Colorado Real Estate Journal -
The Glass House in Riverfront Park likely will go down in history as the fastest-selling condominium high-rise in Denver, and most likely the fastest-selling major condo project ever built in the Mile High City. The same developers of the Glass House, Wood Partners and East West Partners, have teamed up again and hope history will repeat itself, only this time with a luxury rental community. The frenzy from buyers for the Glass House was epic. “We broke ground in 2005 on the Glass House and we literally had thousands of people interested in buying them,” during the next two years, said Tim McEntee, director of Atlanta-based Wood Partners, which co-developed Glass House with Denver-based East West Partners in Riverfront, the once forlorn railyards at the edge of downtown Denver, which has been transformed into one of the city’s toniest neighborhoods. “We sold units at the Glass House as fast as we could build them,” McEntee said. “We didn’t get too greedy. You could buy a unit from the $200,000s to $1 million. We were the right product, at the right price point at the right time.” Now, McEntee is looking for the same kind of market magic with the Alta City House, a $62 million, 280-unit luxury apartment community in the heart of the Union Station/Riverfront area. “I absolutely do think we can be equally as successful with Alta City House,” McEntee said. Construction will begin in August on Alta City House, just west of Union Station on a full city block at the foot of the 18th Street pedestrian bridge and bordered by 18th and 19th streets and Chestnut Place. It is within 100 feet of a new light-rail station and blocks from the new train to the Denver International Airport that is scheduled to open in 2016. While the sales success of the Glass House was widely documented, what is not well known is that it started out life as a rental property. “We developed it in collaboration with East West Partners and financed it with BlackRock Capital as an apartment development,” McEntee said. An exit strategy was always to convert the apartment units at the Glass House to condos at some point, but that all changed during the construction. “Glass House was a $100 million apartment project, which is a big deal,” McEntee said. “Rather than do condo presales, we decided to just finance it as an apartment project with the idea that at some point we would convert them into ‘for-sale’ units. But during construction, we decided that the best and highest use was condos. It was an immediate hit.” At the same time Glass House was built, it acquired the nearby land for a second phase that is now City House, another condo project. But it also had more land, which was later expanded to the full block where construction of Alta City House is planned. The land is zoned for a 23-story building, but Alta City House will be a fraction of the allowable height, with only five stories. “We could have gone out and built a high-rise, but when I looked at the numbers, they just didn’t make sense, at least not to me,” McEntee said. “I’m not sure Denver is really a high-rise apartment market yet.” Alta City House also will be somewhat unusual in that all five stories will be stick built. In Denver, four stories often is the maximum height for a stick built building, with additional floors being constructed out of more expensive materials, such as concrete and steel. “That is partially true,” McEntee said. “A five-story building is a type III construction, which brings another level of complexity and is more difficult and challenging to construct as a stick-built building. But it can be done.” Alta City House will be constructed with the same levels of finish and amenities found in luxury condominium units, before the real estate collapse. “Never say never,” but it is unlikely anytime in the near future that they will be converted to condos, given the softness in that condo market and the potential liability to developers, McEntee said. As the most popular asset class because of rising rents and demand for multifamily, that category is the easiest to finance in today’s market. The USAA Real Estate Co. recently announced that it would provide financing for Alta City House. “We are very pleased to be part of such an exciting new apartment development in Union Station,” Pat Duncan, chairman and CEO of USAA Real Estate, said in a statement. “We also look forward to working again with Wood Partners, who are well known for developing some of the most outstanding apartment developments in the country. Alta City House also constitutes Wood Partners’ second joint venture, increasing the total cost of projects for which USAA is the capital partner to over $200 million.” Wood Partners, which last year started 3,750 apartment units across the country — more than any other multifamily developer — will lead the construction effort. Paul T. Bergner Associates is the architect, Harris Kocher Smith is the civil engineer and Norris Design is the landscape architect and land planner for Alta City House. Alta City House, which will have a parking garage and 1.5 parking spaces for each unit, will occupy slightly less than three acres and will offer one bedroom units ranging from 645 to 825 square feet, two-bedroom units from 991 to 1,227 sf and nine three-bedroom townhomes with 1,300 sf. “Alta City House will be the perfect destination for single young professionals and couples as well as empty nesters who are downsizing or seeking second homes in the core of urban life,” McEntee said. Riverfront attracted a number of buyers whose main home was in mountain communities such as Vail and Beaver Creek, and McEntee said the same thing could happen at Alta City House. “I expect people whose primary residence is in Genesee will rent a unit here,” he said. “I’m trying to talk to my wife about getting a place at Alta City House. We come downtown all of the time for music, sporting events and to eat, so it would makes a lot of sense.” The community will feature a two-story fitness center, cyber café, two-story club room, game room, two large outdoor courtyards, one with a large pool area with outdoor fireplace, a plaza opening to the 18th Street pedestrian bridge and 100 feet from the light-rail podium, a large roof deck with a year round outdoor kitchen facility and a view of Coors Field so striking that you will feel like you have the best seat in the house when the Rockies are playing. “It’s really going to have a lot of cool amenities,” McEntee said. “It’s even going to have a dog park and a bike shop. There will be a public piazza that will connect it to the 18th Street bridge. We hope to get some public art in the piazza. And a lot of natural light will stream in on our courtyards. While he, and just about every developer, “is always nervous” about the potential of too much of a good thing — in this case new luxury apartment units — McEntee thinks Alta City House is well-positioned even if the Denver apartment market becomes overbuilt. “If you believed news reports, one developer has started his apartment project five times,” McEntee said. “Really, only two other projects are moving forward. Beyond that, I do think we have the best location in all of downtown. The 18th Street bridge takes people straight into Riverfront and Commons Park and you are a 10-minute walk to Highland. You are walking distance to all of the restaurants, bars and sporting venues in downtown. And because our financing is in place, we are ready to come out of the ground; we’re not just talking about it. I really think we have a leg up on other projects that are still trying to secure equity and a construction loan.” In addition to Alta City House and the Glass House, Wood Partners also developed Alta Aspen Grove, the first market rate apartment community of stick-frame construction to be certified under LEED for Homes in Colorado. “It’s not guaranteed that this one will be LEED-certified, but our goal is to make it as green as possible.”