Colorado Real Estate Journal - August 5, 2015
It’s difficult to find a big land assemblage in Uptown. “It’s very much like LoHi, where you can find smaller parcels, but there just really aren’t any 1.5-acre land assemblages available,” said Ken Howell, chief financial officer of the Southern Land Co. However, Southern Land, based in Tennessee, did find a land assemblage, although it was not on the market. Southern Land, according to public records, paid $11.5 million for a 62,688-square-foot site at 1601-1665 Pearl St. and 520-538 E. 17th Ave. in Uptown. That assemblage of six parcels equates to $183.45 per sf, believed to be the most ever paid for land in Uptown. Southern Land, based in Nashville, in a partnership with New York City-based GTIS Partners LP, plans to build a 315-unit, Class A apartment community on the site. The project is expected to cost between $80 million and $90 million, Howell said. The community also will include 14,000 sf of retail space. The project will include eight stories and five stories, which is allowed under the current zoning. The Tavern Hospitality Group was the seller. An existing Tavern Uptown bar and restaurant is on the site and will be replaced by a larger Tavern establishment, including an eighth-floor rooftop deck. Chris Cowan of the ARA Newmark team, with Steve O’Dell and Julie Rhoades, found the deal by approaching Frank Schultz, the owner and CEO of the Tavern Hospitality Group. Cowan, Howell said, “knew we only have real interest in off-market deals and that we were focusing on Uptown.” Schultz, who founded his chain in 1997, noted he had rebuffed several offers from other developers in the past. The Tavern Uptown was the first building he opened and he would not have sold it unless he could incorporate a newer and bigger restaurant/bar into the new apartment community. “It will be a big upgrade for him and he probably will include a new concept,” Howell said. Schultz said the current restaurant has about 4,000 sf. “The new store on the same corner (at Pearl Street and East 17th Avenue) will have about 7,000 square feet,” Schultz said. That is an 87.5 percent increase in the size. However, about 2,500 sf of it will be for banquets and meetings, “so unless we open all of it up, the new store won’t feel that much bigger,” he said. The current store has a 2,500- sf patio, while the new Tavern Uptown will have a 4,000-sf, eighth-floor patio. “There will be fantastic views from the patio,” Howell said. In addition, Schultz will be in charge of all 14,000 sf of retail space in the new apartment community. “I plan to bring in other restaurants, such as a coffee shop or a breakfast place, which will complement Tavern Uptown,” which he opened in 2001. Unfortunately, the current building for the Tavern Uptown, which opened around the turn of the century, will be demolished, under the current plans. Historic Denver Inc. has contacted Southern Land about trying to incorporate the building, which the city has said is not historic, into the new development. A meeting on the matter is scheduled for mid-August. Howell said it is too early to determine whether the existing building can be saved. Another idea is to save the bricks from the building and try to re-create a facsimile of the existing building in the new development. However, bricks that are more than 100 years old often crumble when the existing mortar binding them is removed. The new building, being designed by Shears Adkins Rockmore, will not allow the existing structure to remain. “My first hope was that it could be saved,” Schultz said. He said the existing building could not withstand the weight of an eight-story structure on top of it. “We almost didn’t do the sale because” the existing building could not be saved, he said. However, he said he is pleased the Tavern Uptown will remain at its current location. Also, 50 covered parking spaces will be dedicated to patrons of the Tavern Uptown, he noted. He also said he is thrilled to have a large patio on the eighth floor. A portion of the new building that abuts East 16th Avenue will have five stories, with the rest of the project having eight floors. Units will range from about 500 sf to 1,400 sf. “Rents will be set at the market, which is now in the $2.50 to $2.60 per sf,” Howell said. “We’ll have the typical amenities like a fitness center, bike storage and bike lockers and at least two or three courtyards with grass and fire pits and grills and an outdoor kitchen,” he said. One thing Southern Land discovered during its due diligence, is that young professionals who will be the likely tenants don’t need or want a giant swimming pool. “We surveyed other projects and talked to a lot of managers and one of the questions we always ask is, “What would you do differently, if you could do it over?” He said the answer is that they would make the swimming pool smaller and the hot tubs larger. “So we are going to have oversized hot tubs that might hold 35 or 40 people instead of 18 and what I would call a midsized pool,” Howell said. “We’ll probably put the pool on the fifth-floor roof, because that is where it will get the best light,” he said. The building will be energy-efficient, but it has not been decided yet whether they will seek LEED certification, he said. “It certainly will be built to LEED standards,” he said. Howell said if he could pick the perfect site for a large, luxury apartment community, this Uptown location would be it. “It gives us a bunch of boxes to check off,” Howell said. “Is it near bars, restaurants and jobs? Check. It is five blocks from the Wells Fargo Center downtown and an easy walk to the restaurant row along 17th. The other neighborhood anchor is the nearby St. Joseph Hospital and the other hospitals in the area. So we are between downtown and all of its jobs and the medical district. Beyond that is City Park and the Denver Zoo. So if you look at a map, you’ve got the central business district on the left and City Park and the Denver Zoo on the right.” Howell said he would much rather be in City Park than in a hot area such as around Union Station in downtown Denver. “We don’t like to follow the crowd,” Howell said. “Trammell Crow Residential is building 372 units in Uptown and you have the One City Block by RedPeak,” Howell said. “Other than those, there really aren’t any big projects in Uptown,” Howell said. And there are unlikely to be any large projects to be built after them. “We will have very little competition,” Howell said. “There is just no land available,” he said. “It reminds me of LoHi, where we bought the Mile High United Way site at 18th and Central and where we are building 302 units,” Howell said. “There are infill sites in LoHi where someone can maybe build 70 or 80 units, but there really aren’t many sites where you can build a large project with a great amenity package,” he said. “This Uptown site is right on the fairway for us.” Southern Land also plans to develop a 242-unit apartment community with 115,000 sf of retail and office space at 30th and Pearl streets in Boulder.