Low vacancy rate attracts apartment builders
Element Properties, a Boulder-based developer and property-management company, and a group of undisclosed investors have purchased the land at 1707 Walnut St. for $2.875 million and plan to build a 20-unit luxury apartment building on the site.
The building, expected to be completed by early 2014, will have about 8,000 square feet of retail space.
Element Properties acquired the 13,539-square-foot lot from MCV 1707 Walnut Investments LLC, which is part of Morgan Creek Ventures, a Boulder-based development company. Morgan Creek Ventures built the Walnut condominiums, which are across 17th Street from the property. It paid $3 million for the land in 2007.
A recent report from the Colorado Division of Housing said the vacancy rate for apartments in Boulder, excluding the university area, is 1.8 percent. Meanwhile, the third-quarter report issued Oct. 22 by the Apartment Association of Metro Denver and the Colorado Division of Housing found the vacancy rate for the combined Boulder County and Broomfield area was 2.9 percent, and the average rent climbed to $1,115. Both figures are records for the past 10 years.
The extremely tight market for apartments makes this the time to invest, said Scott Holton, a principal of Element Properties.
Residential construction in downtown Boulder has been dominated by luxury condominium projects such as the 34-unit Walnut at 1655 Walnut St. and the Arete, a 22-unit building at 1077 Canyon Blvd.
Developers and investors could see better returns on condos because the sale price would justify the cost of construction and the land purchase, Holton said. Only recently have the returns for apartment been high enough to attract investment and financing.
The 1707 Walnut St. project is being financed by a mix of loans from local banks and equity from investors, Holton said. Banks with a deep knowledge of Boulder proved more willing to back local projects, he said.
“A bank out of state — or even out of the county — sometimes can’t understand Boulder and the nuances here,” Holton said. “They don’t understand how the market is here.”
The apartments, which will be one- and two-bedroom units, are likely to rent for about $2 per square foot, Holton said. They will be marketed to young professionals working in downtown Boulder and empty nesters.
Element Properties’ management unit will market and manage the building. The success of that part of the company managing other landlords’ buildings has enabled it to branch out into developing projects of its own, Holton said.
Terry Kruegel of Kruegel Commercial Real Estate was the listing broker for the seller, working for months with Holton to put the deal together.
MENTAL HEALTH: 1707 Walnut St. is not the only thing keeping Element Properties busy.
In late October it sold the 30,000-square-foot medical office building at 1000 Alpine Ave. to Mental Health Partners for $5.35 million.
Mental Health Partners is a Boulder-based nonprofit provider of mental-health services.
Mental Health Partners bought the property from 1000 Alpine LLC, which purchased the building in February for $4.65 million, according to Boulder County records.
Holton is a principal of 1000 Alpine, which intended to redevelop the property into apartments. Katherine Payne and 1000 Alpine co-owned the property, the warranty deed said.
In addition to 1707 Walnut St., Element will shift its attention to a 41-unit multifamily project at 3085 Bluff St. Holton and Mike Boyers of Del Mar Interests LLC formed 3085 Bluff Partners LLC for the project. The units will be affordable housing.
3085 Bluff Partners paid $1.582 million to acquire the 81,196-square-foot property from 3085 Bluff Street LLC. The existing building will be cleared.
The 45-year-old building now will remain a medical office building.
Mental Health Partners intends to relocate programs for adult clients such as its wellness, employment and education services to the building, according to Bill Myers, director of development and public information. The nonprofit picked it because it didn’t want to build a new building and liked the location.
“It’s an existing building in a great location for our clients, with its proximity to other service providers,” Myers said.
Mental Health Partners now has 13 operating locations in Boulder, Broomfield and Longmont, but might consider consolidation in the future, he said. Outpatient therapy and medication management will continue at 1333 Iris Ave, Boulder.
Mental Health Partners will not occupy the building until late 2013, Myers said, allowing current tenants’ leases to expire. The nonprofit will remodel the building and eventually occupy all of it over a five-year period, he said.
In the 1000 Alpine Ave. sale, Chris Jacobs of Element Properties represented 1000 Alpine LLC and B. Scot Smith of The Colorado Group represented Mental Health Partners.
Terry Kruegel of Kruegel Commercial Real Estate represented the seller in the 3085 Bluff St. sale.
SELLER’S MARKET: Surveys of statewide real-estate trends have good news for home sellers.
According to a report from the Colorado Association of Realtors, sale prices and the number of sales are up and time on the market is down across Colorado.
The association released its first quarterly market statistical report recently, using statewide Multiple Listing Services, or MLS, data to take a snapshot of Colorado. The report covers the third quarter, which ended Sept. 30. The data does not include the sale of homes by their owners or the sales of new homes.
Statewide, combined sales of single-family homes, condominiums and townhomes totaled 23,987, a 14 percent increase compared with the third quarter of 2011. During the same period, the median sale price statewide rose 12 percent, to $224,000. Properties spent an average of 83 days on the market.
The local numbers are even stronger and show that some market segments now are clearly seller’s markets, said Duane Duggan of Re/Max of Boulder. Duggan tracks real estate stats for the Re/Max of Boulder Real Estate Report.
In Boulder County, 2,521 single-family homes were sold through September, a 24 percent increase from the same period last year. The median sales price is $379,500, a 7 percent increase, and the average market time has dropped from 113 days to 102 days.
The most noteworthy change might be the drop in inventory, Duggan said. The county now has 4.7 months of inventory, down from 6.7 last year.
NEW DEVELOPMENT: Etkin Johnson Group, a Denver-based real estate development and investment company, has started work on a major mixed-use project in Broomfield.
The 74-acre Broomfield Business Park will combine apartments with commercial space and a hotel, according to Etkin Johnson. The development is at the intersection of the Northwest Parkway and Via Varra Drive, across from the Phillips 66 property.
Construction has begun on the first phase of the project, a 374-unit apartment complex to be named Retreat at the Flatirons. The first phase, which also includes construction of a public park and infrastructure, will cost $80 million.
The residential component should attract retailers, restaurants or offices to the 51 acres available for commercial space, Etkin Johnson chairman Bruce Etkin said.
The Retreat at the Flatirons should be ready for initial occupancy in July, the release said. Units will range from 703 to 2,023 square feet and rents are estimated to range from $1,000 to $2,235.
Bank of America Merrill Lynch provided construction financing totaling approximately $53 million for the first phase of Broomfield Business Center, according to Etkin Johnson. The deal was closed in August.
Lauren Brockman, principal of the Denver office of Allied Realty, is providing comprehensive development consulting services, and Orion Real Estate Services, a subsidiary of Allied Realty, will provide property-management and leasing services upon completion, the release said.
ALTA HARVEST STATION: Wood Partners, one of the nation’s largest developers of multifamily residential housing, has closed on its purchase of 13.75 acres of land in Broomfield.
Wood Partners is building Alta Harvest Station Apartments, a 297-unit complex at the southwest corner of Wadsworth Boulevard and 118th Avenue. The project is across U.S. Highway 36 from 1stBank Center.
Job growth in Broomfield and the surrounding area attracted Wood Partners to the city, said Tim McEntee, director of the Wood Partners Denver office.
“There’s plenty of good, organic job growth, and that corridor is staying very strong,” McEntee said.
McEntee declined to disclose the price, and Broomfield has not yet recorded the deed. The first building is expected to be ready for tenants next June or July, and the entire community is scheduled to be completed in January 2014.
Alta Harvest is one of several multifamily developments being started in the U.S. 36 corridor. McEntee said Alta Harvest is targeted at people who work in the area and likely need to commute.
Alta Harvest is across U.S. 36 from the Broomfield RTD station in Arista, and residents will have easy access to the pedestrian bridge over the highway, McEntee said. Easy access to transit is expected to be a selling point.
Alta Harvest Station will be 13 three-story buildings with 175 one-bedroom units, 107 two-bedroom units and 15 three-bedroom units. Average size of the units will be 940 square feet.
The land was owned by Jere Mock, and plans filed with the Broomfield Planning Department during the planning process say Wood Partners valued the land at $4.8 million.
Wood Partners projected the cost of construction to be $40.2 million, according to Broomfield records.
Wood Partners is the general contractor. Womack + Hampton, a Dallas-based firm, is the architect. Steve O’Dell of the Denver office of Apartment Realty Advisors is the broker.
ANNEXATION: The Longmont City Council approved the annexation of about 29 acres that could one day be the home of the long-delayed Fairgrounds Marketplace retail center.
Developers have tried to build a shopping center on the site for several years, but without success. Efforts continue to attract tenants, said Rich Gebele, who represents the developer, National Development Realty Inc.
The property, near the corner of Rogers Road and Hover Street and north of Home Depot, had been in unincorporated Boulder County. The annexation was to become official once documents are filed, said Longmont Mayor Dennis Coombs.
In 2011, Rich Development Enterprises, a California-based company, and the Sprouts grocery chain announced that Sprouts would open a store at the site. That deal fell through late in lease negotiations as Sprouts found another Longmont site — a space which had housed a Borders bookstore — and acquired Sunflower Markets, Gebele said. Rich is no longer involved with the project.
The developers are talking with potential tenants, and the annexation will make finding them a bit easier, Gebele said. National Development Realty is flexible with what it would build, he said.
The annexation agreement means Longmont will provide fire and police protection for the property, senior planner Don Burchett said. Longmont will collect property taxes from the owner and sales taxes once retailers open.
A NEW PEARL: Pearl Izumi, a maker of cycling and running apparel and equipment, has bought the land it needs to build its new headquarters in Louisville.
Pearl Izumi USA Inc., which is a trade name of DashAmerica Inc., paid $597,627.90 for about 8 acres in the Colorado Technology Center in Louisville, according to Boulder County records. The company plans to build a 55,400-square-foot office building and research center at the site.
Pearl Izumi’s new home, according to plans filed with the Louisville Planning Department, will have a distinctive design, with a reddish-brown weathered steel, exposed concrete and glass exterior. It could be expanded by another 10,500 square feet.
The building is being designed by Boulder-based Arch11 Inc. and the Portland, Oregon, office of ZGF Architects LLP. Construction is planned to start before the end of the year and could be occupied in the third quarter of 2013, according to the planning documents.
Pearl Izumi purchased the lots at 101, 1739 and 1797 Taylor Ave. from EJ Louisville Land LLC, which is owned by Etkin Johnson Group.
Pearl Izumi currently leases space at 1886 Prairie Way, a block south of the proposed new building, according to the Louisville Planning Department.
A representative of the company declined to provide additional details.
Michael Davidson can be reached at 303-630-1944 or email@example.com.
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