DENVER | Main Development Thread #7

[seventwenty]

Nvm.

[BG918]

Originally Posted by TakeFive

I can recall in previous years speculating on the 'end of the RE cycle.' But with construction going on and on, even accelerating we mostly gave up talking about cycles and their ending. BG918 would occasionally issue a 'warning.'

Hopefully, we see more developers look to building TOD outside of the city center. Cypress Real Estate Advisors is but one example of wanting to develop urban/suburban product. There's lots of opportunity for suburban TOD.

There were a couple months when people really didn't know what COVID would do that it looked like construction would significantly slow down. And in some sectors that has held true like hotels (even though a couple have started recently like the Vib at 35th & Brighton and hearing the Kimpton will be starting soon at Belleview Station). With city/state budgets in the dumps there will likely be fewer civic and transportation projects though some that already had some level of funding like the convention center expansion will move forward. Same for education and airport projects.

Office is definitely a shaky sector right now but some companies may play the long game and realize that large projects in the planning phase now won't open until 2023 or 2024 and things could be "back to normal" then. I see more Wework/co-working style offices gaining popularity again as a hybrid WFH/office culture develops in many industries.

Multifamily construction still seems to be chugging along even with falling rents. I'm honestly surprised by how resilient the market has been and how many new projects are still popping up in the usual places (Rino, Golden Triangle, TOD's) but at some point the market will cool down. I agree with you suburban locations are hot right now, especially if they are TOD. Colorado Springs is also a hot market, likely due to spillover from Denver and the southern suburbs being too expensive.

[BG918]

Backing up some of my comments above from this article:https://milehighcre.com/denver-sees-...7035-136063493

According to the report, there was a decrease in the quantity of cranes in Denver, due to several projects being completed or approaching completion. According to the Denver Metro Association of Realtors, there is still an increase in demand and shortage in supply of housing. This could mean that the crane count in the future could remain fairly constant if there is continued growth in the residential construction sector.

“The pandemic-induced recession is going to have far-reaching effects,” said Julian Anderson, FRICS, president of RLB North America. “Lenders are less likely to support large new developments in sectors that have been hard-hit, like sports and hospitality. As construction costs soften, we are already seeing more interest in the projects that are coming online.”

Cities seeing an increase in cranes include Phoenix, Seattle, Toronto, and Washington D.C.

Cities with a decrease in cranes include Denver, Chicago, Las Vegas, New York, and San Francisco

Residential projects account for 40% of all cranes counted, followed by 25% installed at mixed-use developments

Cranes dedicated to cultural projects drop 38% from the previous count

Healthcare projects experienced a nationwide increase in active cranes of 38 percent.

[seventwenty]

Greyhound site changes hands

Andy Gibb, senior manager of marketing and proposals for Toronto-based developer First Gulf, told BusinessDen in an email Wednesday that the company is “no longer involved” with the property, an entire city block with the address of 1055 19th St.

A different party is now under contract to purchase the property, according to a representative of JLL, which began marketing on behalf of Greyhound in April 2019. First Gulf backed out in the second quarter.

Gibb declined to comment further. In March, First Gulf submitted a development proposal to the city calling for a 29-story office building and 38-story residential building, which would share a single base, to be constructed at the site.

[DenvertoLA]

Damn. First Gulf usually has quality projects IMO

I feel like we should see something big pop up while the market's low and construction labor is plenty available. Or is that just me wishing ?

[BG918]

Originally Posted by DenvertoLA

Damn. First Gulf usually has quality projects IMO

I feel like we should see something big pop up while the market's low and construction labor is plenty available. Or is that just me wishing ?

Unfortunately RE prices are higher than ever and construction costs are going back up.

[FunctionForm]

I like your thinking, but with literally thousands of people working from home in the current COVID environment, companies are re-thinking their need for office space. My company will allow hundreds of employees to begin working from home permanently starting in 2021. The paradigm shift to work-from-home may forever change the office space landscape and it could be years before there is a need for massive amounts of space.

[DenvertoLA]

I don't think that will last too long. The negative effects from remote working have yet to come in to full view. And low key lots of parents don't want to work from home, they need the escape.

I think the more probable outcome is a demand in sanitary tech updates. Air filtration, ultraviolet sanitizers in elevators, etc.

but that's me hoping again

[TakeFive]

Courtesy Ohio Farm Bureau

Originally Posted by bunt_q

Can we log it faster than it burns down? Market prices will tell.

Downtown is f'ing weird. Central Denver is f'ing weird. Not a surprise to me that people are fleeing. As more of our offices talk seriously about whether we will ever re-open, and make a vaccine a condition to any re-opening plans... folks are moving on with their lives and making other plans. The die-hard urbanists who stay behind, expect cider prices to plummet. Why? Because bunt_q is going to be the best damn lawyer/orchard-tender there is. Yields gonna skyrocket.

You do know your seasons. It won't be long before the grocers start getting in jugs of apple cider. That's when I push the carrot juice aside and live off apple cider for about 4 months.

Speaking of orchards etc and since it's silly (political) season this is what voters in MI get to see.

Have we come full circle?

Think back say 8 years ago. The energy was so strong in downtown from millennial affection that developers were afraid to even build in the suburbs. Then there was a surge over a few years where they scooped up readily available land for apartments. That played itself out and several developers who entered the Denver market via the suburbs quickly moved into downtown.

Good guess that going forward there will be much more emphasis on (again) building urban/suburban density with Lone Tree being the poster child. Apartments outside of downtown but within the city will also be a focus for many developers.

Originally Posted by Sam Hill

The thing that's causing downtown (and adjacent neighborhoods) to feel so dystopian to me lately - even more so than COVID - is the massive homeless camps everywhere. It's hard to feel good about your neighborhood (or the state of the world in general) when you have to walk by/through camps every time you mask up and venture out into the world.

That has to be tough for a guy who likes to get out and walk a lot.

It's as though the city center has unwittingly become a magnet for homeless. Come on down where every day is a 'homeless party and free camping day.' Yes, drug use has grown and again the city center is the place to enjoy your many drugs of choice - sadly. To top it off the city is now being sued for their homeless sweeps because...

[TakeFive]

Originally Posted by BG918

Multifamily construction still seems to be chugging along even with falling rents. I'm honestly surprised by how resilient the market has been and how many new projects are still popping up in the usual places (Rino, Golden Triangle, TOD's) but at some point the market will cool down. I agree with you suburban locations are hot right now, especially if they are TOD. Colorado Springs is also a hot market, likely due to spillover from Denver and the southern suburbs being too expensive.

Agreed. There were a number of multifamily projects far enough along to proceed to construction. In some cases developers had their own funding. There were also several more modest-sized projects with a niche location that were able to secure funding as a result.

Originally Posted by BG918

There were a couple months when people really didn't know what COVID would do that it looked like construction would significantly slow down. And in some sectors that has held true like hotels (even though a couple have started recently like the Vib at 35th & Brighton and hearing the Kimpton will be starting soon at Belleview Station).

As I recall the 'Vib' developer is a smaller, infrequent builder and interesting group. Presumably, they did their own 'private' offering using many of the same investors. Once they had raised their money and perhaps after a COVID pause they decided "let's go" and were able to secure construction funding due to their specific plan.

Consider the area. Brighton Blvd will never be as 'walkable' as some would prefer since it's a major corridor with freeway access. They did do a nice job with the road reconstruction. The area between Brighton Blvd and the Platte should be quite nice and walkable however.

We now have to talk about Generation Z in addition to some millennial stragglers. I'd make a bet that the Vib will be a magnet for those coming for a job interview, to check Denver out for a possible move, those coming to visit their Gen Z friends etc.

[TakeFive]

Originally Posted by BG918

Backing up some of my comments above from this article:https://milehighcre.com/denver-sees-...7035-136063493

Courtesy Gfycat

Urgently need a volunteer for critical task
Your assignment will be to drive downtown Denver and count the number of tumbleweeds you find.

Originally Posted by DenvertoLA

Damn. First Gulf usually has quality projects IMO

I don't recall knowing that First Gulf was the original buyer. I did like their office project on 14th Street. They weren't the biggest player but they were credible and outside of Toronto I think Denver was the only U.S. city they had interest in.

Originally Posted by FunctionForm

I like your thinking, but with literally thousands of people working from home in the current COVID environment, companies are re-thinking their need for office space. My company will allow hundreds of employees to begin working from home permanently starting in 2021. The paradigm shift to work-from-home may forever change the office space landscape and it could be years before there is a need for massive amounts of space.

It's sooo hard to project under the current circumstances but no doubt this will have an impact going forward.

Originally Posted by DenvertoLA

I don't think that will last too long. The negative effects from remote working have yet to come in to full view. And low key lots of parents don't want to work from home, they need the escape.

I think the more probable outcome is a demand in sanitary tech updates. Air filtration, ultraviolet sanitizers in elevators, etc.

but that's me hoping again

I have read of much the same. Many tech (presumably) companies have discovered issues managing their workforce; additionally the loss of synergies from having an office is another concern.

As you suggest many workers have found too much distraction at home; it could be from kids, the dog or just everyday normal stuff. If you live in a small space there isn't the room to set up a nice work area.

[wong21fr]

Welp. F**k the suburbs. I believe that this is the third (?) project to break ground in RiNo post pandemic.

Hines breaks ground on 397-unit luxury apartment project in Denver Opportunity Zone

All degeneration of the godless, barren 'burbs asides, this is a no-brainer by Hines to move forward. Opportunity Zone, location, and a construction timeline that wraps up post-pandemic are all factors that make this an ideal project to start now.

[SirLucasTheGreat]

Glad to see that move forward in RiNo. I hope that more residential breaks ground soon there.

[TakeFive]

Image courtesy Tenor

Originally Posted by wong21fr

Welp. F**k the suburbs. I believe that this is the third (?) project to break ground in RiNo post pandemic.

All degeneration of the godless, barren 'burbs asides, this is a no-brainer by Hines to move forward. Opportunity Zone, location, and a construction timeline that wraps up post-pandemic are all factors that make this an ideal project to start now.

Dude... you live in a suburb; it's called Stapleton and The Dirt will back me up on this one (I'd think).

Nice find though; nice project.

Residences At RiNo






All images courtesy of Hines

[Jmc84]

I think a lot of the commentary here on WFH impacts on commercial RE downtown miss the mark. The decisions going forward will not be binary (i.e. in the office 5 days per week OR WFH 5 days per week).

My company has at least 800 employees across the Denver metro (Boulder, Denver, and Tech Center area). We've all been WFH since March and our company has been very transparent about their plans post-COVID. Across the entire company we are being allowed to determine our own schedules once we return to the office - the vast majority of employees selected to work in the office 3 days per week or less.

The solution is that anyone working in-office 4 or 5 days per week will be guaranteed a desk, while anyone in the office 3 days per week or less will sit at open, non-assigned desks. This will allow us to significantly reduce the amount of square footage we need in the office. Multiply this across dozens/hundreds of companies and it's hard to see how that won't impact the demand for commercial real estate, at least in the short to medium term.

[SirLucasTheGreat]

I went for a bike ride today and took photos of a few projects that I was interested in.

1. Rev360



2. X2 (right beside X Denver)



3. Vib Hotel (Right beside Rev360)



4. RiNo Promenade



5. RiNo Art Park

[laniroj]

Originally Posted by Jmc84

...Across the entire company we are being allowed to determine our own schedules once we return to the office - the vast majority of employees selected to work in the office 3 days per week or less...

Multiply this across dozens/hundreds of companies and it's hard to see how that won't impact the demand for commercial real estate, at least in the short to medium term.

Totally agree on this point, short term at least. The pandemic may ultimately be the saving grace of WeWork and other shared workspace concepts which were beginning to falter pre-pandemic. I can definitely see smaller companies scaling down or eliminating traditionally leased office space and adopting a more flexible strategy including shared workspaces...the trick is whether or not those shared workspaces can provide an on-site mailing address...

[wong21fr]

Originally Posted by laniroj

Totally agree on this point, short term at least. The pandemic may ultimately be the saving grace of WeWork and other shared workspace concepts which were beginning to falter pre-pandemic. I can definitely see smaller companies scaling down or eliminating traditionally leased office space and adopting a more flexible strategy including shared workspaces...the trick is whether or not those shared workspaces can provide an on-site mailing address...

The biggest impact that I do see to commercial RE is on the lower end of the quality spectrum. If a company goes hybrid they are going to want their remaining space to be attractive, flexible, and central. That translates to Class A space that's located in desirable locations. This will ultimately be a boon to downtown and suburban TOD located along the commercial corridors. The north (Bellview Station) and south end (Lincoln/Lone Tree) of the Tech Center corridor are primed for further growth. It's the B and C class space that are screwed IMO as office space. I can see a good chunk of these towers downtown renovated as residential space over the next decade.

Assuming we address the homeless issue and start sending non-city residents back to Douglas County. Free-loading suburban ingrates.

[twister244]

Originally Posted by wong21fr

The biggest impact that I do see to commercial RE is on the lower end of the quality spectrum. If a company goes hybrid they are going to want their remaining space to be attractive, flexible, and central. That translates to Class A space that's located in desirable locations. This will ultimately be a boon to downtown and suburban TOD located along the commercial corridors. The north (Bellview Station) and south end (Lincoln/Lone Tree) of the Tech Center corridor are primed for further growth. It's the B and C class space that are screwed IMO as office space. I can see a good chunk of these towers downtown renovated as residential space over the next decade.

Assuming we address the homeless issue and start sending non-city residents back to Douglas County. Free-loading suburban ingrates.

I think that's a very good take on things. My company is about 100-130 people right now and based out of Boston. We have a small office in Boulder, but it's definitely not A class space lol. I think after this is done, we may just all get WeWork hot desk memberships and can go in at our discretion to meet in person for meetings a couple times a week. Myself though.... being single and owning a condo, there's nothing stopping me from renting my place out and working remotely from anywhere in the world for a while so I can explore. Especially since we have offices in Tel Aviv, and a few employees scattered elsewhere. I think this is going to be another fun fad you see explode here after the pandemic is over. Those who aren't anchored down and can work remotely will GTFO and see the world.

[TakeFive]

Originally Posted by Jmc84

I think a lot of the commentary here on WFH impacts on commercial RE downtown miss the mark. The decisions going forward will not be binary (i.e. in the office 5 days per week OR WFH 5 days per week).

I had wondered... but it's more relevant and interesting to hear someone's anecdotal information.

It will be interesting to see how many follow suit.

Originally Posted by SirLucasTheGreat

I went for a bike ride today and took photos of a few projects that I was interested in.

Thanks for sharing; I'm always up for 'drive-by' photos.

Rev360 - they sure did a nice job on that project. Props to Anderson Mason Dale, a quality firm if ever there was one.

Vib hotel; I believe we were just talking about that. Rino Promenade and Art Park will add sooooo much to that area.

Originally Posted by twister244

I think that's a very good take on things. My company is about 100-130 people right now and based out of Boston. We have a small office in Boulder, but it's definitely not A class space lol. I think after this is done, we may just all get WeWork hot desk memberships and can go in at our discretion to meet in person for meetings a couple times a week. Myself though.... being single and owning a condo, there's nothing stopping me from renting my place out and working remotely from anywhere in the world for a while so I can explore. Especially since we have offices in Tel Aviv, and a few employees scattered elsewhere. I think this is going to be another fun fad you see explode here after the pandemic is over. Those who aren't anchored down and can work remotely will GTFO and see the world.

Well said.

In hindsight I think you were wise to buy your condo when and where you did. Being on the west side of I-25 was smart.

Tel Aviv sounds like fun and a nice resume builder I'd think.