DENVER | Main Development Thread #7

[CherryCreek]

Originally Posted by Keesy9

When I met with The Coloradan, most of the prices were closer to $650/sf. 1,000 SF 1/1 around $625,000, 550 SF studio around $300,000. There was a premium for units facing Union Station and most of those units came with balconies while the side facing Whole Foods does not have balconies. The units did not come with parking spaces and you have to rent them for $200/month.

Nice. So early buyers have seen massive appreciation even before the damn place gets windows.

Crazy.

[twister244]

Yeah, I think the sales at the Coloradan should be a sign of how pent up the demand really is right now. I would love it if we started seeing more condo developments in the RiNo area as there's plenty of room to grow there, and it would give me an incentive to stay in that part of town.

Time will tell, but I suspect we will see a slow increase in condo developments, especially as the apartment market continues to saturate.

[Stonemans_rowJ]

Here's the problem I see with new condos. Interest rates are on the upward move. We're now at 4.25% for a 30 year fixed, conforming, (<$529,000). Firgure that rates if you were locking today for a jumbo condo even higher. Most likely we'll be significantly higher in a year. At the same time....drumroll, rents coming down for similar product. Lots and lots of vacancy. Even the bank of mom and dad isn't that stupid.

I would imagine most of these units will close i.e. "sell," but it ain't sold until the deed is signed. Impressive pre-sales though, not to take anything away from that.

This is the pre-eminent location in all of Denver. I think this building is an outlier.

[TakeFive]

Originally Posted by Stonemans_rowJ

Here's the problem I see with new condos. Interest rates are on the upward move. We're now at 4.25% for a 30 year fixed, conforming, (<$529,000).

BTW, not all Mom and Dad Banks are smart. I do like Lakehouse; in fact that would be my preference.

Some are claiming a bond bear market ahead but who knows. I'm waiting to see if we might get an inverted yield curve.

[CherryCreek]

Originally Posted by Stonemans_rowJ

Here's the problem I see with new condos. Interest rates are on the upward move. We're now at 4.25% for a 30 year fixed, conforming, (<$529,000). Firgure that rates if you were locking today for a jumbo condo even higher. Most likely we'll be significantly higher in a year. At the same time....drumroll, rents coming down for similar product. Lots and lots of vacancy. Even the bank of mom and dad isn't that stupid.

I would imagine most of these units will close i.e. "sell," but it ain't sold until the deed is signed. Impressive pre-sales though, not to take anything away from that.

This is the pre-eminent location in all of Denver. I think this building is an outlier.

If these were still at $600 square foot I think that' would be pretty solid. But I'd be reluctant to jump in now at around $1,000 a sq. foot. I really worry that we are at peak market prices. I remember previous Denver condo booms from the 1980s where ten years after the initial sales, condos were still selling below purchase price.

(Of course in the unlikely event that Denver won Amazon, those prices might well surge 50% over night).

[RyanD]

Speaking of The Coloradan... I'm amazed nobody has noticed the terracotta going up!

https://denverinfill.com/blog/2018/0...update-10.html

[Stonemans_rowJ]

Originally Posted by TakeFive

BTW, not all Mom and Dad Banks are smart. I do like Lakehouse; in fact that would be my preference.

Some are claiming a bond bear market ahead but who knows. I'm waiting to see if we might get an inverted yield curve.

Lakehouse looks truly outstanding quality of build, amenities, site plan, etc. but to me location is everything and that location isn't everything. I could see how it might be for some people.

[TakeFive]

Originally Posted by Stonemans_rowJ

Lakehouse looks truly outstanding quality of build, amenities, site plan, etc. but to me location is everything and that location isn't everything. I could see how it might be for some people.

Hell yeah! I'd just put my rocker out on the balcony, grab my hard copy of the Denver Post and my pipe and sit there and watch the geese on the lake all day.

Originally Posted by RyanD

Speaking of The Coloradan... I'm amazed nobody has noticed the terracotta going up!

It looks nice. I just hadn't the time to walk by lately.

Originally Posted by The Dirt

I can kind of forgive those prices ($1,000 a sq. ft.) simply because of the location, but it's appalling that there aren't other, more affordable condos within a larger radius. I find it sad that $500 a sq. ft. condo is now an affordable rate in my mind.

Nice pics btw and those prices are well beyond my comprehension.

[TakeFive]

Originally Posted by Stonemans_rowJ

Northwest Denver over 30% vacancy!? I was speaking to a friend who has 18 doors just this week, he is below market rent in B and C neighborhoods and he "suffered a bit" this year due to lease-breaks and extended vacancies.

Normal blip or the beginning of something yuuge?

Although Ken makes a good point that with a lower base number of existing apartments a couple of bigger projects can make a yuge impact on vacancy.

I was going to save this for tomorrow but it is almost Friday.

Downtown L.A. Is Starting to Mirror Manhattan’s Glut of Apartments
So Denver is not the only place where supply is getting ahead of demand.

Trying to read the tea leaves is trickier than ever. One thing that's evident is that this year commodities prices have been moving higher at a steady but accelerated rate over previous years. Things like industrial metals and crude oil don't take too long to filter through which could add an assist to inflation and raise construction costs even higher. This is one thing that has caused nervousness in the bond markets.

OTOH there's supposedly still lots of cash reserves and it was just two months ago that Bloomberg carried this article:
The U.S. Yield Curve Is Flattening and Here's Why It Matters

Should the stock market wobble I could see fresh buying in the bond market and the potential for an inverted yield curve which is rather rare but usually portends a recessionary period.

No real signs that the stock market is the least bit nervous though.

[RyanD]

999 17th tower crane is up!

[bob rulz]

Originally Posted by CherryCreek

Also, was told that the expensive studios are being bought up by "millennials." Sounds like there's at least a few millennials around town with some real change in their pockets.

Originally Posted by wong21fr

There's also the Bank of Mom and Dad.

Millennials are not children anymore. The oldest people considered "millennials" are coming up on their 40th birthday.

[jbssfelix]

Originally Posted by bob rulz

Millennials are not children anymore. The oldest people considered "millennials" are coming up on their 40th birthday.

This. Technically, I'm a Millennial (born '86). I'm coming up on my 3rd home purchase.....first one is, as we all know, the hardest. Had to scrape like hell to get the down payment saved up, but appreciation + overpayments mean home 2 and 3 have been relatively easy bumps.

[CherryCreek]

Originally Posted by CherryCreek

If these were still at $600 square foot I think that' would be pretty solid. But I'd be reluctant to jump in now at around $1,000 a sq. foot. I really worry that we are at peak market prices. I remember previous Denver condo booms from the 1980s where ten years after the initial sales, condos were still selling below purchase price.

(Of course in the unlikely event that Denver won Amazon, those prices might well surge 50% over night).

Also, to be clear, I'm not sure any of the units are quite at $1,000 per sq foot, though the studios are getting close. By my calculation the 2 bedrooms are more in the $650 to $850 p.s.f. range, if that sounds better. .

[wong21fr]

Originally Posted by jbssfelix

This. Technically, I'm a Millennial (born '86). I'm coming up on my 3rd home purchase.....first one is, as we all know, the hardest. Had to scrape like hell to get the down payment saved up, but appreciation + overpayments mean home 2 and 3 have been relatively easy bumps.

True, but when we are talking about studios at ~$1,000/sq ft is the purchaser really on their second or third home purchase? I’m guessing probably not and this is where alternative funding sources do come into play. Mom and Dad helping out on Juniors first place (that just happens to be a trendy studio) is a very common scenario.

[CherryCreek]

Originally Posted by RyanD

Speaking of The Coloradan... I'm amazed nobody has noticed the terracotta going up!

I love the look. You couldn't see this from the original drawings - looked like boring black or charcoal.

Much more interesting.

[jbssfelix]

Originally Posted by wong21fr

True, but when we are talking about studios at ~$1,000/sq ft is the purchaser really on their second or third home purchase? I’m guessing probably not and this is where alternative funding sources do come into play. Mom and Dad helping out on Juniors first place (that just happens to be a trendy studio) is a very common scenario.

There's quite a few of us (not me) who came out of the gates with a solid CS or CE degree and were making 6 figures on day one out of college. Let's assume that, yes, mom and dad did at least pay for college but stopped there. If they scraped by on a cheap apartment for a few years and racked up a couple solid pay bumps/promotions, they could probably afford one of the smaller units downtown. $1000/sqft is a stretch for anyone, but 6-700/sqft would be within their realm these days.

[semiurban]

Anyone know how the terracotta tiles are affixed to the building and how they keep moisture from getting between them?

[CastleScott]

Love the color of the terracotta-this will make it stand out more.

[BG918]

Originally Posted by semiurban

Anyone know how the terracotta tiles are affixed to the building and how they keep moisture from getting between them?

Looks like a rain screen application where there is a fluid-applied air barrier (the white) and then continuous rigid insulation on top (the yellow) with the panels supported by zee-girts attached to the studs.

[Liberty Wellsian]

As a demographic nerd I hate the term millenial. It describes nothing. It is poorly defined.

Rant
The Millennium is an arbitrary thing. It is just another date on the calendar. Alternatively it is an easy thing to track births and to whom those children were born to. The last generation that is absolutely clear is the baby boom generation. There were very real events in history that led to this generation. It jumps off the page like gangbusters. From there(to keep things simple) we only need to look at the median age of a mother who gives birth to see if more or less than half of the births in that given year were to mothers who are boomers. Let's call those Gen X. When Boomer mothers give way to Gen X mothers as the majority mothers then we have a new generation in my view. By my estimation (iirc)this happened between 1992 and 1993. If you were born in the 80s, if you are now almost 40 you are not a millennial.

edit: iirc the height of the baby boom was 1954. The median age of an expectant mother throughout most of 70s was 25 years old. 1979 would have been smack dab in the middle of the Boomers childbearing years. So how does it make any sense for a new generation to pop up in the middle of that? That isn't the border between Generations that is the center of a generation.