Colorado Real Estate Journal - March 2, 2016
Legacy Partners has developed more than 8,000 apartment units in the Denver area since the 1970s. But its latest luxury apartment community at Main and Main in Denver’s Golden Triangle neighborhood might just be its nicest yet. “I think this is going to be a really superb property,” said Spencer Stuart Jr., a senior managing director at Dallas-based Legacy, regarding the seven-story, 322-unit apartment community it plans on a parking lot at Speer Boulevard and East 14th Avenue. “We are really advancing the art of apartments with this project,” Stuart said. “It is going to have a real boutique hotel feel,” he said. “I don’t think I have ever done a more amenity-packed apartment project in one location before.” The “full spectrum” of amenities will include an executive suite office, and conference and meeting room on the fifth floor; a rooftop deck and swimming pool; a demonstration kitchen and wine storage area; dog grooming area; state-of-the-art fitness center with a yoga room; and a game room. “We will also have a ton of bicycle storage,” Stuart said. “Denver is a really bike-centric town. As you know, Denver has a very large population of bicycle riders. We will have an area for repairing and working on bikes, skis and snowboards.” Legacy Partners recently paid Paradise Development, headed by Buzz Geller, $17.5 million for the 2.3-acre parking lot. Legacy, which formed a joint venture with USAA Real Estate Co. for the community, was not represented by a broker in the transaction. “We’ve known Buzz Geller for years,” Stuart said. “This was a direct deal.” He said he couldn’t have picked a better site for a high-end apartment community. “In my world, when you build a rental property like this, you need to have a really great drive-by exposure,” Stuart said. “You have that here not only along Speer, but also along 14th Avenue, which is kind of a main drag for east-west travel,” he said. “You also want to have a good walkable area, which we have here. In fact, you are right across from the Cherry Creek bike and walking trail. You could walk all the way down to Larimer Square on the Cherry Creek trail, if you wanted,” he said. It also is an easy walk to downtown, as well as the Denver Public Library, the Denver Art Museum and a growing number of restaurants and bars. Jeff Hawks, a broker with ARA Newmark, wasn’t involved in the deal but thinks Stuart’s assessment of the site is on target. “I really like the Golden Triangle,” Hawks said. “It is a more culturally oriented part of Denver and doesn’t have the difficulty of parking you find in downtown,” Hawks said. “It is very easy to get in and out of the Golden Triangle,” he said. “You also have quick access to I-25 from Colfax. “Also, we haven’t seen as much new product being added to the Golden Triangle compared with other areas, although it is starting to change, with several new communities underway,” Hawks added. Construction likely will begin in August, or perhaps the early fall, on the community, Stuart said. It will take two years to build. “Something as complicated as this takes a long time to build,” Stuart said. The Denver office of KTGY is designing it. “We’re using the new, 2015 building code, which allows for a seven-story wood-frame building,” Stuart said. It will be an energy-efficient, sustainable development. “We’re just exploring right now whether it will be LEED or some other green program, like the NAHB (National Association of Home Builders) Green Building Program,” Stuart said. The garage, for example, will include charging stations for electric cars. “And we will have conduits built in, so we can expand the number of charging stations, if it proves to be very popular,” he said. Instead of traditional retail on the ground floor, there will be four live-work spaces along Speer Boulevard and one workspace along 14th, he said. “I’m hoping those live-work spaces will bring some pretty interesting businesses to the project,” Stuart said. The view from the project will be outstanding, he said. “To the west, you will overlook Speer and have great views of the entire mountain range,” he said. “And you will have great views of the Denver skyline, too. Along the Fox Street side, it will be a little quieter.” He said he isn’t worried about overbuilding, either in the Golden Triangle and other areas near downtown, where most of the luxury apartment construction is occurring. “I think what all of this building means is that people really want to live in Denver,” Stuart said. “We want to build in the Golden Triangle not because a good sized parking lot is available, but because the Golden Triangle has its own character,” Stuart said. “It is a little more affluent than just being downtown,” he said. He said their internal research showed there is a demand from the older, more mature renter. “Our demographic target is not so much the millennial right out of college, but someone who is a little older and more affluent,” Stuart said. “A lot of our competitors are building apartments with an average size of 700 square feet, because they need to keep the monthly rent costs down,” Stuart said. “Our average size will be 960 square feet and our units will range in size from 600 square feet to about 1,800 square feet,” he said. Indeed, he thinks demand also will come from empty-nesters who have sold a big suburban home and want to live in an urban apartment before deciding where they want to buy. “This will be very appealing to someone who wants the urban experience, but doesn’t want the noise and congestion you find downtown,” Stuart said. Legacy does not know how long it will own the development. “That, of course, is always a function of your partner, which is this case is USAA,” Stuart said. “USAA could very well decide it wants to own it for a long time and we will remain an owner as well.” “This transaction reinforces USAA’s strategy of investing in Class A, urban-infill, transit-oriented multifamily ground-up developments in major markets across the U.S.,” said Len O’Donnell, president and CEO of USAA Real Estate Co. “We are enthusiastic about launching this partnership with Legacy Partners,” O’Donnell added One thing that probably is not in the cards is converting the units into for-sale condos. “We probably will not convert these into condos,” Stuart said. Even if Legacy and USAA decided to sell it, it is almost certain the next owner could not convert it into condominiums. “Generally, when we sell a project, we put in a deed restriction that says it can’t be converted into condos until the statute of repose expires,” Stuart said. In Colorado, that often means that it can’t be converted into condos for at least eight years, as the original developer could potentially still be on the hook for any liabilities, even if it no longer owns the project. “At some point, the laws will change in Colorado and condos will start to be developed again,” Stuart said. “Right now, the laws are unfair to condo guys, because they can be sued before they have an opportunity to correct any problems.” Other News Atlanta-based Wood Partners will develop a 350-unit apartment community on a 19.2-acre site it recently bought near the Pinehurst Country Club in Lakewood. Wood Partners will complete the community, Alta Pinehurst, in fall 2017. Steve O’Dell and Chris Cowan of ARA Newmark sold the site to Wood Partners. “Alta Pinehurst will satisfy high demand for units in the southwest metro area,” O’Dell said. The mixed-use development at 3950 S. Wadsworth Blvd. will include one-, two- and three-bedroom units in a garden-style setting. The average size of a unit will be 975 square feet. Kitchens will include quartz countertops, an upgraded appliance package and islands. There will be vinyl plank flooring in bathrooms, kitchens and living areas. Amenities will include a two story, manor-style clubhouse featuring a cyber café, sports lounge, game room with billiards, kitchen/ bar seating and a fitness center. Outdoor amenities will include a resort-style pool with covered outdoor grilling and seating areas, a large dog park and game lawn. "Residents will have convenient access to major employers as well as numerous retail and dining options at the Southwest Plaza mall and Belmar, among others,” said Jack Kachadurian, vice president of development for the Denver and Rocky Mountain markets at Wood Partners. An unidentified buyer paid $2.7 million, or $135,000 per unit, for a 20-unit apartment building at 4353-4373 Clay St. in Denver. Kevin Calame and Matt Lewallen, senior advisers at Pinnacle Real Estate Advisors LLC, represented both the buyer and the seller in the transaction. “The seller is looking forward to moving his money into a more passive investment, while the buyer is excited about carrying the property through the next wave,” Lewallen said. An unidentified buyer paid $1.5 million, or $134,818 per unit, for an 11-unit apartment building at 1422 Leyden St. in Denver. Kevin Calame and Matt Lewallen, senior advisers at Pinnacle Real Estate Advisors, represented the buyers. "The buyers are very excited about the neighborhood and the potential. They intend on renovating the property to better serve the changing clientele,” Lewallen said. An unidentified buyer paid $435,000, or $217,500 per unit and $87 per square foot, for a rental duplex at 5909 Newcombe Court in Arvada. The property is near Olde Town Arvada. The property was part of a three-property portfolio that the seller plans to exchange out of and into a 28-unit apartment building in Denver, said Justin Knowlton, a senior adviser at Pinnacle Real Estate Advisors, who represented the unidentified seller in the transaction.