DENVER | o2gygen | ft | 19 floors

[RyanD]

Originally Posted by bunt_q

I'm not saying what "should" be, I'm just telling you what is. Everybody who lives in Central Denver drives to Glendale Target to shop (to the point that it's a bad joke)

I'm part of that bad joke and it's stupid. Hopefully the 15th / Welton Target will lessen the sadness and horror of going to Glendale. Luckily the City Target moving forward.

[wong21fr]

Originally Posted by RyanD

I'm part of that bad joke and it's stupid. Hopefully the 15th / Welton Target will lessen the sadness and horror of going to Glendale. Luckily the City Target moving forward.

Spill it.

[RyanD]

Originally Posted by wong21fr

Spill it.

I'm not sure if I can disclose details because I don't know the 'confidentiality' of it. Doo doo doo

[bunt_q]

Worst kept secret in Denver history.

[mhays]

Got it, regarding the 7,000. Personally I don't count my chickens quite that freely, particularly with projects coming after a sizeable existing boom, though I'm one of the optimists in my local market (with a bit more than double the new unit count but similar percentage growth). It's unusual for 100% of planned units to all happen quickly, as even in the best market some will go haywire. The saving grace would be the Denver's quick/hidden entitlement process might mean some 2013 starts that the rest of us don't know about yet.

As for the Target, it's great to have one but in a few visits I haven't found what I wanted -- computers, juggling balls, and decent groceries. The groceries were almost entirely cheap packaged mass market brands.

[RyanD]

Originally Posted by mhays

Got it, regarding the 7,000. Personally I don't count my chickens quite that freely, particularly with projects coming after a sizeable existing boom, though I'm one of the optimists in my local market (with a bit more than double the new unit count but similar percentage growth). It's unusual for 100% of planned units to all happen quickly, as even in the best market some will go haywire. The saving grace would be the Denver's quick/hidden entitlement process might mean some 2013 starts that the rest of us don't know about yet.

As for the Target, it's great to have one but in a few visits I haven't found what I wanted -- computers, juggling balls, and decent groceries. The groceries were almost entirely cheap packaged mass market brands.

Going back to that list I posted, the 'proposed' section has shrunk and moved to U/C.. So I count my chickens pretty freely in this city lately..

17th Wewatta - 300
Alta City House - 280
29th and Huron - 296
Legacy 22nd - 212
22nd & Stout - 78
16M - 47

So really we have 5077 units under construction / recently completed.. It wouldn't surprise me if there were even more than 2000 additional units that are proposed / kicked off this year...

EDIT: 20th and Chestnut is set to kick off later this year as well as the 11th and Gaylord residences so that brings the total to 5545 units..

[wong21fr]

Originally Posted by mhays

Got it, regarding the 7,000. Personally I don't count my chickens quite that freely, particularly with projects coming after a sizeable existing boom, though I'm one of the optimists in my local market (with a bit more than double the new unit count but similar percentage growth). It's unusual for 100% of planned units to all happen quickly, as even in the best market some will go haywire. The saving grace would be the Denver's quick/hidden entitlement process might mean some 2013 starts that the rest of us don't know about yet.

Too be fair, that's a pretty conservative estimate in the table that RyanD posted. There are a bunch of other projects that are in the proposed category, but are more rumor than anything else. That conservatism is reflected in the fact that of the 14 projects that were listed as proposed, 5 have already broken ground this year. It's frankly amazing the amount of success we've had in this recent boom with announced residential projects actually ending up under construction.

[mhays]

Roger that. That is a good number. But locally, while some developers and financiers keep moving ahead, others point to the volume of construction as a reason to slow down.

Back to the positives: One factor in the boom may be a lot of projects that already have pre-bust land use permits and were mostly designed, so they can come back to life quickly.

[RyanD]

Originally Posted by mhays

Roger that. That is a good number. But locally, while some developers and financiers keep moving ahead, others point to the volume of construction as a reason to slow down.

Back to the positives: One factor in the boom may be a lot of projects that already have pre-bust land use permits and were mostly designed, so they can come back to life quickly.

I think it's a great wait and see era for Denver to see what all this development will do and how it will benefit our other office / condo markets as well.

I realized I really botched the title to this thread. It's all weird lowercase and it's supposed to be O2XYGEN. Hey mods can you fix this for me? Pretty please?

[bunt_q]

Originally Posted by RyanD

I think it's a great wait and see era for Denver to see what all this development will do and how it will benefit our other office / condo markets as well.

I realized I really botched the title to this thread. It's all weird lowercase and it's supposed to be O2XYGEN. Hey mods can you fix this for me? Pretty please?

Dear lord, something in the for-sale segment needs to shake loose soon. The available inventory right now is absurdly low. It's not even worth trying to buy right now - there's so little out there and the competition is fierce. My suburban (exurban) clients are ramping up, but if the last few years' building permit trends are any indication, the product they can offer isn't what we need right now.

[bunt_q]

As for over-building, I don't think we're terribly worried about that yet. Apartment construction is still below historical averages, even with all of this new construction, and not even taking into account a 4-year backlog when almost nothing new was built. What's different - and perhaps makes it look like more of a boom than it really is - is that Denver (most of it central Denver) is now capturing roughly two-thirds of metro area multifamily growth - 61% of metro building permits in 2012. Which is absurd (in a good way). Arapahoe County only issued something like 1,600 building permits - and half of those were multifamily. So either we're seeing a dramatic historical shift in building patterns, a still-screwy market, or more likely, both. The simple fact is, though, that folks still need a roof over their head, and folks are still moving here. So unless somebody else is going to start building, this rental boom is all we have at the moment, and it isn't really a "boom" at all.

EDIT: The fact that only 5,236 single family building permits were issued in metro Denver in 2012 - compared to 6,548 for multifamily - is another indicator that things are...odd. When you figure that metro population increased by ~35,000 over the same timeframe... we're not even keeping up right now. Hence the shortage of housing.

[RyanD]

I love charts and Ken does a great job making and posting said charts. So here's a good one showing exactly what you said Bunt!


http://denverinfill.com/blog/2013/01...ospective.html

And yes, agreed with needing 'for sale' development. I think Spire filled faster than they expected and it would be nice to see some condo high-rises that didn't have 'luxury' units or 'luxury' amenities. Then I'd be all about buying something.

[mhays]

I've made precisely the same arguments about Seattle, which has the same dynamic. But it still comes down to whether developers are confident looking into the future. Some are getting skittish.

Others are looking at improving fundamentals for hotels, offices, and condos, and slowing down or coming up with alternate concepts, even while apartments might continue to be viable.

[bunt_q]

I'd be happy if skittish rental developers decide to delve into for sale product. There are plenty of residential developers who aren't going to make the switch to commercial product, though.

If that were to happen - developers get skittish - my hope is to persuade suburban developers (who have tons of capital, but aren't entirely sure what to do with themselves right now) to take another look at the urban core. Certainly outside of their comfort zone, but still in the same general investment ballpark.

RyanD - I updated that chart and distributed it to my peeps. It needed Weld, Larimer, and El Paso counties to give a comprehensive look at what's happening on the Front Range. I was actually pleased to see that the same slow-down I see in Arapahoe County (as one example) is also holding true up in Weld.

[mhays]

Those who choose to pursue condos will probably wait until that market recovers....not supply/demand, but the much harder part: buyers being comfortable with presales, and lenders being comfortable with presales. My guess is those might start breaking ground in 12-18 months in Seattle and it sounds like Denver is similar. Until then, developers+partners need to self-finance. That's happening occasionally (we have one) but it's rare. New product in 2014 will probably be a few conversions, and even that might require a slackening of the rental market.

Those who can self-finance will make a killing. They can build with today's development costs but charge 2014 or 2015 sale prices, which might easily be a 10-20% difference. And they'll have very little competition.

PS, on the commuting/traffic point: Yes reverse commutes are common. But if many current car commuters turn into pedestrian commuters, that might more than offset the increase in outbound car commuters, even if the transit mode share is similar before and after. Also, the peak outbound commute time (leaving around 7:15 perhaps) will be a bit different from the peak inbound time (7:45). Downtown traffic at 7:15 is probably a fair bit more open. Combine all that, and 7:45 might have a net decrease in traffic demand.