Colorado Real Estate Journal - March 18, 2015
Denver Lofts Multifamily DST recently paid $11.5 million for the Emerson Lofts apartment building in Governor’s Park in Denver. The sales price of the three-story, 42-unit apartment completed in 2013 was 8 percent below the asking price of $12.4 million. “It was listed higher; however, the group that bought it made an all-cash offer, which motivated the sellers to take a lower offer,” said John Laratta of Berkadia Real Estate Advisors, a Berkshire Hathaway company. “It was kind of like ‘cash is king,’” said Laratta, who listed the property at 777 Emerson St. on behalf of the seller, Denverbased L.C. Fulenwider. He listed the building with Frank Farrell, formerly of Berkadia. Farrell has since formed his own company, Farrell Real Estate Service, or FarrellRES. Chris Fulenwider, an architect and developer at CF Studio, designed the property. Although Fulenwider could have gotten a higher price for Emerson Lofts by accepting a financed offer, the sale equated to $423 per square foot, which appears to be the second-highest price per sf so far this year. Only the Logan sale, at $443 per sf, is apparently higher. “In any event, Denver multifamily sales seem to be breaking records and pushing the upper limits on a regular basis,” Laratta said. “Records are made to be broken,” he said. More important than that metric is what the community represents, he said. “I think the real story here is the vision of a company (L.C. Fulenwider) that has been active in the Denver real estate market for over a century and the fact that building such a property at seemingly the highest point in the market did not take away from their confidence in the Denver market,” Laratta said. The property was completed in 2013 and fully leased within six months. It was 100 percent leased when it was sold to Denver Lofts Multifamily DST, based in Oak Brook, a suburb of Chicago. There was a lot of interest from prospective buyers, both from local investors and out-of-state investors, according to Laratta and Farrell. The buyer, Farrell said, “loved the location. They did a lot of research in the area. They also liked that it was just a year old.” Chris Fulenwider did an excellent job designing the building, he said. “It has 37 different floor plans,” Farrell said. “Emerson Lofts is filled with natural light. He (Fulenwider) designed it to use space very efficiently.” Laratta agrees. “It was masterfully planned and designed to seamlessly blend modern urban architecture into an older, stately neighborhood,” Laratta said. “The end product represents one of the most attractive apartment buildings that has been built in central Denver in recent years,” according to Laratta. This is what Fulenwider had to say about Emerson Lofts in July 2013, soon after it opened: “When initially designing the building, we wanted it to have a neighborhood feel, making sure the building fit with the rhythm of Emerson and the more commercial feel of Eighth (Avenue). On Emerson (Street), the building meets the street with porches in the same manner as the Denver squares that line that street. Then on Eighth (Avenue), we have a more vertical, rowhouse feel with stoops that also creates an outdoor public-private transition or defensible space. These elements meet at the knuckle, or corner, of the building, creating a three-dimensional composition that is one of the signatures of the project.” Fulenwider said he took Denver’s outdoor lifestyle into consideration when designing Emerson Lofts. “In addition to the porches and stoops on the first floor, large outdoor terraces are scattered across the building façade and a network of bridge-style walkways invite neighborly interaction among tenants,” he said. Emerson Lofts also is a very “green” building. Energy-saving and sustainable features include floor-to-ceiling low-“E” windows, cross ventilation, ceiling fans, energy-efficient lighting, Kohler “flipside” showerheads and Energy Star appliances, including frontloading washers and dryers in each unit. In addition, units are equipped with a Nest learning thermostat, which recognizes personal heating and cooling patterns and can be controlled by a smartphone to reduce energy consumption and expenses. Selling at $274,000 per sf, Denver Lofts paid close to replacement cost, according to Farrell. “I’m not a developer, but it is clear that construction costs are going to continue to rise,” Farrell said. Construction continues to escalate because of rising construction and land costs, according to experts. Farrell said he expects that these inner-city apartment communities will continue to command high prices, as millennials and others are willing to pay premium rents per sf for a relatively small unit.