Posted: December 22, 2009
Who Owns Colorado: Lag of Luxury
High-end condos have become a tough sell for most developers in metro DenverDavid Lewis
When in November the Residences at the Ritz-Carlton fell into receivership, it came as a blow where it hurts to high-end Colorado real estate and to all that represents goodness, purity and unthinkable levels of luxury.
After all, we're talking about the Ritz, as in: "The Diamond as Big as the Ritz,"F. Scott Fitzgerald, 1922; "Puttin' on the Ritz,"Irving Berlin, 1929; "From the Ritz to the Rubble,"Arctic Monkeys, 2005.
Cesar Ritz built the first Ritz Hotel in 1898, hiring master chef George August Escoffier, sleeping in each room to test the quality of the mattresses, and turning his family name into a noun, a verb and an adjective.
So much for history. The Big Recession, or whatever posterity ends up naming it, has made luxury into more of a swearword than a byword. Hardly anybody can afford it, it seems. On the other hand, that would seem to make luxury living today something really, really exclusive.
The condo market is "tough, very tough," says Jan Nelsen, broker and owner of Denver-based Kentwood City Properties. "If you want to sell you're really going to have to be
desirable in terms of an incredible value. There are not a lot of $1 million sales downtown right now, or anywhere. Even Cherry Creek has experienced the same thing."
"It has been a worldwide phenomenon, that the luxury market had held out and then softened," says Brian Kincade, Realtor with Cherry Creek Professionals Realty. "If sellers aren't willing to lower their price they pretty much have to suck it up until the market makes a turn."
After selling but one penthouse unit prior to foreclosure, the Residences at the Ritz-Carlton is undergoing a $1 million renewal under the supervision of receiver Todd Smith and lender Goldman Sachs.
Ironic, isn't it?
Also in process is a sales and marketing makeover.
"We put together a sales and marketing plan really in an effort to reintroduce the product to the market. Now that things are reshaping and taking form we have created a new program and look and feel," said Orlando, Fla.-based sales and marketing consultant Tina Necrason. "We have everything from a dedicated on-site sales staff that specifically focuses only on this project. We've created our sales process around the Ritz-Carlton experience. We have our database going. We have new collateral," and so on.
The Residences at the Ritz-Carlton receivership might have marked a low point. It also is an object lesson in the importance of a couple of vital clichés: "location, location, location"- the R-C sits across from Denver's Greyhound Station - and "adapt or die"- condos there first started at $825,000 to $4.6 million and now range from $500,000 to $3 million.
We must point out, however, that elsewhere the success of Denver's luxury condo market is more mixed, perhaps a glass half-full.
Take for instance NorthCreek, a mixed-use project with 48 residences whose "tower residences" range in price from $1.28 million to $3.255 million. Nonetheless, Denver-based Western Development Group has sold 16 of those condos partly on the strength of NorthCreek's superior fit and finish, says Western Development partner Roy Kline, partly because of its Cherry Creek North location.
"We selected the site so that if in fact we had to weather a storm economically, this area would weather it best. Unfortunately we're in the middle of a storm, but we're doing pretty well compared to the rest of the world."
NorthCreek's relative sales success also has to do with adaptability. "We were trying to sell more core-and-shell units, but that market has kind of dried up, so we decided to finish more units. We finally finished those this summer, so we haven't been that long on the market," Kline says.
"We haven't had a whole lot of activity lately, but the good news is we're completed; we are done," he adds.
Then there's the example of the Residences at the Ritz-Carlton's cross-town rival, SPIRE.
Location: a block from the Denver Center for the Performing Arts. Adaptability: a spectrum of condo price points from the low $100,000s to $1.1 million, plus low monthly fees.
"That was always our strategy with SPIRE, says Chris Crosby, executive vice president developer the Nichols Partnership. "It was always to be first and foremost attainable. We wanted to make sure we could deliver a price point where we felt like there was the strongest demand. We're filling from the bottom up."
Four Seasons Private Residences Denver, with prices from $895,000 to $10 million, since summer has sold half its 102 units.
Location, location has much to do with that. "We are literally kitty-corner from the Denver Center for the Performing Arts," notes spokesman Christopher Norton.
Unlike others, Four Seasons residences has not reduced its sales prices. This proves that luxury is not passe, Norton says.
"Four Seasons is a unique company, a hotelier that doesn't do anything else," he argues. "People who are continuing to buy in this market actually are buying life in a residence with a Four Seasons hotel and all the service that comes along with that. It becomes less about square footage and a nice kitchen and more about very personalized service."
LOCATION: 891 14TH ST., DENVER
DEVELOPER: NICHOLS PARTNERSHIP INC.
PHONE: (720) 457 7550; (303) 291-2200
SIZE: 37,500 SQUARE FEET (FOOTPRINT); 42 STORIES
PROJECT TYPE: MIXED USE
COMMERCIAL SQUARE FOOTAGE: ABOUT 9,000 SQUARE FEET: 7,633 SQUARE FEET OF RETAIL PLUS A 1,400-SQUARE-FOOT MANAGEMENT OFFICE
GROUNDBREAKING: MAY 2007
BUILD-OUT: DECEMBER 2009
SPIRE retail includes Hertz Rent-a-Car, Revolution Cleaners, plus two restaurants and a coffee shop as yet unannounced. The development comprises 496 condominiums, of which 493 were intended for sale (the remaining two are a guest suite and a unit reserved for the building engineer). More than 100 have been sold. As of this writing, Crosby said the complex is averaging $1.2 million per week in sales. Fifty-nine percent of units are one bedroom; 39 percent are two bedroom; and two percent are three bedroom. Prices range from low $100,000s to $1.1 million. Two-bedroom models start at about $270,000; 60 percent of the total are under $400,000. "That's where we've had a lot of traction," Crosby says.
FOUR SEASONS PRIVATE RESIDENCES DENVER
LOCATION: 1133 14TH ST., DENVER
DEVELOPER: 1111 TOWER LLC
WEB SITE: WWW.TOWERPRIVATERESIDENCES.COM
PHONE: (720) 946-3939
SIZE: 353,153 SQUARE FEET, RESIDENTIAL; 824,349 SQUARE FEET, TOTAL BUILDING
PROJECT TYPE: HOTEL/RESIDENTIAL
COMMERCIAL SQUARE FOOTAGE: NONE (IN THE RESIDENCES' AREA)
BUILD-OUT: LATE SUMMER 2010
GROUNDBREAKING: OCTOBER 2007
Four Seasons Private Residences consists of 102 luxury private residences ranging from the 964-square-foot, one-bedroom (one remains at $895,000) unit to the 6,100-square-foot penthouse, which sold for $10 million. Amenities include a 1,650-square-foot residential fitness center on the 17th floor and a 5,379-square-foot residential lobby area with separate entrance, elevators and concierge desk.
THE RESIDENCES AT THE RITZ-CARLTON, DENVER
LOCATION: 1891 CURTIS ST., DENVER
DEVELOPER: CJS RESIDENTIAL (ORIGINAL DEVELOPMENT);
TODD SMITH, RECEIVER
PHONE: (877) 614-8139
PROJECT TYPE: MIXED USE
The Residences at the Ritz-Carlton entered receivership in November on behalf of lender Goldman Sachs. Since then, the receiver has begun a $1 million upgrade. The residences consist of residential units, plus Elway's Downtown Steakhouse restaurant. The first eight units are complete, with 25 units planned in all. One has sold. The residences are located on floors 15 through 19 above the Ritz-Carlton Hotel. They range from 1,143 square feet to 5,561 square feet, while prices range from $500,000
to $3 million. Previous pricing ranged from $825,000 to $4.6 million. Sizes range from: one bedroom, about 1,143 square feet to 1,859 square feet; two bedroom, about 1,960 square feet to 3,115 square feet; three bedroom, about 3,490 square feet; penthouse bi-level, about 3,438 square feet; and penthouse, about 4,495 square feet to 5,561 square feet.
LOCATION: 1610 LITTLE RAVEN ST.
DEVELOPER: EAST WEST PARTNERS
PHONE: (303) 623-1500
SIZE: 25 ACRES
PROJECT TYPE: MASTER PLANNED RESIDENTIAL COMMUNITY WITH RETAIL
GROUNDBREAKING: JUNE 2000
BUILD-OUT: FIRST THREE BUILDINGS COMPLETED IN 2000
Riverfront Park includes 11 completed buildings comprising about 800 units. Condominiums range from a 600-square-foot studio to 4,500 brownstone lofts. Condominium values range from $200,000 to $2.5 million. The development is located on Commons Park across from the 16th Street Millennium Bridge. Four remaining developer residences remain in The Park at One building, priced from the $800,000s to $1 million, ranging from 1,800 square feet to 2,000 square feet. Retail includes Zengo Denver restaurant, McLoughlin's Restaurant and Bar, Community Banks of Colorado, Esquire Fabricare dry cleaners, and the Little Raven Wine Shop.
LOCATION: 100 DETROIT ST.
DEVELOPER: DENVER-BASED WESTERN DEVELOPMENT GROUP LLC
PHONE: (303) 270-0101
SIZE: ONE CITY BLOCK OR ABOUT 100,000 SQUARE FEET
PROJECT TYPE: MIXED-USE
COMMERCIAL SQUARE FOOTAGE: ABOUT 40,000 SQUARE FEET
BUILD-OUT: NOVEMBER 2009
NorthCreek contains 48 residential units over retail including Hermes, Chase bank and the NorthFace. Condos run from 1,400 square feet to 11,000 square feet at a cost of about $700 per square foot.
THE PINNACLE AT CITY PARK SOUTH
LOCATION: 17TH AVE. AND FILLMORE STREET
DEVELOPER: OPUS NWR DEVELOPMENT LLC
PHONE: (303) 333-1200
SIZE: 2.3 ACRES
PROJECT TYPE: RESIDENTIAL
COMMERCIAL SQUARE FOOTAGE: NONE
GROUNDBREAKING: MARCH 2006
The Pinnacle includes two high-rise towers. Tower One is 27 stories tall, featuring a two-story lobby, and 142 residential condominiums ranging in size from 940 square feet to 4,646 square feet, and priced from the mid-$200s to over $2.5 million. The second, 22-story tower includes 108 units ranging in size from 826 square feet to 4,092 square feet, and in price from the mid-$200,000s to more than $1.9 million. Amenities include a seventh-floor, open-air garden terrace with a barbecue area and fire pit; wine lockers and a wine tasting room; fitness center and sauna; two "owner's club" rooms; a media room and business center; private parking; and full-time, on-site staff.
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