Colorado Real Estate Journal - July 1, 2015

Denizen to be first LEED Platinum project

When the first building in the Denizen apartment community at Alameda Station opens in about a month, it will be the first market-rate, LEED Platinum rental building in Denver.

“The Denver Housing Authority has opened LEED Platinum apartments, but this will be the first market-rate one,” said Dan Cohen, development manager for D4 Urban.

Denver-based D4 Urban is developing the 75-acre Alameda Station, where the twobuilding Denizen at 405 S. Cherokee St. is located.

Denizen will have a total of 275 units. The first building has 105 units. The second, 160- unit building will open this fall.

Kephart is the architect and the general contractor is a joint venture between PCL and CFC.

Alameda Station itself, bordered by West Alameda Avenue, South Broadway and Interstate 25 and the railroad tracks, is one of the largest parcels left to develop in Denver.

When built out, the mixed-use Alameda Station could have about 10 million square feet of residential, office and retail space.

To put that into context, downtown Denver has about 35 million square feet of office space.

D4 Urban always planned to make the Denizen a LEED Platinum community.

“That was fully our design,” Cohen said.

“First off, for us, in terms of our corporate mandate, we felt it was our duty to be sustainable and build energy-efficient buildings. It is just the right thing to do.” Beyond that, sustainable buildings, which need to be airtight and have plenty of insulation, are better built, he said.

“It provides kind of a protection from obsolescence,” Cohen said.

“Denizen is being built to a higher standard.” The U.S. Green Building Council, which created and administers the LEED rating, will certify the Denizen as LEED Platinum after it opens.

“We had to tweak it a bit to get above LEED Gold,” he said, adding that the chances of getting LEED Platinum certification appear to be excellent.

The added cost of going to Platinum is just about impossible to estimate.

“It’s hard to quantify; I can’t give you an exact number,” Cohen said.

“I can’t tell you if it cost $100,000 more or $500,000 more. Was there an additional cost? Absolutely. We just don’t know what it is.” Part of the reason is because each level of LEED certification requires incremental, rather than wholesale, changes.

“I can tell you the way the building code exits today and as standards are getting to be more stringent, most new construction in Denver can be built to LEED Silver standards with no additional costs,” Cohen said.

In addition, the Denizen receives LEED points simply by virtue of being built next to a light-rail stop.

“This is a true transit-oriented development and one of the best TOD sites in Denver,” Cohen said.

It’s also too early to know how much energy and money a renter will save on utility bills, although D4 plans to track that, he said.

Not only will tenants be sure to have lower energy bills, but also Cohen suspects they will further save money by not owning cars.

“You can walk out your door, hop on the light rail and be at Union Station,” Cohen said.

“Starting in 2016, it will be 35 minutes from Union Station to DIA, so you will be able to get from the Denizen to DIA in 45 minutes, without ever having to get in a car,” Cohen said.

Going forward, he said that he expects the idea of not owning a car will become even more popular with the millennial generation and others, he said.

“Ten years from now, I think there are going to be some pretty dramatic changes in how people use automobiles,” Cohen said.

If almost no one at the Denizen is driving cars, there will be no need for the current parking garage, he noted.

The garage is being built so it can easily be retrofitted for a “better and higher use,” such as retail, he said.

He is not sure if any other developer has thought of that, but he said it is something that makes sense.

“To build structured parking costs something like $30,000 per space, so it makes sense to convert it to some other use, if people are no longer using it for parking,” he said.

The units at Denizen will range in size from about 360 sf to 1,300 sf, with the average unit size being 690 sf.

They will lease for an average about $2 per sf.

“They are far more affordable than the new apartments being built downtown in places like Union Station,” where many new apartments are charging north of $3 per sf, he noted.

“It’s absolutely cheaper than renting downtown,” Cohen said.

He said he expects a typical renter will be someone who neither wants nor needs a huge apartment unit, wants to live along light rail and uses public transportation or bikes whenever possible.

“Not only are you minutes from downtown by light rail, there are probably 30 or 40 restaurants and bars along Broadway that you can walk to,” Cohen said.

“It’s also easy to get on the bike trail. You can live here very easily without owning a car,” he said.

Also, D4 Urban was cognizant of the demographics of the area and wanted to develop a building that made sense for the area.

“The median household income in the area is about $59,000, so we wanted the Denizen to be a place that would not stress pocketbooks of people living here,” Cohen said.

In the first two weeks of leasing the first building, 27 leases were signed.

“Interestingly, the first six leases were signed by people moving to Denver from out of state,” Cohen said.

“We’ve got renters from Texas, Michigan and Rhode Island. It really runs the gamut,” Cohen said.

And while D4 Urban projected that the Denizen would largely attract millennials, “one of the first tenants is a gentleman in his 60s,” Cohen said.

How long D4 Urban will own the Denizen is uncertain.

“It all depends on the market,” Cohen said.

“People are paying a premium for multifamily rental properties these days and cap rates are very low,” Cohen said.

“We are seeing a tremendous amount of out-of-town investors looking at Denver and the demand for Denver properties only appears to be getting stronger.” Also, buyers have shown a willingness to pay a premium for sustainable, energy-efficient buildings, he noted.

So why is called the Denizen? “Denizen means the habitat or occupant of a particular place,” Cohen said.

“What we are doing is creating a community that brings together public uses like light rail with really cool, fun buildings. So we are creating the Denizen of Denver, right? “Plus, we really liked how the name sounds.”