 2325 Blake St.

Double your apartment pleasure.

Meanwhile, behind Blake Street Tavern, Urban Renaissance Group this month also submitted a site plan to develop the parking lot at 1561 Park Ave. West. The proposed nine-story building on the 1.86-acre lot would bring 237 units to the site, in addition to three stories of below-grade parking with 350 spaces.

Urban Renaissance Group hopes to start this project in early 2024 and complete it in early 2026, according to city plans. Since the firm submitted its concept plan before the city’s inclusionary zoning requirement took effect, the firm does not plan on designating any of the 237 units as affordable.

Urban Renaissance Group has hired Oz Architecture to design developments at both 2325 Blake St. as well as 1561 Park Ave. West.

Seems I recall discussing this proposal previously so consider this an Update.

[Ich]

Glad Polis is actually trying to address increasing the housing supply rather pushing for endless leases and rent control which will most likely make the situation worse.

https://www.cpr.org/2023/03/22/gov-p...ownhomes-adus/

[twalm]

Originally Posted by SirLucasTheGreat

Looks like there's some very massive housing reform coming in at the State level. Among other changes, looks like Polis will be banning single family zoning in all of the "tier 1" cities.

Gov. Polis’ housing proposal would allow duplexes, townhomes, ADUs across many cities in Colorado
https://www.cpr.org/2023/03/22/gov-p...ownhomes-adus/

Sounds like a knock on single family zoning in dense areas. Sounds like a big win to me! I appreciate the inclusion of mountain towns in this, building single family suburbs in walkable mountain towns with limited space is incredibly dumb.

[Darius C]

Originally Posted by Ich

Glad Polis is actually trying to address increasing the housing supply rather pushing for endless leases and rent control which will most likely make the situation worse.

https://www.cpr.org/2023/03/22/gov-p...ownhomes-adus/

It is too heavy handed and not thought through. What do you think will happen to SFH property prices if a single lot suddenly becomes worth up to 6 units to a developer? What do you think will happen to TOD when existing SFH lots become alternative building sites?

One positive, predictable outcome would be some restoration of political balance in CO in the next election cycle since the suburbs---sorry, I meant Tier 1 cities---will not be thrilled.

[wong21fr]

Originally Posted by Darius C

It is too heavy handed and not thought through. What do you think will happen to SFH property prices if a single lot suddenly becomes worth up to 6 units to a developer? What do you think will happen to TOD when existing SFH lots become alternative building sites?

Well, existing homeowners might get paaaid should they choose to sell, not that that doesn't happen already. What's wrong with that? Polis' libertarian streak is showing in the across the board upzoning and I relish the thought of a market-based experiment like this that relaxes zoning requirements and allows the market to come up some novel solutions to addressing affordability.

Considering that TOD is also upzoned and has parking requirements loosened, it probably results in more TOD development. Greystar isn't coming in to build 10 6-unit projects.

One positive, predictable outcome would be some restoration of political balance in CO in the next election cycle since the suburbs---sorry, I meant Tier 1 cities---will not be thrilled.

I can definitely see the GOP running on a local control platform, but it will likely still get lost in the RMGO, anti-abortion, and Trump servitude planks of the current CO GOP.

[TakeFive]

Originally Posted by Darius C

One positive, predictable outcome would be some restoration of political balance in CO in the next election cycle since the suburbs---sorry, I meant Tier 1 cities---will not be thrilled.

Originally Posted by wong21fr

I can definitely see the GOP running on a local control platform, but it will likely still get lost in the RMGO, anti-abortion, and Trump servitude planks of the current CO GOP.

Agree that Republicans would need to project an image beyond just "Crazy." It is fun having a Dem Governor in the desert; I've always preferred some degree of political balance. During Colorado's very Republican past the voters often chose a Dem Governor; it made for good politics and good government.

It's a bit odd to see Liberals who are normally notorious for adding Red Tape in order to satisfy every special interest group find a Liberal issue where they want to eliminate Red Tape. Of course that's the key; it's a liberal issue.

Well Said

Originally Posted by Ich

Glad Polis is actually trying to address increasing the housing supply rather pushing for endless leases and rent control which will most likely make the situation worse.

https://www.cpr.org/2023/03/22/gov-p...ownhomes-adus/

[TakeFive]

Did the Governor thread the needle with this proposal?

I applaud the effort partly because I'm a huge fan of 'missing middle' housing.

https://www.cpr.org/2023/03/22/gov-p...ownhomes-adus/

Four and six unit townhome-style buildings make up Mosaica, a new Colorado Springs housing development geared to families making slightly too much to qualify for traditional affordable housing.

Gotta love the photo that Kenney and Minor came up with for an example. Proves my argument for how much easier it is to accomplish on vacant land.

"... we need a smart plan ... close to where jobs are and along transit lines with opportunities for people to get where they want to go,”

The normal traditional approach to denser zoning has always been near job centers like shopping areas etc for apartments. Good luck creating transit for where everybody wants to go. Transit lines, especially station stops should accommodate higher density than just 4 to 6 units per lot. BTW, what constitutes a lot?

Cities could still customize their codes, for example by adding design requirements. “People take pride in their neighborhoods and in their communities, and part of that is in fact how they look,” Jodeh said. “Those standards are there to make sure that people can still do that.”

Sounds like an exception big enough to drive a Mack Truck through.

Generally, these requirements are more of an urban form which could be a sticking point with many suburban communities. Traditional nearby to job centers is a fine idea but less so in less dense suburban neighborhoods. The responses among various interest groups should be quite interesting.

[mhays]

If hundreds of thousands of SFR sites can suddenly handle a handful of units each, SFR houses won't necessarily get more expensive.

For one, that's a ton of potential sellers. There won't be the sort of scarcity that raises prices much.

Two, a lot of the SFR demand is from people who might like the option for a townhouse or other missing-middle type.

Washington is looking at similar legislation this year. Fingers crossed. Tacoma already did it.

[TakeFive]

Originally Posted by mhays

If hundreds of thousands of SFR sites can suddenly handle a handful of units each, SFR houses won't necessarily get more expensive.

For one, that's a ton of potential sellers. There won't be the sort of scarcity that raises prices much.

Two, a lot of the SFR demand is from people who might like the option for a townhouse or other missing-middle type.

It occurred to me I better google SFR; now I know what that means. For those who are curious it means single family rentals.

So we continue down the path of becoming more and more a Rental Nation? Eh, why not? It does make 'sprawl' ever more appealing if one wants to find a reasonably affordable home to buy. But favorable areas of Denver are already quite expensive so why not at least add some missing middle options. It makes good sense actually.

[TakeFive]

Originally Posted by mhays

If hundreds of thousands of SFR sites can suddenly handle a handful of units each, SFR houses won't necessarily get more expensive.

For one, that's a ton of potential sellers. There won't be the sort of scarcity that raises prices much.

True Story

I pick up this guy from his favorite neighborhood sports bar and as we drive along Bell Rd I happen to mention I wanted to look at the models of a new development that we passed by. He tells me he already looked at them and he couldn't believe how small the back yards were. Small back yards are not a new thing but I guess his impression was expensive homes shouldn't have back yards THAT small.

I wouldn't call it a prime location but certainly a nice area. The value derived from such a nice-sized parcel that was an infill site. The last piece of a once large ranch that had kept a few cows to preserve their agricultural zoning. D.R. Horton paid $80 million for the 121.7 acre tract that will build out with 420 SFH's and 286 attached duplex units.

Point being that it's easy peasy to create land use efficiency when you start with a raw piece of ground.

[TakeFive]

Here's the Rub

In thinking of neighborhoods where it would be easiest to add density the one's that come to mind are starter home neighborhoods typically built in the 1950's that were (mostly) built on slabs like Virginia Vale/Village or University Hills. Much the same was also built in SW Denver where land values should be less but IIRC some of those home added basements.

Those homes were generally built with nice back yards meaning a lot is maybe twice as deep as it is wide. Trying to figure out how to retrofit multiplexes is a bit of a head scratcher. Slot homes I guess. If you could assemble 3 or 4 lots it could work well. You could add a drive for accessing garages (either attached or detached) in the back.

Closer in perhaps West Wash Park would provide some good opportunities. The challenge is finding sites that are cheap enough to scrape and rebuild.

As much as I do like 'missing middle' housing options I suspect it will be easier said than done anywhere close to the city center or in desirable areas.

[TakeFive]

https://www.denver7.com/sports/bronc...ences-location

The survey acknowledged that the Broncos are "exploring the possibility of constructing a new state-of-the-art football stadium that would serve as a world-class home for the team and its dedicated fan base." Per the Broncos, the new stadium would improve the fan experience with new and enhanced seating options as well as upgraded stadium amenities across concessions, concourse, technology and merchandise.

[SirLucasTheGreat]

The survey also asked fans what their preferred location would be. Do you think there would be enough space between the Pepsi Plant and the Coliseum parking area? I know Pepsi put their 30 acre plant for sale and it is near the commuter rail.

[mhays]

Originally Posted by TakeFive

It occurred to me I better google SFR; now I know what that means. For those who are curious it means single family rentals.

So we continue down the path of becoming more and more a Rental Nation? Eh, why not? It does make 'sprawl' ever more appealing if one wants to find a reasonably affordable home to buy. But favorable areas of Denver are already quite expensive so why not at least add some missing middle options. It makes good sense actually.

Rentals? No, it's a common term for single family residences, pretty universal in planning circles.

[TakeFive]

Originally Posted by mhays

Rentals? No, it's a common term for single family residences, pretty universal in planning circles.

Ahh, OK, thanks for the correction. I jumped at the 1st answer I found. I've always used "single family homes." Apparently it's used differently by different people. One answer even stated "single family residences intended for rental."

[i4isoar]

Originally Posted by SirLucasTheGreat

Looks like there's some very massive housing reform coming in at the State level. Among other changes, looks like Polis will be banning single family zoning in all of the "tier 1" cities.

Gov. Polis’ housing proposal would allow duplexes, townhomes, ADUs across many cities in Colorado
https://www.cpr.org/2023/03/22/gov-p...ownhomes-adus/

Originally Posted by Ich

Glad Polis is actually trying to address increasing the housing supply rather pushing for endless leases and rent control which will most likely make the situation worse.

Originally Posted by twalm

Sounds like a knock on single family zoning in dense areas. Sounds like a big win to me! I appreciate the inclusion of mountain towns in this, building single family suburbs in walkable mountain towns with limited space is incredibly dumb.

This is good news! Obviously, the final legislation will look very different from what's proposed, but it looks like a promising start. I wish we could see more policies like this, and less like the endless leases, rent control, and that asinine registration and inspection requirement in Denver that only 8% of landlords are in compliance with.

On the flip-side, I would find it deeply ironic if one of Polis's best policies (in the long-term) ends up becoming one of his most unpopular (in the short-term), and what ultimately costs him politically in the next election.

Originally Posted by TakeFive

https://www.denver7.com/sports/bronc...ences-location

Great! Here's to hoping that a new stadium will have a retractable roof so we might be able to host a Superbowl one day - I'd read somewhere that the vast majority of them are either held in warmer climates (Miami, Phoenix, LA...) or places with covered stadiums (MSP, Detroit...).

[TakeFive]

Commercial real estate is in trouble. Why you should be paying attention - Nice clickbait headline.

Interesting piece on CNN. Essentially, is CRE a slow moving train wreck?

New York CNN —
Economists are growing concerned about the $20 trillion commercial real estate (CRE) industry

While that is a big number there's little context. Statistics need explanation. There is a lot of debt that matures in 2023 but only some of it is of concern.


I did not fully appreciated this point:

Lending to commercial real estate developers and managers largely comes from small and mid-sized banks, where the pressure on liquidity has been most severe. About 80% of all bank loans for commercial properties come from regional banks, according to Goldman Sachs economists.

“I do think you will see banks pull back on commercial real estate commitments more rapidly in a world [where] they’re more focused on liquidity,” wrote Goldman Sachs Research’s Richard Ramsden in a note on Friday. “And I do think that is going to be something that will be important to watch over the coming months and quarters.”

Note: the primary concern is with office and retail.

Consider the old adage: "When one door closes another opens."

For example, I've also read that as Bed, Bath and Beyond closes stores this year, other retailers are ready to jump on their space. Some retail is in trouble; other retail seems to be thriving; it's the way it's always been.

Denver is aware of issues with some of their office properties. I think partly it's simply a matter of changing trends and not all office space is impacted.

The only takeaway I'd be concerned about is an overall tightening of credit. I've also heard that some Life Insurance companies have similar concerns. But even so some deals will still get done while others may be put on hold.