Colorado Real Estate Journal - July 1, 2015
Atlanta-based Wood Partners was one of the first out-of-state apartment developers to realize the underlying strength of the Denver area market. Since opening a Denver office eight years ago, it has developed six apartment communities with a total of 1,300 units. It is about to launch its seventh. However, as other developers entered the market, resulting in almost unprecedented apartment building, Wood Partners pulled back. “We were very active coming out of the recession,” said Jack Kachadurian, a multifamily investment and development s p e c i a l i s t , who recently was hired to be the vice president of development for the Denver and Rocky Mountain markets for Wood Partners. “As supply came on line, we took a step back to see if demand would remain as strong for Class A apartments in Denver,” said Kachadurian, a graduate of Regis University. After examining things such as absorption, current and future projected demand and costs over an 11-month to 16-month period, Wood Partners is ramping back up. “We searched nationally for someone with Jack’s depth of experience,” said Timothy M. McEntee, director of Wood Partners’ Rocky Mountain and Midwest regions. “Jack knows the local Denver market, and this hire shows Wood Partners’ commitment to that market,” McEntee said. Wood Partners in the past has had great success with both urban and suburban developments in Denver. “A lot of people are going to the downtown core to build,” Kachadurian said. While Wood Partners would consider opportunities downtown, going forward it is focusing on suburban locations It is especially interested in sites on the west, southwest and northwest parts of the metro area, he said. “We are very cognizant that people really like these locations,” he said. “People enjoy the open spaces and that you are not only close to downtown Denver, but you are close to all of the nature amenities and open space along the Front Range,” Kachadurian said. “Plus, you are that much closer to the mountains,” he said. And of the long-term outlook for downtown, “When you break it down the micro markets of places like RiNo and Ballpark, we still think that it will take a little bit of time to absorb all of those new units,” he said. Long-term, however, there is no doubt that downtown Denver will be a great place, especially with a new King Soopers and Whole Foods opening, he said. The west side, and other suburban locations, do not have the concerns of overbuilding. Wood Partners, he said, typically will build communities with 250 to 350 units. “From an economic standpoint, it is hard to provide the kind of amenities that people want, such as recreation centers and swimming pools, with fewer than 200 units,” Kachadurian said. “That would be the case, whether it is a typical breezeway garden-style apartment project or a wrap-garage project,” he said. Typically, that will mean a site of 15 to 20 acres, depending on such things as densities allowed by municipalities, he said. Ideally, he said they would like to be working on two to three projects each year. “I will say, as we kind of continue through this growth cycle, a lot of the low-hanging fruit has been picked,” Kachadurian said. Also, a lot of municipalities are requiring developers to pay for off-site infrastructure improvements, which makes it more difficult to make the numbers pencil out, he said. “Still, we think there is a good amount of buyable land in these suburban areas,” Kachadurian said. Wood Partners was one of the first national apartment developers to embrace sustainable building practices and that practice will continue going forward, he said. For example, in 2011 Wood Partners’s Alta Aspen Grove was the first market rate apartment community of stick frame construction in Colorado to be certified under LEED for Homes. “Sustainability is very important to us, and generally speaking, our goal would be to have everything we build be LEED certified,” Kachadurian said. Wood Partners is committed to Denver, he said. “We think Denver, long-term, is going to be very strong performer,” Kachadurian said. “Part of that is being driven by high home prices,” he said. “Also, with the detrimental condo development problems with Colorado’s construction defect rules,” there won’t be many low-priced condos developed anytime soon to compete with luxury apartment units, he said. And, of course, Denver has a strong, diversified economy that is attracting about as many millennials as any city in the country. “The quality of life a city like Denver offers – coupled with some of the strongest employment gains in the country over the past few years – has continued to attract new residents,” Kachadurian added. “I feel Denver has a great future in terms of continued rent growth and absorption of new rental units, and I’m looking forward to cultivating a strong portfolio of new deals and continuing the success that Wood Partners has had in the Rocky Mountain region.” Before he joined Wood Partners, Kachadurian was a senior associate with Pritzker Realty Group in Chicago, where he assisted with the closings of land acquisitions and development of over 2,000 units in various markets around the country. Kachadurian also served as an investment sales real estate analyst for Holliday Fenoglio Fowler LP in Chicago.
-An unidentified buyer paid $740,000, or $61,666 per unit, for a 12-unit apartment building at 1650 Boston St. near the Anschutz Medical Campus. Joe Hornstein, a senior adviser at Pinnacle Real Estate Advisors, represented the seller in the transaction. Scott Fetter, also a senior adviser at Pinnacle, represented the buyer. “Property values in Aurora have risen more than any Denver submarket in the past 12 months,” Fetter said. “The buyer strongly believes there’s room for further improvement and was excited to close this property for less than $62,000 per unit.” n An unidentified buyer paid $719,000, or $102,714 per unit and $155.93 per square foot, for a seven-unit building constructed in 1915 at 830 Clarkson St. The property includes three garages and six off-street parking spaces. Josh Newell of Pinnacle Real Estate Advisors represented the local seller in the transaction and Jim Knowlton represented the local buyer. “It was a great value-add opportunity,” Knowlton said. “The property sold well below the comparable averages, which leaves a lot of upside for my clients to take advantage of,” he said.