Colorado Real Estate Journal - September 3, 2014
Developer Randy Nichols is planning to redevelop the VQ Hotel next to Sport’s Authority Field at Mile High into a microapartment tower. It could be the first in Denver of a new breed of ultra-small rental units that are sweeping the country. Most of the 175 units in the 13-story building at 1975 Mile High Stadium Circle will have monthly rents below $1,000. About 160 of the units will be 330 square feet each, while the remaining 15 will be a bit bigger, said Nichols, one of the most high-profile developers in Denver. By contrast, when RedPeak Properties developed the former Burnsley Hotel into an apartment building, the average unit size was 700 sf. By definition, of course, micro units are small. “I don’t know if this will be the first true micro-unit building in Denver; it might be,” Nichols said. “The micro-unit idea is one that is sweeping the country and these type of projects are becoming popular in many other big cities, especially those with high rental rates,” Nichols said. “The whole idea is that we don’t really need that much space,” he said. “For a young guy, what he cares about is that he is paying in the neighborhood of $900 a month, not the size of the unit,” Nichols said. “His question is not the square footage, but is, ‘Am I in downtown or not?’ This is a market that is being hugely underserved.” Nichols, whose previous projects have included such well-known developments as the Spire condo tower in downtown and Clayton Lane in Cherry Creek, and his partner are scheduled to close on the building in October. His partner in the hotel building, which will be renamed Turntable Studios, is Derek Ahrens, principal of Denver-based Realty Capital Group. “The building kind of looks like an old record player,” Nichols said, hence the name. “It reminds me of the Capitol Records building in Hollywood.” The hotel was built in 1967 and at one point was a Holiday Inn. Turntable Studios, which will be ready for occupancy around the end of 2015, will provide rental housing for people, especially young professionals, who want the urban living experience, but can’t afford the sky-high rents in new apartment buildings, Nichols said. “We are designing these microapartment units to have rents under $1,000 a month, which is kind of nonexistent in the new apartments being built in downtown Denver and neighborhoods like Highland,” Nichols said. Rents in recently built buildings can range from $1,500 a month for a one-bedroom to $2,500 for a two-bedroom, he said. “It will be kind of like the Spire (condo) mentality,” Nichols said. “The units might be a little smaller than they otherwise looked at, but the idea is you live in the common areas and you sleep in the units,” Nichols said. Turntable Studios will be loaded with amenities, he said, much like the Spire condo tower. “It already has a pool,” Nichols said. “The whole ground floor will be common space with a lounge area and a pool table and a little kitchen area, and a big-screen television. There also will be an outdoor barbecue area.” Turntable Studios also will be “very bike oriented,” something Nichols Partnership became well-versed at with its bikethemed Cruise apartment building near City Park on Denver’s east side, which it sold earlier this year. Turntable Studios, being designed by JG Johnson Architects, “will be very bike oriented,” Nichols said. “It is going to have indoor bike stations and storage area and places to work on your bike,” he said. The site itself, technically in the Jefferson Park neighborhood, also is an amenity, Nichols said. “The great thing about being next to Mile High is that all of this incredible infrastructure was put in place, even though there are only eight home games a year,” he said. “You can go under or over I-25 and be on the Platte River and Cherry Creek bike trail in minutes,” he said. “You are close to West Highland and all its restaurants and bars, as well as downtown,” he said. The views from the building also are some of the best in Denver, which many people may not realize, he said. “To the east, you have views of the downtown and to the west, you have views of the mountains,” he said. “To the south, you have views of the stadium,” Nichols said. “You are literally looking into the stadium. “When we did 1899 Wynkoop (office building) way back in 2000, everyone said people would want mountain views. We found the most popular spaces looked over Coors Field. Who knows? Those might be the most sought-after.” On a personal level, Nichols said he likes the micro-unit movement and how it will be represented by the former hotel tower. “This is a fun deal,” Nichols said. “It is kind of a unique kind of deal that allows you to be a bit more creative.” In fact, at Cruise, it was the smaller units that leased the quickest, he said, which helped convince him there was a market for tiny units. This isn’t the first time a developer has tried to buy the hotel. In 2002, Trammell Crow Residential explored razing the building and constructing a 338- unit apartment building on the site that would have average monthly rents of about $1,600. “Trammell Crow couldn’t make the numbers pencil out by demolishing it, while it costs a lot less to renovate an existing building,” Nichols said. Currently, there are 175 parking spaces in one lot. “This site is bigger than a lot of people realize,” Nichols said. According to public records, the site covers 3.3 acres. “There is a second, adjacent lot that eventually will be redeveloped into a new building, that has about 200 spaces, which will help serve the residents,” he said. It is too early to say whether Nichols and his partner will develop the next building or if it will be another developer. “We don’t know,” Nichols said. “We’re just focusing on buying the VQ and doing this deal.” Nichols declined to reveal the purchase price, as the deal has not yet closed. According to public records, Mile High Hotel Venture LP of Long Beach, Calif., which purchased it in 2009 for about $2.5 million, owns the site. The property was conveyed to an entity of the same name through a quitclaim deed in 2012.