Page 10 —
COLORADO REAL ESTATE JOURNAL
— February 17-March 1, 2016
Greater Denver
percent interest rate, as part of
the purchase of the Grove, Win-
slow’s research shows.
However, it wasn’t pure profit
as Kennedy-Wilson invested
about $11 million into capital
improvements into the commu-
nity.
But plenty of value-add oppor-
tunities remain.
“With much of the heavy lift-
ing done, (Wood Partners) can
focus their investment on capital
expenditures that result direct
rental increases,” according to
JLL’s research.
The 48 units that Kennedy-
Wilson upgraded resulted in
rent premiums of $200 to $275
per month.
“Through thoughtful design,
capital improvements and
sound property management,
we look forward to bringing this
well-positioned asset to its full
potential to meet the level of
other similar assets in the sub-
market and achieve our strategic
investment goals,” said Maush-
ardt of Wood Partners.
Wood Partners and other pro-
spective buyers liked the loca-
tion of the Grove, in addition
to its value-add appeal, Stucker
said.
“It is right off East Mississippi,
a half-mile from I-225,” Stucker
said.
The Grove also is less than a
half-mile from the Aurora Metro
Center light-rail station that will
open later this year.
The 10.5-mile I-225 rail line
will function as Aurora’s “Main
Street,” Wood Partners said.
Also, the Grove is 20 miles
east of downtown Denver and
close to major employment cen-
ters including the Denver Tech
Center, the Anschutz Medical
Campus, Fitzsimons Innovation
District and the Denver Interna-
tional Airport.
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Wood
which RTD controls on a ground
lease, is undetermined. But what
no one wants to see happen is for
the new station to open and not
address what goes on at that criti-
cal, Broadway and Colfax, corner.
“What you hear over and over
again is because of some of the
antisocial behavior, the perception
of that site is very challenging,”
said Iverson.
Project for Public Spaces, a
New York-based nonprofit that
helps people create and sus-
tain public places to strengthen
communities, has been engaged
to assist in ideas for activating
the space in the interim.
“I think there’s a recognition
in Denver in general that public
spaces work best when they’re
programmed,” said Iverson. “It
makes a lot of sense as away to get
activity without a huge infrastruc-
ture investment.”
Downtown Denver Partner-
ship Executive Vice President
for Downtown Environment
John Desmond, who is actively
involved in the transit district
plan, said the Civic Center Sta-
tion area is a high-profile location
given the bus, shuttle, pedestrian
and vehicle traffic. Redeveloping
it into a “much more visible and
attractive space is really going to
send a strong signal” and draw
attention to some of the other rede-
velopment in the area, such as
the SkyHouse Denver apartment
community at 18th andBroadway.
“It is really focusing both rede-
velopment money as well as plan-
ning energy on a part of down-
town that has not kept pace with
reinvestment in some of the other
areas of downtown,” he said. “It’s
going to give upper downtown a
real shot in the arm.”
Civic Center Station was built
in 1984, and because of the way
it was constructed, with systems
sandwiched between the roof and
plaza above, “It’s a very difficult
station to maintain over the long
haul,” Iverson said. There is water
damage, and isolation springs
meant to soften buses’ impact on
the parking garage below have in
many cases failed.
The bus bays weren’t designed
for modern buses, and not all of
the current bays are usable. The
new station will have both indoor
and outdoor bays. A bus ramp
extension from Broadway to Lin-
coln will ease bus traffic flow and
eliminate the need for northbound
buses to travel south to 14th Street
to turn around. Pedestrian cross-
ings will be improved.
The enclosed station will be
smaller but will feel more open
and will be entirely at street level,
according to Iverson.
Requests for proposals for the
redevelopment are out and pro-
posals will be in soon for con-
sideration by the RTD board of
directors. The budget hasn’t been
established, but is expected to
range between $17 million and
$23 million.
During construction, there will
be nine locations within a block
of the site that will accommodate
temporary bus loading areas, said
Julia Marvin, RTD public rela-
tions specialist. RTD has submit-
ted a temporary bus plan to the
city and, once approved, it will
begin communicating changes to
riders.
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Civic Center
landlords are offering free rent
and that trend will continue, he
said.
Indeed, the AAMD put the
“economic” vacancy rate, which
includes concessions and dis-
counts, at 13.7 percent, twice the
actual vacancy rate.
Markets with a significant
number of newbuildings already
are showing double-digit vacan-
cy rates, he noted.
For example, Boulder, outside
of the city, has a vacancy rate
of 14 percent, according to the
AAMD, while downtown Den-
ver is at 11.4 percent.
Northwest Denver’s vacancy
rate was at 17.4 percent, but
that was because it is such a
small market that it doesn’t take
many new buildings that are in
the lease-up mode to drive up
vacancies, he said.
The other factor that makes
the apartment vacancy rate look
worse than it is,whenyou scratch
below the surface, is reporting.
The institutional owners of the
“movie star” properties are very
good at reporting their data, he
said.
“I know a guy who owns 750
older units,” Kendall said.
“His units are basically 100
percent occupied, but they don’t
appear in the data, because he
doesn't report them,” he said.
Alot of “mom-and-pop” apart-
ment owners don’t report their
vacancy or rental rates, he noted.
“There is a glut at the higher
end,” Kendall said.
“But if you remove all of the
units that were built after 2010,
our market is looking pretty
healthy,” he said.
And with 10,000 people mov-
ing to Denver each year, the
vacancy rates won’t last that
long, assuming there isn’t some
huge financial jolt to the econo-
my, he said.
“A lot of apartment commu-
nities that are on the drawing
board, but haven’t yet been start-
ed, won’t be built, during this
cycle,” Kendall said
It already is becoming more
difficult to raise equity for apart-
ment construction and that trend
will continue, he said, which will
reduce the future supply.
“It all comes down to supply
and demand, and right now we
have too much supply at top of
the market,” Kendall said.
s
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