Scenes and Highlights from BusinessDen’s ‘Future of Multifamily’

There are fewer apartment buildings breaking ground in Denver these days as developers face higher interest rates and construction costs, and what seems like endless rounds of city reviews on their proposals.

Owners of existing older buildings, meanwhile, face increasing city and state regulations, including Energize Denver requirements, which can impose significant costs.

These were some insights from BusinessDen’s “The Future of Multifamily” event last week, which brought more than 150 readers to the Clayton Hotel & Members Club in Cherry Creek.

Adam Fenton, founder of Denver-based Narrate Cos., which develops apartment buildings, said his most recent proposal in Denver had gone through eight rounds around the city, drawing comments and Narrate trying to address them. It should have been “three, maybe four,” he said.

“There’s no coordination,” Fenton said. ‘You get responses back. One agency says one thing, a separate agency says the opposite. They are never on the same page.”

Denver’s Department of Community Planning and Development recently got a new leaderand Fenton said the process “seems to have gotten a little better over the last six months.”

But “it’s been a frustrating process to the point where it’s kind of pushed us out of Denver,” he said. Narrate also does projects in Colorado Springs.

“You know, we’ll look at a site here and a site there (in Denver) that’s really special,” Fenton said. “But we can’t do that anymore, we’re just not made to hold my hand for that long.”

Leaving Denver is not an option for D4 Urban, which owns about 75 acres at the southwest corner of Broadway and Alameda Ave. in the Baker district. The site is home to major retailers including Sam’s Club and Safeway, but D4 has been working for more than a decade to gradually fill Broadway Park with housing.

Earlier this year, D4 Urban CEO Chris Waggett said San Diego-based developer Fairfield had terminated its contract to purchase a site in Broadway Park. The company had been under contract since 2021 – and a lot has changed in that time, he said.

“The capital markets are in flux, the affordable housing ordinance – none of the contractual basis that they signed up for existed when they would otherwise have been closed down… To me, we have a crisis in the way we are actually entitled to things,” said he.

Waggett noted that another developer is now under contract for the site.

Projects that do get built could still face surprises, such as rising insurance bills, said Danielle Vachon Bell, director of development for Denver-based MGL Partners.

“We have just received revised quotes and they are up 35 percent on last year,” she said.

Vachon Bell specializes in the development of income-restricted housing. To create a project in that area, more and more sources of financing are needed.

“I did three deals last year… the one with the least number of sources was 12 funding sources,” she said.

Denver-based RedPeak owns about 3,300 units in and around the Mile High City. The company has not made any acquisitions for a few years, after being a regular buyer for a long time. President Bobby Hutchinson said the company expects “fairly flat rental growth over the next few years,” so it is focusing on keeping occupancy rates high and turnover low.

But Hutchinson said there appears to be a decline in new unit deliveries by 2026, and the homeownership rate is also expected to decline.

In a few years, “there will be a pretty strong environment for rental growth,” Hutchinson said.

Charlie Hogan, CEO of Cornerstone Apartment Services — which manages about 6,100 units in downtown Denver — said new construction is more challenging, but the pre-1970s assets that made up the bulk of the company’s portfolio “are the have actually done relatively well’.

“This year we’ve had 4.8 percent rental growth in those pre-existing properties,” he said.

He noted that this is happening despite the fact that many of Cornerstone’s buildings are located a short distance from downtown, where office demand remains weak.

“I think what’s exciting for us — it’s a little weird to say — but the fact that downtown Denver is 30 percent vacant and we’re still 96 percent occupied,” Hogan said.

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