If all the projects in the works come to fruition, Denver’s condo market is in danger of being overbuilt, analysts say.
The number of people buying condos as investments is also alarming because the units either remain vacant or are rented, which does little to develop the neighborhoods Denver is striving to create.
“I’m concerned about the communities we’re building or not building,” said Anne Ricker, principal of Leland Consulting Group’s Denver office. “We’re just building property but not creating neighborhoods. Investment opportunities don’t create neighborhoods.”
Ricker was among experts discussing the U.S. and local real-estate markets Wednesday at the Urban Land Institute’s Colorado emerging-trends luncheon at the Hyatt Regency Denver at Colorado Convention Center.
There were 9,597 condos sold through the end of October this year, down from 10,082 for the same period last year. The median price dropped to $157,900 from $160,000 last year.
Projects planned for downtown include developer Randy Nichols’ 41-story Spire near the Colorado Convention Center; an age-restricted condo tower near the convention center by developer Charlie Woolley; Osborn Development’s 31-story One Lincoln Park; Buzz Geller’s 31-story condo tower near 14th Street and Speer Boulevard; Great Gulf Group’s 51-story tower at 14th and Lawrence streets; and the Four Seasons, which will include 140 condominiums atop 20 floors of hotel rooms.
“The fundamental question is, who’s buying them?” said Tom Wootten, senior vice president of Denver-based Frederick Ross Co. “It’s going to be a horse race. Those that can get built first will do well. I worry about the ones that will come later.”
But as long as developers are responding to a niche, the market should respond positively, said Patty Silverstein of Littleton-based Development Research Partners.
“The first baby boomers are turning 65, and I see developers responding to that marketplace, as well as the development along the whole southeast (rail) line,” she said. “Some of that construction is responding to changes in preferences. Single-family construction is falling fairly significantly, but the two-family attached marketplace is catering to the lifestyle changes we’re seeing throughout the metro region.”
Although there is a perceived demand for housing near light- rail stations, developers should carefully consider whether condos are appropriate.
Many people view proximity to transit as a convenience but don’t necessarily think about living in a multifamily dwelling.
“It gives them the opportunity to live in suburbia with access to transit without having to live in a high-density community,” Wootten said.
Staff writer Margaret Jackson can be reached at 303-954-1473 or mjackson@denverpost.com.
