Gary Kaliher travels the world in his job as international logistics manager for Newmont Mining Corp., so buying a $360,000 condo in Denver’s Uptown neighborhood made sense.
When he’s home, he’s within walking distance of everything he needs. When he’s away, he doesn’t have to worry about maintaining a home and yard.
“I’m four short blocks from my office and about the same to the Avenue Grill, one of the best restaurants in town,” said Kaliher, whose primary residence is in Boise, Idaho. “Denver is a great walking town. I think it’s a real luxury to be able to walk to a restaurant to have lunch or dinner.”
People like Kaliher, who buy condos in downtown metropolitan areas for the sake of convenience, increasingly are helping push up condo prices both nationally and in Colorado.
Since 1996, the increase in prices for condos in metro Denver has exceeded that of single-family homes: 101.1 percent versus 92.4 percent, according to an analysis of condo- and home-sale data by The Denver Post. Additionally, condo-price growth has surpassed house-price growth in five of the past nine years.
Nationally, the condominium has hit greater heights: The median condo price exceeded the median price of a single-family home, $219,300 versus $217,900, in July, according to the Westlake Village, Calif.-based National Association of Realtors, a brokerage- industry trade group. The median price is the price at which half the homes in a given market sell for more and half sell for less.
However, the national statistics are skewed “because there is a concentration of condos in high-cost metro areas,” the Realtors group cautions. “In a given market area, condos typically sell for less than single-family homes.”
That’s certainly true in Midwestern cities such as Minneapolis, where condos sell for $12,000 less than single-family homes. And condos are nearly $100,000 less in metro Denver for a simple reason – good availability of low-cost land for the construction of homes.
“I’ll be dead before condo prices exceed single-family because of the fact of where we are,” independent real estate consultant Gary Bauer said. The metro Denver median condo price hit $162,499 in August; the median single-family home price that month fetched $255,000.
“As long as there’s land available, single-family homes will be built, and Colorado residents will always go for a single- family over a condo,” Bauer said.
That’s not stopping developers from adding to an already abundant supply of condominiums downtown.
About 1,000 condos are under construction, and 2,500 are on the drawing board. Developers are banking on shifting demographics – namely, aging baby boomers – to fill them.
“The baby boomers have had a very profound effect as a demographic group at each age they’ve moved through,” said Dan Horvat, a principal with Berryhill Development. “When they started having kids, washer and dryer sales went through the roof. Now they’re entering the empty-nester phase of their lives.”
Horvat’s company plans a 114-unit, 19-story mixed-use redevelopment project at West 10th Avenue and Speer Boulevard. Prices will range from $225,000 to $1.5 million.
Empty-nesters Judi and Scott Saunders want to buy a condo downtown so they’re close to their business, Golden Awards & Engraving, as well as to downtown’s cultural amenities.
“We work a lot,” Judi Saunders said. “It would just be more convenient to be closer. There are lots of things to do downtown, with the ballet and different musicals. If you don’t have kids, you don’t have to worry about schools.”
Horvat is confident in the market, but he won’t start construction on the 10th Avenue project until at least 35 percent of the units have been sold. He’s waiting until financing for the project is in place before starting presales.
High-powered developer Mark Smith, on the other hand, has so much confidence in the downtown condo market that he’s started construction on the Glass House at Riverfront Park without selling a single unit.
It’s a gutsy move – developers of large condominium projects typically won’t break ground until at least 30 percent of the units have been sold.
But Smith said demand is so great for condos in the $200,000 to $400,000 price range that he has 1,300 people on a waiting list for the 400-unit development.
“That’s a really deep market,” said Smith, referring to the price range.
If there’s any weakness in the condo market in Denver, it may be the market for luxury condos priced at $800,000 and up.
Lenders are cautious about financing high-end projects downtown, and local high-end condo developers are working on projects in other parts of the country.
“I’m very bullish on downtown Denver multifamily residential, but I have concerns with the higher price points,” said Craig Poulter, senior vice president at LaSalle Bank, which is providing financing for a number of condo projects downtown, including a 41-story tower near the Colorado Convention Center planned by Clayton Lane developer Randy Nichols.
Condos in the tower will sell for an average of just over $300 a square foot – a price with which both Nichols and Poulter are comfortable. Buyers will pay between $200,000 and $550,000.
“I think the market is very limited, and there’s too many people chasing the same affluent buyer,” Nichols said. “That’s why we’re doing a project with the target market being the guy who is spending $150,000 to $300,000 for his home.”
Still, other developers are having success with projects where units are selling for $500 a square foot and up. Corporex, for example, has sold 75 percent of the 56 units in its Museum Residences next to the Denver Art Museum, said Steve Moyski, president and chief operating officer of the company’s Denver office.
“Everything that’s been brought to market at every price point has been selling,” Moyski said. “There is no typical buyer.”
The Pinnacle at City Park South, the 27-story tower being developed by Opus Northwest, is a prime example.
Of the 162 units that will be built in the first phase, more than 100 are reserved and at least 34 are under contract, said Scott Menefee, senior director of real estate development for the Minneapolis-based development firm. The sales prices are diverse as well. About 67 percent of the units priced over $400,000 have sold, and 34 percent priced below $400,000 have sold.
Nearly 20 percent of the buyers are between ages 28 and 35 with no children or only one child. But some are grandparents who see the park across the street as a great place to take their grandchildren.
“You reach a point where you don’t want to mow the lawn, you don’t want to worry about maintaining a house,” Menefee said. “The simple demographics is that we’re all getting older.”
Staff writer Margaret Jackson can be reached at 303-820-1473 or mjackson@denverpost.com.
