Posted: November 01, 2013
Real estate: A tale of five cities
From Denver to Durango, new projects signal developers’ renewed confidenceBy Mike Taylor
Following the collapse that began in 2007, Colorado’s residential real estate market has come roaring back, fueled by low interest rates, limited inventory coupled with buyer demand, and a gradually improving economy. Meanwhile, the commercial sector is at least on the mend, as evidenced by the redevelopment of Union Station in Lower Downtown Denver and other large-scale, transit-oriented developments spurred by light rail connections.
According to the Colorado Association of Realtors, the median sales price for a single-family home across the state was up 8.8 percent – to $260,000 – in the second quarter of 2013 compared to the same period a year earlier. Similarly, the price for townhouse-condo properties statewide was up 9.7 percent, to $170,000, in the second quarter.
But real estate is fundamentally local; what holds true for Denver might not apply to Durango. With that in mind, we went local with this issue’s Quarterly Real Estate Report, highlighting key developments along with overviews of five areas: Denver, Boulder, Colorado Springs and Fort Collins along the Front Range; and Durango in the Southwest.
These five snapshots provide a glimpse of what’s taking shape across the state as developers respond to pent-up demand and apply their vision to the Colorado landscape.
— Mike Taylor
Denver development extends from future transit stations
Transit-oriented development is the big news on Denver’s real estate scene, with the redevelopment of historic Union Station considered the mother of all TODs.
When completed, Union Station and the 19.5 surrounding acres will be transformed into a transportation hub that includes commuter rail to north Denver metropolitan communities and Denver International Airport, Amtrak, bus service, and taxi and limousine services.
“Transportation alternatives are enormously important for the futures of our cities, and historic preservation is very important for the future of our cities,” said Dana Crawford, a longtime developer who is on the team redeveloping the old train station. “This is a coming-together of two very important urban assets.”
The historic building itself will include more than 22,000 square feet of retail space and a 112-room hotel; while the new Union Station neighborhood will include commercial, retail and residential add-ons to boot, thanks to a public-private partnership between the City of Denver, Regional Transportation District and master developers Continuum Partners and East West Partners.
“We’re coming in on time and on budget,” managing partner at East West Partners, Chris Frampton, said of the $480 million project. “We’re looking at about 700,000 square feet of new office space and 2,000 new apartment homes. Good things happen in good markets.”
Frampton called the 16th Street Mall the “spine of downtown Denver,” and added his assertion it is “the best public space in the country,” listing off competitors such as Rodeo Drive and Madison Avenue. In addition, 17th Street will become a new public gathering place with “an outdoor waiting room set with gardens and cafés, bridging transit, retail, offices, hospitality and residential users all together in one place,” Frampton said.
The build-out projects and RTD additions are scheduled for completion in 2016.
Excitement surrounding the transit hub has prompted several companies to stake claims and prime office space in the surrounding area. IMA Financial Group and Antero Resources are building new headquarters just blocks from their existing locations in Lower Downtown, and DaVita Inc. opened its new headquarters near Union Station last year after relocating from Los Angeles.
Denver Union Station may be the centerpiece of RTD’s FasTracks expansion program, but other stops along the line also are seeing a flurry of activity.
Front Range Land and Development Co. has plans for 2.2 million square feet of office space, 1,800 residential units, two hotels and 300,000 square feet of walkable retail space at its 42-acre site at Belleview Station.
The first 653-unit apartment complex is already underway, and Denver developer Prime West earlier this year announced plans to complete the first 340,000-square-foot office building at the Belleview station site.
“It’s clearly the best location in southeast Denver for a corporate relocation or expansion,” said Stephen Clarke, president and CEO of Prime West. “We’re still seeking an anchor tenant. We have several interested parties.”
With the frenzy of activity surrounding FasTracks, one Denver-based nonprofit wants to ensure there is ample work-force housing near stations. Since 2007, the Urban Land Conservancy (ULC) has completed 19 transactions, eight of which are using Denver’s $15 million Transit-Oriented Development Fund. The fund was created to preserve and develop affordable housing around bus and train depots.
ULC and Medici Communities LLC recently opened the $12.3 million Evans Station Lofts, bringing 50 affordable housing units to the Evans Light Rail Station TOD.
Denver’s residential market is also vibrant, with the number of homes sold in August up 20.3 percent compared to the same month a year ago, according to an analysis of Metrolist data by independent real estate consultant Gary Bauer. The $287,000 median price for a home in Denver is up 9.5 percent compared to last year. The number of homes on the market also is beginning to stabilize at around 10,500 units.
“At our low we were at 6,600 units,” Bauer said. “Now we’re able to meet buyer demand, which is still strong. Do homes come on the market and go under contract within a day? Yes, but before it was within hours.”
— Margaret Jackson
With growth management restrictions, Boulder bets on
With Boulder’s economy pumped up by high-tech companies and startups coming out of the University of Colorado, developers are snatching up infill property in an effort to capitalize on the flurry of activity.
A low vacancy rate and Boulder’s stringent growth-management policies make it difficult for companies to find office space within city limits, so they often look to other areas within the county. While Rally Software recently announced plans to add 89,000 square feet to its headquarters, Ball Aerospace is leasing 48,000 square feet at Lafayette Corporate Campus and Medtronic surgical navigation systems is leasing 41,000 square feet at Colorado Technology Center in Louisville.
“There’s a lot of publicly owned land on the outskirts of Boulder, so there’s no way to go outward,” said Steve Kawulok, managing director of Sperry Van Ness/The Commercial Group. “The activity in Boulder is mostly around redevelopment.”
One of the most high-profile projects is the redevelopment of the old Boulder Daily Camera building at 11th and Pearl streets. Denver-based Nichols Partnership paid $13.5 million for the site, to be called West Pearl, in November that will add 46,000 square feet of offices, 15,000 square feet of public landscaped rooftop, three levels of structured parking and a movie theater below grade. Retail and restaurant space will be added at street level and offices will occupy the top three floors.
“Office space will appeal to creative, tech-based companies including startups,” said Dan Schuetz, project manager.
Among the biggest projects proposed in Boulder is a 400-seat amphitheater and a pair of four-story office buildings totaling 202,500 square feet, and 6,000 square feet of retail space in addition to the offices at 30th and Pearl streets. The project also includes a 120-room hotel. Pearl Place Associates LLC, formed by principals of Denver-based Brickstone Partners and Forum Real Estate Group, paid $11.2 million for three parcels in July and has a fourth under contract.
Nearby, another major project is taking shape. Depot Square, in the heart of Boulder Junction, includes an underground Regional Transportation District bus station and a 400-vehicle parking structure wrapped by 71 affordable housing units slated for delivery by the first quarter of 2015. Pedersen Development Co. is also working on a 150-room Hyatt Place Hotel on the site and renovating the historic train depot the city relocated to the property several years ago.
Mike Taylor is the managing editor of ColoradoBiz. He writes about small-business money issues and how startups are launched. Email him at email@example.com.