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Page 6 — COLORADO REAL ESTATE JOURNAL — June 17-June 30, 2015
Greater Denver
see some of the action,” said Fine.
There also will be a little more
than 5,000 square feet of ballroom
space and meeting rooms for
business gatherings, weddings
and other events.
Additional amenities include
a swimming pool with floor-to-
ceiling glass that can be opened
to the outdoors, a fitness center
and two levels of underground
parking.
Alliance Construction Solu-
tions is the contractor.
The Hilton Garden Inn – Den-
ver Union Station will be in com-
pany of other new, “boutiquey”
hotels in the Union Station neigh-
borhood, including the Craw-
ford, and planned Kimpton and
Indigo hotels.
Focus Property Group isn’t
bothered by the new supply
because of Denver’s strength
at absorbing additional guest
rooms.
“We just have, historically,
high occupancy. The funda-
mentals of Denver are very
strong. I think Denver could
use and really needs additional
hotel rooms,” said Fine.
“We are very excited for our
development and very bullish
on it. We really like the neighbor-
hood because it has this ‘boutiqu-
ey,’ unique feel,” he said, adding
there are travelers who want to
stay in that type of location and
also be able to accumulate their
Hilton loyalty rewards points.
“We’ve been investing in down-
town Denver and this neighbor-
hood for years, and we’re really
excited about our development
and all the other developments
because, while we’re all competi-
tors, we all need to develop great
product to make the neighbor-
hood the great neighborhood it’s
going to be. I think Union Station
is shaping up to be Denverʼs most
exciting few blocks,” Fine said.s
cago and other cities,” Hellman
said.
In Denver, however, other than
RedPeak, he said he primarily
is seeing “institutionlike” buyers
picking up the small stuff, rath-
er than the classic institutional
investors.
“We are seeing more people
coming here from both coasts
than we ever have,” Hellman
said.
New investors interested in the
smaller properties include fam-
ily offices, wealthy individuals
and syndicators that raise money
from qualified investors, he said.
Many investors from the East
andWest coasts are coming out of
1031 sales and think Denver has
more upside than if they invested
in properties in their backyards,
he said.
RedPeak, however, is the per-
fect buyer of small properties.
“Basically, they plan to own
their properties forever,” Hell-
man said.
“Like I’ve said before, it’s
almost impossible to overpay for
a building in a great, walkable
neighborhood like Capitol Hill,
especially if you plan to own it
for the long term,” Hellman said.
That is because renters who
can’t afford to pay $3 or more
per square foot for the newest
buildings opening in downtown
and nearby neighborhoods will
always find better deals in exist-
ing buildings in places like Capi-
tol Hill, he said.
“And it’s hard to find land to
build in Capitol Hill, so that real-
ly limits the new competition,”
Hellman said.
RedPeak’s buy and hold strat-
egy allows it to compete aggres-
sively for these smaller buildings.
“We have long-term owner-
ship in mind in every deal we
do and our capital partners have
very long-term deals in mind,”
Hutchinson said.
“We see great benefits from
owning buildings in these very
urban, walkable neighborhoods,”
Hutchinson said.
“We think they will be less
impacted from new supply and
should outperform the over-
all market in the long term,”
Hutchinson said. “Long term,
we think these smaller, urban
properties will provide better
risk-adjusted returns. And short
term, if there is a correction, we
think they will be better insulated
from falling prices than the newer
properties.”
Part of that is because many
renters have trouble paying
$2,000 a month for a 650-sf unit,
he said.
“We have plenty of $2,500 units
in our portfolio and we would
like to have more $1,200 or $1,400
units in our portfolio,” Hutchin-
son said.
That is one reason that, going
forward, RedPeak is more likely
to be adding to its urban portfolio
than developing new buildings.
“We’ve got one development
underway at Seventh and Sher-
man, with 115 units in an eight-
story property, but after that one,
we don’t have too much on our
development plate,” Hutchinson
said.
“And given the extent of new
supply in downtown and Cherry
Creek and potential headwinds,
we think we might get a better,
safer, risk-adjusted return from
buying existing buildings at a
lower price point than building
new,” Hutchinson said.
The math of what renters can
afford also works in its favor.
RedPeak is interested in buying
buildings in Capitol Hill, Wash-
ington Park, Congress Park, May-
fair and City Park South, he said.
“We also don’t have anything
on the west side, but we really
like that whole Highland area,”
he said.Afewyears ago, RedPeak
tried to develop three buildings
in West Highland, but pulled the
plug on the project after neigh-
bors sued to stop it.
“Really, we want to be any-
where there is a vibrant, walkable
urban neighborhood,” Hutchin-
son said.s
RedPeak recently purchased this apartment building in Capitol Hill.