DENVER | Main Development Thread #7

[Sam Hill]

I fear we may not have enough projects in the pipeline and could be in for more skyrocketing rents.

The third quarter apartment scene: Vacancies down, rents up in metro Denver

The average vacancy rate fell to 4.7 in the third quarter, just under 1 percent less than in the same quarter last year. It was the lowest vacancy rate across the Denver area since the second quarter of 2015, according to the results of the survey conducted for the association by the University of Denver’s Daniels College of Business and Colorado Economic and Management Associates.

In a statement accompanying the release of the survey results, Terrance Hunt, vice chair Newmark Knight Frank Multifamily’s Denver office, said corporate moves to the area increased demand for apartments. Meanwhile, he said, the number of building permits decreased 24 percent in the past year.

“It does create a concern that the lack of future deliveries (of completed buildings) combined with already low vacancy will put upward pressure on rents,” Hunt said.

[twister244]

Originally Posted by Sam Hill

I fear we may not have enough projects in the pipeline and could be in for more skyrocketing rents.

The third quarter apartment scene: Vacancies down, rents up in metro Denver

Wow, that's pretty interesting. It's interesting as everyone keeps expecting the bottom to fall out in the economy, yet here we are......

Not saying a recession won't happen, but I'm still waiting for that initial spark to show itself. Part of me thought it might start in the tech startup arena with the WeWork disaster showing that some of these companies are not profitable and a correction is imminent. But.... not all companies are created equal. Some tech companies are losing money like crazy (I'm looking at your Bird/Lime). But other companies are showing profits and beating expectations (Tesla's latest results).

It's great to see so many condo projects coming into the city, but if vacancy rates are going back down... then things really aren't improving on the imbalance side.

[SirLucasTheGreat]

Originally Posted by twister244

Wow, that's pretty interesting. It's interesting as everyone keeps expecting the bottom to fall out in the economy, yet here we are......

Not saying a recession won't happen, but I'm still waiting for that initial spark to show itself. Part of me thought it might start in the tech startup arena with the WeWork disaster showing that some of these companies are not profitable and a correction is imminent. But.... not all companies are created equal. Some tech companies are losing money like crazy (I'm looking at your Bird/Lime). But other companies are showing profits and beating expectations (Tesla's latest results).

It's great to see so many condo projects coming into the city, but if vacancy rates are going back down... then things really aren't improving on the imbalance side.

I'm interested to see if more residential projects break ground soon with news of this sort. My understanding is that Denver expanded its apartment inventory by a larger percentage in 2018 than any other major US city. However, it really does not seem like many significant projects have broken ground in 2019.

[TakeFive]

Originally Posted by Sam Hill

I fear we may not have enough projects in the pipeline and could be in for more skyrocketing rents.

The third quarter apartment scene: Vacancies down, rents up in metro Denver

I think most of this is tied to the suburbs. There was was a slew of projects several years ago and then they dropped off to a trickle. There's a few scattered around but still not very much in the suburbs.

The supply in downtown feels more balanced. Just the same it's still good news for more groundbreakings.

[Sam Hill]

Originally Posted by TakeFive

I think most of this is tied to the suburbs. There was was a slew of projects several years ago and then they dropped off to a trickle. There's a few scattered around but still not very much in the suburbs.

The supply in downtown feels more balanced. Just the same it's still good news for more groundbreakings.

If you don't live here, I don't know how you can think you know any of this. The suburbs are booming hard everywhere I look. What trickle? A 24‰ decrease in new permits is not a trickle. You're making wild guesses.

[laniroj]

Originally Posted by Sam Hill

If you don't live here, I don't know how you can think you know any of this. The suburbs are booming hard everywhere I look. What trickle? A 24‰ decrease in new permits is not a trickle. You're making wild guesses.

I'll make a wild guess: we don't have enough residential zoning! My company has capacity for probably 500 units a year in 2-3 projects. We can barely find enough land to support half that. So, we dabble in annexation and rezonings, many of which fail and the successful ones take years. I keep saying it...if we want housing affordability, we need more medium and high density zoning everywhere, not just Denver where land costs $100/sf+ MINIMUM out of the core, $200/sf+ in the central core.

Our company's issue is not unique. Everyone we know has ample capital sitting around doing literally nothing because it doesn't want to chase a 5% return on cost for core development projects - risk reward isn't there. Our suburbs need to step up and proactively rezone large swaths of land for medium and higher density development. I'm still fine with SFH, but for crying out loud we need stronger leaders everywhere who will stand up to SFH owners afraid of ANY change! A project that will be super interesting is the one at Colorado and Evans. 5 to 12 story zoning change is proposed with partial intent being to create a more interesting building design while maintaining the same density as the current 5-story zoning. Not to mention, it's a TOD site on a major arterial with ample amenities within walking distance. It's also next to a bunch of old SFH. I'll be following that one closely.

[CherryCreek]

Originally Posted by laniroj

I'll make a wild guess: we don't have enough residential zoning! My company has capacity for probably 500 units a year in 2-3 projects. We can barely find enough land to support half that. So, we dabble in annexation and rezonings, many of which fail and the successful ones take years. I keep saying it...if we want housing affordability, we need more medium and high density zoning everywhere, not just Denver where land costs $100/sf+ MINIMUM out of the core, $200/sf+ in the central core.

Our company's issue is not unique. Everyone we know has ample capital sitting around doing literally nothing because it doesn't want to chase a 5% return on cost for core development projects - risk reward isn't there. Our suburbs need to step up and proactively rezone large swaths of land for medium and higher density development. I'm still fine with SFH, but for crying out loud we need stronger leaders everywhere who will stand up to SFH owners afraid of ANY change! A project that will be super interesting is the one at Colorado and Evans. 5 to 12 story zoning change is proposed with partial intent being to create a more interesting building design while maintaining the same density as the current 5-story zoning. Not to mention, it's a TOD site on a major arterial with ample amenities within walking distance. It's also next to a bunch of old SFH. I'll be following that one closely.

Very interesting feed back. Obviously, TONS has been, and will continue to be built in the core (RiNO, Golden Triangle, and adjacent areas), but it's sounds like it isn't happening nearly as much outside of that. Where ELSE should additional density go (other than areas named above), whether in Denver, or nearby areas?

My thoughts -

* Cap Hill - if you can get the land bankers to actually sell/develop some of the remaining open parcels.

* Evans/South Colorado Blvd. Some room for density there, especially if you allow midrises.

* Bellevue Station (some is already happening)

* Broadway Station (a lot is already happening).

I'm afraid the suburbs are all a blank slate to me, not sure where prime areas for additional density are.

[SirLucasTheGreat]

Originally Posted by CherryCreek

Very interesting feed back. Obviously, TONS has been, and will continue to be built in the core (RiNO, Golden Triangle, and adjacent areas), but it's sounds like it isn't happening nearly as much outside of that. Where ELSE should additional density go (other than areas named above), whether in Denver, or nearby areas?

My thoughts -

* Cap Hill - if you can get the land bankers to actually sell/develop some of the remaining open parcels.

* Evans/South Colorado Blvd. Some room for density there, especially if you allow midrises.

* Bellevue Station (some is already happening)

* Broadway Station (a lot is already happening).

I'm afraid the suburbs are all a blank slate to me, not sure where prime areas for additional density are.

There's going to be a lot of development in Lone Tree near the new light rail extension. I think Shea Homes is all on that though from a residential standpoint.

[SirLucasTheGreat]

Denver Post had an interesting and non-pay walled article regarding the decreasing residential construction. https://www.denverpost.com/2019/10/2...-construction/

Here are a few of the interesting statistics that I took away from the article:

1. Permits for new projects have declined by 24% compared to the prior year,

2. Cost of land has risen from $150 per square foot in 2015 to $250 per square foot in 2018, and

3. Delivery of new apartments over the past twelve months was at a three-year low (and will likely continue to fall due to the 24% decrease in permits).

Wouldn't the decrease in construction activity cause the price of some of the costs to go down as well? Not saying that we will see $150 per square foot again but I imagine there will be an equilibrium.

[Agent Orange]

It’s interesting how in a famously "capitalist" economy, urban land use is an extremely top-down, centrally planned sector. We take the institution of zoning as a given nowadays, but when you zoom out a bit, there seems to be a lot of hubris in the idea that city planners know best how each parcel in a 153 square mile city ought best to be used. But it wasn’t always this way. Until the mid-20th century or so (depends on the city), the city planner’s job was primarily to lay out streets and set aside land for schools, government buildings, parks and other amenities. What was built on the blocks they laid out, how dense, what types of use, etc. were determined by land owners and developers. And it seems to have worked pretty well, creating neighborhoods which are full of character, are highly walkable, have integrated retail, and a multitude of housing types facilitating a rich diversity of incomes and households that no central planner could come close to replicating.

So, while it’s not politically feasible, this “where should density go” question leads me to a thought experiment: where would density naturally go if we somehow resurrected early 20th century land use regulation? My assumption would be:

• Intense density anywhere within a 45 minute walk / 3 miles or so from the CBD/Union Station
• Moderate density throughout currently SFH-dominated neighborhoods within the city’s pre-1920 core
• Moderate density along most rail lines, especially the stops closer to downtown and the tech center, and also those on the A due to easy access to both downtown and the airport
• Moderate to intense density near major Tech Center nodes and other employment centers such as hospitals, universities, office clusters like Broomfield
• Increased density ringing larger parks (Sloans, City, Cheesman, Wash)—wouldn’t mind seeing more midrises like those on the east side of Cheesman
• Potentially more density atop high points and ridges which afford good views of the Front Range or the city

Instead, today’s planners have to put “density” near a handful of transit stations designated as TODs and in industrial, not-long-ago-abandoned warehouse districts where there are no or few SFH homeowners to raise a fuss. It's the political reality at the moment, but it's fun to imagine how interesting (and affordable) Denver could be if history hadn't played out this way.

[BG918]

Originally Posted by CherryCreek

Very interesting feed back. Obviously, TONS has been, and will continue to be built in the core (RiNO, Golden Triangle, and adjacent areas), but it's sounds like it isn't happening nearly as much outside of that. Where ELSE should additional density go (other than areas named above), whether in Denver, or nearby areas?

My thoughts -

* Cap Hill - if you can get the land bankers to actually sell/develop some of the remaining open parcels.

* Evans/South Colorado Blvd. Some room for density there, especially if you allow midrises.

* Bellevue Station (some is already happening)

* Broadway Station (a lot is already happening).

I'm afraid the suburbs are all a blank slate to me, not sure where prime areas for additional density are.

We're starting to see more new development in Cap Hill, especially along Grant and Logan. The Modera projects and the Capitol Square affordable housing project are adding more density. Still lots of parking lots left in the western section of Cap Hill that could be redeveloped.

Golden Triangle still has more room to develop highrises which is pretty much all of the new proposals in that area.

Interesting article about a new project proposed for Colorado/Evans: https://denverite.com/2019/10/23/dev...versity-hills/ I think this area could blow up, lots of room for more density around Colorado Station. They are working on a rezoning of this area which should accelerate that.

Completely agree on Alameda/Broadway Station and Belleview Station, major redevelopments planned or under construction in those areas. Especially closer to Alameda Station where the Broadway Marketplace strip mall will eventually be a thing of the past.

I think you can also add 41st & Fox to the list, that will be a hot spot. And Central Park Station in Stapleton.

[jhwk]

Originally Posted by Agent Orange

...And it seems to have worked pretty well, creating neighborhoods which are full of character, are highly walkable, have integrated retail, and a multitude of housing types facilitating a rich diversity of incomes and households that no central planner could come close to replicating. ...
It's the political reality at the moment, but it's fun to imagine how interesting (and affordable) Denver could be if history hadn't played out this way.

Getting deep into this topic can (and does!) fill urban planning textbooks - but other than zoning, which is not just a modernist economic central planning idea but is entwined with racial and class segregation, during the same time period nearly every American bought a car. Oil prices were low and there were massive federal road building subsidies. I believe that the dense development you describe would have declined without any zoning or central urban planning at all.

While many have sounded the alarm for a long time that low density car-oriented suburban and edge-city style planning is not sustainable, we are still fighting to create policy to effectively allow the type of development you describe to take place.

[TakeFive]

Originally Posted by Sam Hill

If you don't live here, I don't know how you can think you know any of this. The suburbs are booming hard everywhere I look. What trickle? A 24‰ decrease in new permits is not a trickle. You're making wild guesses.

I suspect we're thinking of different things.

With respect to the apartment survey it used to be they counted projects of 50 or more units; not sure if that's still the case or not.

My focus goes more to projects that are 200 units or more. The chances are much less that I'd catch projects that are less than 100 units. Chances are I haven't caught everything buy I have posted some suburban projects on the Front Range Development thread. Outside of Lone Tree I haven't paid much attention to DougCo although I know there has been apartment construction at Castle Rock. Same for Boulder Co. where there's been a number of apartment projects along U.S. 36 but I don't really pay attention to those either.

I'm currently aware of Brickhouse At Lamar Station which is a 300-unit project and there's a couple of projects in the vicinity of Pena Station but that's all I can think of off the top of my head that are currently under construction. If there's projects that I'm unaware of (very possible) then I'd love to learn about them.

There's a mixed moderate density project in Arvada near the northwest corner of Ridge Road and Quail Street that's been approved but still in planning phase. Actually, there's a number of things in planning.

[TakeFive]

Originally Posted by laniroj

I'll make a wild guess: we don't have enough residential zoning!

Our suburbs need to step up and proactively rezone large swaths of land for medium and higher density development.

You bring up a great point I hadn't really considered. In hindsight I suspect developers grabbed most of the available suburban land zoned for apartments starting in about 2012. I know that both Lennar and Camden as well as others built suburban projects before they came to downtown Denver. Speaking of Camden they've started Phase Two for what must be a 1,000-unit site along Mayo Blvd (Phx); they've got all these four-story, what I assume are elevator cores sticking up in various place which looks quite funny.

I have to agree that at this point, suburbs need to allow more area for more density.

[TakeFive]

Originally Posted by twister244

But.... not all companies are created equal. Some tech companies are losing money like crazy (I'm looking at your Bird/Lime). But other companies are showing profits and beating expectations (Tesla's latest results).

It's great to see so many condo projects coming into the city, but if vacancy rates are going back down... then things really aren't improving on the imbalance side.

Tesla is the classic "Short Squeeze."

https://www.reuters.com/article/us-t...-idUSKBN1X31NG

Tesla late on Wednesday reported a quarterly profit, citing improvements in operating efficiency and a reduction in manufacturing and material costs. The strong report unleashed a bloodbath on traders shorting Tesla, the second most shorted U.S. company, after Apple Inc (AAPL.O), in terms of the overall amount of money shorted.

Short sellers, in effect, "sell" shares they don't own with a promise to buy them back later. If they "sell" shares at say $100 they hope to buy those shares back later for say $50. If the stock 'pops' on good news to say $150 then short sellers are left scrambling to "cover their shorts" having lost 50% of their investment (which could get worse).

[Agent Orange]

Originally Posted by jhwk

I believe that the dense development you describe would have declined without any zoning or central urban planning at all.

That's true, city living was on the decline for several decades in most of the US. I do think, though, that a few neighborhoods would have infilled a bit during the 70s-90s. Look at all the Cap Hill/Cheesman buildings built during the 60s while the suburbs were simultaneously booming. But you're right, most neighborhoods would have stagnated until the 90s when urban living began to make a comeback. Sans zoning, I think we would have started to see good momentum for densification 25 years ago and a significant amount during the present boom and the last cycle as well (early-mid aughts).

And of course I agree that there's far more to the story with zoning, redlining, FHA loan criteria etc that brought us to where we are. It'll take us longer to get out of this mess than it took to get into it.

[Sam Hill]

Originally Posted by TakeFive

I suspect we're thinking of different things.

With respect to the apartment survey it used to be they counted projects of 50 or more units; not sure if that's still the case or not.

My focus goes more to projects that are 200 units or more. The chances are much less that I'd catch projects that are less than 100 units. Chances are I haven't caught everything buy I have posted some suburban projects on the Front Range Development thread. Outside of Lone Tree I haven't paid much attention to DougCo although I know there has been apartment construction at Castle Rock. Same for Boulder Co. where there's been a number of apartment projects along U.S. 36 but I don't really pay attention to those either.

I'm currently aware of Brickhouse At Lamar Station which is a 300-unit project and there's a couple of projects in the vicinity of Pena Station but that's all I can think of off the top of my head that are currently under construction. If there's projects that I'm unaware of (very possible) then I'd love to learn about them.

There's a mixed moderate density project in Arvada near the northwest corner of Ridge Road and Quail Street that's been approved but still in planning phase. Actually, there's a number of things in planning.

Never mind me. I was all cranky and suffering from insomnia in the middle of the night when I wrote that. For some reason your post annoyed me at the time, but going back and reading it now, it seems fine. LOL

[CherryCreek]

It's look like someone took their SimCity hobby a little too far, and submitted a development plan for someone else's property in FivePoints!!

Okay guys, fess up. I bet it is one of you!


https://www.bizjournals.com/denver/n...ashington.html

[Sam Hill]

It was me. And now the owners say they want exactly one kazillion dollars for the property. Damnit!

[tommyboy733]

El Jebel facelift:


[IMG]IMG_20191025_111220438_HDR by Tom Conley, on Flickr[/IMG]

Block 162:

[IMG]IMG_20191025_123724342_HDR by Tom Conley, on Flickr[/IMG]

15th & South Hotel. The ground level and street presence are nice with good materials, landscaping, and the restaurant on the corner, despite the bulk above.

[IMG]IMG_20191025_124107667_HDR by Tom Conley, on Flickr[/IMG]

BONUS (pikes peak at far left):

[IMG]707 (43) by Tom Conley, on Flickr[/IMG]