Multi-Housing News - November 2008 - (Page 14)

market report A Tale of Two Cities Denver’s multifamily market continues to outperform, while Phoenix lags behind By Christopher Hosford, Contributing Editor When multi-housing analysts, brokers and developers look at two key metropolitan areas of the Southwest—Denver and Phoenix—they’re presented with two very different stories. In short, while Denver is enjoying a strong multifamily market, Phoenix isn’t. In Denver, vacancies are expected to total about 6.2 percent for 2008 overall, and are anticipated to keep falling. Phoenix multifamily vacancies, by contrast, are at about 12 percent, with much higher vacancies in certain severely impacted submarkets. “Denver is continuing to outperform expectations, and Phoenix is underperforming,” reports Clyde Holland, chairman and CEO of Holland Partners, a Vancouver, Wash.-based development company with offices in Denver and Tempe, Ariz. “Denver never became involved in the subprime mortgage situation, and therefore prices never ran down. But Phoenix is underperforming our pro forma by 5 percent. We’re seeing a lot of panic there.” Among new apartment projects in the Denver market are the Clay Street Residences, a $6.5 million project developed by Mary Dean Marshall, with 55 units aimed at the workforce housing market, and Lincoln Terrace, a $13 million affordable housing project encompassing 75 units in seven stories, developed by Lincoln Housing Partners. By far the strongest action is in Denver’s condo developments. Spurring multi-unit construction in downtown Denver is the city’s Downtown Area Plan, approved last year by the Denver City Council, which encourages increasing urban residents in the city core and development to house them. The council anticipates the need for 18,000 additional units to accommodate upward of 25,000 more downtown residents over the next 20 years. “Jobs drive this,” notes Mel Mayers, senior vice president with Sterling American Property Inc., based in New York. “Unemployment in Denver is just 4.7 percent, and they’re expecting 20,000 jobs to be added in 2008. In the last month, I’ve had half-a-dozen deals come from Denver operators.” Marcus & Millichap expects some 2,500 new apartment units to be added to the Denver market in 2008. When factored into the shadow market of unsold single-family homes, multifamily concessions in the Denver market are running at the equivalent of about a month-and-a-half of rent. Among major Denver deals, Red Peak Properties has broken ground on a $65 million expansion project of the Seasons of Cherry Creek, a 439-unit luxury apartment property in Denver’s upscale Cherry Creek neighborhood. Seasons’ existing 15-story tower will be augmented by a 13-story tower as part of the Built Green Colorado pilot program. It will incorporate green standards expected to produce energy efficiency 15 percent better than code. Meanwhile, Marcus & Millichap has arranged the sale of Uptown Broadway, a 116-unit apartment community in nearby Boulder, for $22.85 million, representing $226 per square foot, or $193,983 per unit, a record price for Boulder. “Over the past 12 to 18 months, there has been a marked improvement in the Denver market in occupancy and concessions,” Mayers says. Strong activity Among the array of new condo developments is Spire, a 41-story condo project at 14th and Champa streets. Spire will include 503 condos with prices starting at $200,000. Sales are expected to start in January. Bancroft Capital is owner of the project, Prices at the 503-unit Spire in downtown Denver start at $200,000, with sales to begin in January. Phoenix Metro Area Average Highest Submarket Rents North Scottsdale/Fountain Hills $989 North Paradise Valley $937 South Scottsdale $889 Chandler $879 North County $879 Average Lowest Submarket Rents West Central Phoenix $603 Central Black Canyon $603 West Phoenix $653 Glendale $653 Metrocenter $670 Source: RealData Inc./Phoenix which is developed by The Nichols Partnership. Meanwhile, looking toward a spring 2009 completion is the $165 million Pinnacle at City Park South, with two condo towers of 27 and 22 stories comprising 284 units. Developed by Opus Northwest, Pinnacle’s units range from 826 sq. ft. to 2,393 sq. ft. and are priced from $279,500 to $1.7 million. Continuum Partners is developing Kent Place, a $400 million project with phase one of three anticipated for completion by next summer. Those 105 high-end units, including 91 condos in two mid-rise towers, will range from $500,000 to $2.5 million. And One Lincoln Park, just opened in downtown Denver at a cost of about $140 million, sold 144 of its 180 units by mid-September. Units in the 32-story tower range from 882 sq. ft. to 4,330 sq. ft., and run $375,000 to $2.574 million. One Lincoln Park, 14 November 2008 | Multi-Housing News | Producer of Multi-Housing World

Table of Contents for the Digital Edition of Multi-Housing News - November 2008

Multi-Housing News - November 2008
Contents
From the Editor
Perspective: The Economy
Market Pulse
Special Report: People to Watch
Market Report: Southwest
Executive Roundtable: Dealing with the Crisis
Development & Design: TOD
Finance: Workforce Housing
Green Awards/Perspective
Sell Me: Renters Insurance
Products: Recycled Content
Solutions: Security
Property Showcase: Chelsea Modern

Multi-Housing News - November 2008