Denver Continues to Heat Up in Development, Investment

DENVER—A partnership between Chicago-based Origin Investments and Boulder-based SEEC Enterprises recently started construction of Brick Stone Apartments on 56^th Street, a 150-unit, $35 million, garden-style multifamily development in a burgeoning corridor of Denver, Colorado. The partnership pairs SEEC which has developed more than 1,200 units in Utah and Colorado together with Origin Investments which currently owns an 11-property, 2,700-unit portfolio of multifamily assets valued in excess of $600 million, including The Fletcher Southlands, acquired earlier this year. It also represents the fourth property in which Origin has been either the developer or joint venture partner in a new multifamily development.

Brick Stone Apartment units are expected to be delivered in phases beginning in the second quarter of 2019.

Apartment Sales Are Happening Too

But that new multifamily build isn’t the only thing happening in Denver. St. Moritz, a 360-unit multifamily asset located at 1724 Robb St. in Lakewood, CO just recently changed hands for an undisclosed price. Vice Chairmen Shane Ozment and Terrance Hunt represented the seller, an affiliate of Lowe Enterprises Investors – a real estate investment firm based in Los Angeles – in the sale to Denver-based BMC Investments in partnership with Oak Coast Properties also based in Los Angeles.

Nearby employment hubs include The Denver Federal Center campus, which employs 8,000 and is located less than three miles from the property; Saint Anthony Central Hospital located two miles from the property employs 2,332 and less than a mile from St. Moritz is the Terumo BCT global headquarters which employs 2,275. Other prominent, nearby employers include: The National Renewable Energy Laboratory, employing 2,200; Miller Coors Brewing Company, employing 2,500; Jefferson County government offices, employing 2,300; and the Denver West Office Park. Additionally, 130,000 jobs are just 20 minutes away in downtown Denver.

Industrial is Also Hot

Things are also active on the industrial development/construction side of things in Denver. Denver’s strong industrial construction cycle is starting to satisfy demand for warehouse and distribution space, but the market remained tight at Q2, according to recent Avison Young research. Denver’s sustained population and employment expansion, along with growth in e-commerce and general distribution, have fueled significant activity in recent years. There was nearly 7 million square feet (msf) of speculative space under construction, along with 1.8 msf completed in the first half of the year.

“Construction is finally starting to alleviate some of the tightness in Denver’s industrial market, but because so much of the new space is preleased, there will be more yet to come,” says Avison Young Principal Dawn McCombs. “The new construction should slow the rise of rental rates, which have risen to over $9 per square foot, but it will still take a while for the market to reach equilibrium.”

According to Avison Young, development activity is expected to remain steady throughout 2018, with several projects scheduled to break ground in coming months, at least on the industrial side. “Construction financing is still flowing into the market, despite rising development costs. Significantly preleased new projects indicate that the industrial market will remain tight in 2018,” the firm says.

An Attractive Price…

Switching back to the Brick Stone Apartment development, Thomas Briney, director of acquisitions at Origin Investments, said that the development represents a great opportunity to develop new product at an exceptionally attractive price, “allowing us to offer rents at a reasonable level, while still providing a very high-quality experience for our residents. He adds that “This project is directly in path of population and job growth in this area of Denver. Further, it is being done with experienced development partners who have designed and constructed an almost identical development in another location.”

Briney adds that “One of the most compelling draws of this development project is its prime location in a burgeoning area of Denver that is seeing explosive growth and already has pent up demand.”