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  #6001  
Old Posted Jun 13, 2019, 2:29 AM
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Originally Posted by CherryCreek View Post
Interesting insight, thanks. As far as the municipal government delays and work loads, I really don't get it. I would have thought cities would simply raise fees sufficiently to self-fund reasonable commercial time frames for reviews.

Perhaps they've tried that and in the tight labor markets simply can't find or keep the proper talent.
It's been a perfect storm that nobody could anticipate. There are signs it may have peaked, at least in the near term as Denver Sales Tax receipts grew at about 1/3 the pace of a year ago.

You really highlighted a lot of the problem with respect to land availability and to an extent water access. DougCo, especially has struggled with this. Ofc now we have environmentalists fighting the long planned expansion of Gross Reservoir.

Planning clustermess continues though... for now. Donna Bryson/Denverite covered some of the potential construction defects downside.

Aerotropolis can't come fast enough I guess. Much of the planning has been done and this summer they'll start on road infrastructure.

There's still a lot of land at the Federal Center that was delayed by the homeless wanting to build a tent city. With that behind I'm not sure where it's at. Lakewood for it's part will be voting in early July on new development limitations.

Doesn't sound like the new Denver City Council will be the most development friendly either but that remains to be seen. Campaign bluster and reality aren't always a match. Not sure what the holdup is with Sun Valley?
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  #6002  
Old Posted Jun 13, 2019, 3:21 AM
mhays mhays is online now
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My knowledge of development economics is fairly sketchy...just a marketing guy for a Pacific Northwest contractor who tries to understand this stuff. A few points:

If there's plenty of capital, great. In my market, I'm hearing that a top developer can get lots of capital at every level, but the marginal players get a lot of scrutiny and tough rates. Many are failing to move projects forward. Our entitlement process is longer than Denver's, and requires big design presentations that we all moon over 18+ months before construction starts, so we see a lot of very early concepts that don't go anywhere.

Rents can grow quickly but still fall short of penciling if land is rising in the double figures and construction is up 5% per year. And some projects didn't pencil even in the best moments.

One basic truth: Developers often underestimate costs by double-figure percentages even well into design. Projects fall away all the time as reality hits.

Premium designs can pencil...if the costs are aligned with what people will pay more for. the most artistic massing is often not in this category...for example with a swoopy shape, residential floorplans can have more wasted space, office tenants find their cubes don't fit efficiently or consistently, structural and enclosure costs go through the roof, etc. But add a few percent to the overall cost by improving appliances, fixtures, and finishes, if your taste appeals to enough people, and yeah it'll probably pay off.

By "not penciling" I don't mean they'd be unprofitable. I mean the margins would be too thin or unpredictable to get funding, particularly at decent rates. Nobody is going to loan money or drop equity for a return that's probably less than the stock market.
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  #6003  
Old Posted Jun 13, 2019, 2:28 PM
laniroj laniroj is offline
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Originally Posted by The Dirt View Post
Can you post a link to the 2019Q1 results? I can only find the 2018Q4 pdf.
It's a subscription report for purchase. You can get it here: https://www.aamdhq.org/vacancy-and-rent

Otherwise you'll have to wait a quarter for it. First quarter showed strong numbers. An artificial brake on supply via zoning, while having negative consequences of housing affordability, may also be a blessing in disguise in that it could keep the economic expansion rolling steadily along. Given housing investment and spending are a little more than 15% of our national economy, that's maybe a good thing but who knows, maybe housing will be the next black swan.
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  #6004  
Old Posted Jun 13, 2019, 2:59 PM
laniroj laniroj is offline
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Originally Posted by CherryCreek View Post
... 2. Available land - there's endless land to the east of currently built up metro Denver, but is there demand to live there? (And what about No. 1, above?). Land to the west and south is either quite expensive (south) or difficult to build on (West). The north and northeast seems to offer opportunity.
The growth in the sprawling burbs is becoming extremely difficult. It took Harold Smethels over a decade just to get through zoning and figure out a water plan for Sterling Ranch south of Chatfield. By the way their water and associated impact fees are nearly double the next closest utility provider on the Front Range - tens of thousands per unit higher. Growth in Douglas County is coming to a halt because they quite literally have no renewable water sources. Shea also has a somewhat large sprawling master planned community near Chatfield and they basically had to (somehow it was legal) siphon off water rights from Highlands Ranch to service that growth.

Realistically, it seems like impactful growth can come in places like Thornton and Aurora and to a lesser extent Broomfield/Erie area heading up north.
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  #6005  
Old Posted Jun 13, 2019, 2:59 PM
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  #6006  
Old Posted Jun 13, 2019, 3:09 PM
laniroj laniroj is offline
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Originally Posted by mhays View Post
...By "not penciling" I don't mean they'd be unprofitable. I mean the margins would be too thin or unpredictable to get funding, particularly at decent rates. Nobody is going to loan money or drop equity for a return that's probably less than the stock market.
Your understanding is pretty good! However, as international money has flooded places like Seattle for a long time, it's only recently made a push in Denver, save the Canadieeeens in the oil days. On the front end, many multifamily projects in Denver have been "penciling" and getting built with a sub 10% IRR. Many have been lucky to outperform that projection due to incredible rent growth (massive entitlement delays helps in this aspect). Point being, if you can find a Japanese investor at 2%, you can make just about anything work. Pros vs Joes....the haves will (almost) always have access to capital and the amateurs will always struggle to piece a deal together a la World Trade Center Denver.
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  #6007  
Old Posted Jun 13, 2019, 3:26 PM
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The median price isn't very helpful. Sure, Union Station might have a median price of $541k, but that's likely for a 600sqft 1br. $/sqft would have been a helpful bullet point.
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  #6008  
Old Posted Jun 13, 2019, 3:56 PM
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Originally Posted by TakeFive View Post
Those are some interesting numbers, and really helps break the city down a bit in terms of affordability. From the looks of it, rent really isn't nearly as bad as real estate in many of these neighborhoods. Although some of those southern ones actually seem to be fairly affordable across the board.
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  #6009  
Old Posted Jun 13, 2019, 4:55 PM
bushw00d bushw00d is offline
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Originally Posted by laniroj View Post
Your understanding is pretty good! However, as international money has flooded places like Seattle for a long time, it's only recently made a push in Denver, save the Canadieeeens in the oil days. On the front end, many multifamily projects in Denver have been "penciling" and getting built with a sub 10% IRR. Many have been lucky to outperform that projection due to incredible rent growth (massive entitlement delays helps in this aspect). Point being, if you can find a Japanese investor at 2%, you can make just about anything work. Pros vs Joes....the haves will (almost) always have access to capital and the amateurs will always struggle to piece a deal together a la World Trade Center Denver.
I agree with this in large part, though we've been a core/core-plus market for domestic institutions managing foreign capital for a long time. Direct investment by foreigners (ex. Canada) in Denver has been limited to the last 5 years and is largely core in nature (Union Station, primarily) though a Japanese firm is financing a project in River North right now.

Development IRRs are still attractive but it's true that the extreme levels of liquidity are limited to very capable, very experienced groups that can provide their own loan guarantees and have demonstrable expertise in delivering the product type promised. If you put yourself in the shoes of an equity investor, you'd look for the same qualities out of your project sponsor rather than someone with a cool dream and a limited balance sheet (WTC, etc). Equity is almost always in a fiduciary role and therefore cannot spec a developer that doesn't have a very high (approaching 100%) of delivering on time and on (close to) budget.
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  #6010  
Old Posted Jun 13, 2019, 7:43 PM
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Originally Posted by bushw00d View Post
I agree with this in large part, though we've been a core/core-plus market for domestic institutions managing foreign capital for a long time. Direct investment by foreigners (ex. Canada) in Denver has been limited to the last 5 years and is largely core in nature (Union Station, primarily) though a Japanese firm is financing a project in River North right now.

Development IRRs are still attractive but it's true that the extreme levels of liquidity are limited to very capable, very experienced groups that can provide their own loan guarantees and have demonstrable expertise in delivering the product type promised. If you put yourself in the shoes of an equity investor, you'd look for the same qualities out of your project sponsor rather than someone with a cool dream and a limited balance sheet (WTC, etc). Equity is almost always in a fiduciary role and therefore cannot spec a developer that doesn't have a very high (approaching 100%) of delivering on time and on (close to) budget.
The other big challenge WTC is facing is that the WTC itself is only a 3500sf user. Not anything close to big enough to frame that large a project around. They were looking at other sites before they picked the 38th & Blake site, and they bring lots of promises of leasing, but it wouldn't surprise me if they weren't able to get many of those across the finish line - especially with the protectionist tone of US politics right now. The project we were looking at with them was almost entirely reliant on pre-leasing, which is why we didn't go forward. Great concept, but lots of holes in the underlying logic...
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  #6011  
Old Posted Jun 13, 2019, 9:31 PM
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With impeccable timing, given the conversation above, this news this afternoon:


International real estate developer Hines purchased a 2.5-acre lot currently occupied by a vacant warehouse inside Westfield’s North Wynkoop development in Denver’s River North Art District. Hines purchased 4050 Brighton Blvd. for $21 million on June 6, according to property records. The building neighbors the Mission Ballroom music venue, which anchors the North Wynkoop development.

Hines plans to build a 10-story, for-rent multifamily development that features 392 luxury, urban-style residences, Mark Clegg, vice president of corporate communications, confirmed to Denver Business Journal.

North Wynkoop is slated to have a large, landscaped and art-filled outdoor plaza, a 90,000-square-foot, three-story office-and-retail building that will sit above a 234-space underground parking garage. The project also includes South Market Hall, which will feature 45,000 square feet of entertainment-driven retail, including restaurants and bars. Above South Market Hall will be a 130-key, eight-story hotel, with an opening that could come as early as 2020.



https://www.bizjournals.com/denver/n...kers-6-13.html

Yay! More luxury units! (But also office, retail and hotel). Money talks and bullshit walks, I guess. Sounds like a great project ! Brighton Blvd. continues to go bonkers (except for WTC).

Last edited by CherryCreek; Jun 13, 2019 at 10:06 PM.
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  #6012  
Old Posted Jun 14, 2019, 4:54 AM
Darius C Darius C is offline
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Originally Posted by SirLucasTheGreat View Post
I am concerned about Candi Cdebaca and the trend toward socialism in not only in the city but also the country. Socialism has become a fashionable but poorly articulated political ideology in the minds of many younger voters nowadays. I have not heard many people who support modern American socialist politicians articulate many reasonable thoughts on how capitalism or socialism influences problems we face today.
Councilwoman CdeBaca articulated her views on socialism and capitalism pretty clearly in this pre-election debate snippet:
https://m.youtube.com/watch?v=zkuBmsfSiUM
Be afraid, Denver district 9, be very afraid.
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  #6013  
Old Posted Jun 14, 2019, 4:56 AM
DUPio DUPio is offline
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Denver is an amazing city with many millenials moving there, for good reason. However at least on an anecdotal basis I know plenty of young folks, our family included, that decided to move. We were effectively priced out of a single family home in Denver proper. For a budget of $400k our options to live close to the urban core were the west side of Aurora and the SW corner by Ruby Hill, and even then was usually an older home that hadn't been updated in 20 years (and in less than desirable neighborhoods). So effectively we were looking at going to the suburbs (Thornton vs SE Aurora). At $50k below that price point we got a brand new 3/2 with 2200 sqft in a very safe part of Scottsdale, AZ. Miss Denver but definitely made the right decision. If you are a young family looking to buy in one of the nicer neighborhoods on that slideshow, you have to have deep pockets. Upper 400s is the starting price for outdated SFH in gentrifying neighborhoods like Skyland or Virginia Vale. Just out of curiosity I would like to know what the younger people moving here do for a career. Both wife and I are locked into healthcare jobs so no real upward mobility, but would be nice to know what to tell my kids to go into
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  #6014  
Old Posted Jun 14, 2019, 5:57 AM
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Originally Posted by DUPio View Post
Denver is an amazing city with many millenials moving there, for good reason. However at least on an anecdotal basis I know plenty of young folks, our family included, that decided to move. We were effectively priced out of a single family home in Denver proper. For a budget of $400k our options to live close to the urban core were the west side of Aurora and the SW corner by Ruby Hill, ... At $50k below that price point we got a brand new 3/2 with 2200 sqft in a very safe part of Scottsdale, AZ.
Pretty sure I recall you discussing this before, maybe 3 years ago?

Not sure when you moved but it generally takes a couple of years to adjust to the desert landscape and summer heat. At first it felt a bit weird since the seasons are flipped from Denver. Once the adjustment hurdle is behind you'll fall in love. I'll guess you're east of the 101; I was out on E Shea and 120th earlier today.

I still miss Denver but what I miss is more the Denver that I remember.
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  #6015  
Old Posted Jun 14, 2019, 8:07 AM
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Anyone got any renderings ? And seems like they should do something like 2k beds not 515

https://denver.cbslocal.com/2019/06/...udent-housing/
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  #6016  
Old Posted Jun 14, 2019, 3:48 PM
PhilipDDG PhilipDDG is offline
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Originally Posted by DUPio View Post
Denver is an amazing city with many millenials moving there, for good reason. However at least on an anecdotal basis I know plenty of young folks, our family included, that decided to move. ...At $50k below that price point we got a brand new 3/2 with 2200 sqft in a very safe part of Scottsdale, AZ.
Best of luck in your new locale. I lived in the Valley of the Sun (Piestewa Peak area) and enjoyed the city's mountain parks. Must say, if living on one side of the Denver boundary line was too expensive, and living on the other side of that line was so untenable you chose to move to a vastly different climate, it sounds to me that the cost of housing was merely a contributing factor in your decision to move.

Regardless, the desert mountains make for a stunning setting and recreational amenity. Enjoy.
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  #6017  
Old Posted Jun 14, 2019, 4:07 PM
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CherryCreek CherryCreek is offline
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Best of luck in your new locale. I lived in the Valley of the Sun (Piestewa Peak area) and enjoyed the city's mountain parks. Must say, if living on one side of the Denver boundary line was too expensive, and living on the other side of that line was so untenable you chose to move to a vastly different climate, it sounds to me that the cost of housing was merely a contributing factor in your decision to move.

Regardless, the desert mountains make for a stunning setting and recreational amenity. Enjoy.
We all have to weigh whats important to us as far as life style, size home, etc. Many tens of thousands of current Denver /metro residents will doubtlessly leave, based on some mix of "too expensive", "too crowded", "too cold", "too dry" and something "better" is available, using the values that are important to them.

That's just fine, and how it should be. If I were 25 and not from Denver, given Denver's cost I too might very well look for alternatives, though most of the cities I like are probably more expensive than Denver, lol.
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  #6018  
Old Posted Jun 14, 2019, 4:40 PM
PhilipDDG PhilipDDG is offline
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[QUOTE=CherryCreek;8605558]We all have to weigh whats important to us as far as life style, size home, etc. Many tens of thousands of current Denver /metro residents will doubtlessly leave, based on some mix of "too expensive", "too crowded", "too cold", "too dry" and something "better" is available, using the values that are important to them.

Exactly. I live in Denver because the things I love about it outweigh the things I don't. For those who like urban living, we're fortunate in this country to have such a variety of climates to choose from. And, apart from the generally homogenous suburbia, many of the core cities offer a variety of layers to their built environment that reflect their unique histories.

More practically speaking, an abundance of relocation services also makes it relatively easy to pick up stakes and move--for work, for health, for family, for other types of fulfillment, etc.
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  #6019  
Old Posted Jun 14, 2019, 4:59 PM
SirLucasTheGreat SirLucasTheGreat is offline
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Originally Posted by CherryCreek View Post
With impeccable timing, given the conversation above, this news this afternoon:


International real estate developer Hines purchased a 2.5-acre lot currently occupied by a vacant warehouse inside Westfield’s North Wynkoop development in Denver’s River North Art District. Hines purchased 4050 Brighton Blvd. for $21 million on June 6, according to property records. The building neighbors the Mission Ballroom music venue, which anchors the North Wynkoop development.

Hines plans to build a 10-story, for-rent multifamily development that features 392 luxury, urban-style residences, Mark Clegg, vice president of corporate communications, confirmed to Denver Business Journal.

North Wynkoop is slated to have a large, landscaped and art-filled outdoor plaza, a 90,000-square-foot, three-story office-and-retail building that will sit above a 234-space underground parking garage. The project also includes South Market Hall, which will feature 45,000 square feet of entertainment-driven retail, including restaurants and bars. Above South Market Hall will be a 130-key, eight-story hotel, with an opening that could come as early as 2020.



https://www.bizjournals.com/denver/n...kers-6-13.html

Yay! More luxury units! (But also office, retail and hotel). Money talks and bullshit walks, I guess. Sounds like a great project ! Brighton Blvd. continues to go bonkers (except for WTC).
Here is a rendering of the Hines proposal for North Wynkoop.

I can't say that I find it to be an inspiring architectural achievement.
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  #6020  
Old Posted Jun 14, 2019, 5:30 PM
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BG918 BG918 is offline
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Originally Posted by SirLucasTheGreat View Post
Here is a rendering of the Hines proposal for North Wynkoop.

I can't say that I find it to be an inspiring architectural achievement.
Here is another rendering from the article
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