After moving his Cherry Creek North jewelry store four times during the last 25 years, Raz Gnat decided it was time to buy a building.
The owner of Gnat Original Design and partner Rich Nagel are redeveloping the former Bolderdash building at 2721 E. Third Ave. They plan to raze it and build two condominiums on top of retail space.
With the cost of real estate skyrocketing in Cherry Creek North, the next wave of development in the upscale shopping district is bringing in high-end condos on top of retail space.
“It makes sense to own it so we can have some control over our destiny and control over lease rates,” Gnat said. “If we didn’t find a property, we were going to move and leave the neighborhood because it’s getting expensive, and desirable spaces are hard to come by.”
Lease rates in Cherry Creek North range from $35 to $60 a square foot.
At least three other developers are planning projects that put residential space on top of stores in Denver’s tony shopping district.
“The land values are so expensive that if someone is going to buy something and have to scrape it, they have to think about going vertical in order to make their numbers work,” said Susan Karsh, managing director of Frederick Ross Co.
“The owners have been in there for so long that for them to sell and then pay huge, huge taxes … it just doesn’t make sense for them to sell unless it’s an astronomical amount,” she said.
The new residential spaces are already piquing the interest of potential residents. Redwood Real Estate Partners, for example, plans to build up to eight condos on top of 12,000 square feet of retail at 2625 E. Third Ave. The firm doesn’t plan to start construction until next year, but it has already sold all the condos, said Marcus Phillips, the company’s acquisition officer.
“We’ve got a cash-flowing building there, and we’re not in any hurry,” Phillips said. “We just see the market getting better.”
The Broe Cos. is so confident in the Cherry Creek market that it’s building a four-story speculative building that will include three condos, 2,000 square feet of retail and 5,000 square feet of office space that it will occupy, said Graham Hatcher, vice president of construction and development for Broe. The $4.5 million project is expected to be completed next May.
In other projects in the area:
DBC Properties plans to redevelop its building at 3031 E. Second Ave. into residences and retail space but has not decided when, said Winston Dyer, a principal of the firm.
The Hillstone Restaurant Group plans to demolish the former Amore Ristorante building at 2355 E. Third Ave. and build a free-standing restaurant on the site.
The appearance of First Avenue between Cherry Creek North and the Cherry Creek mall also is about to change.
Sturm Realty Group’s redevelopment of the former Tattered Cover space and Christian An schutz’s NorthCreek development, coupled with more stores facing out from the mall, will give the street more of a boulevard feel, said Julie Bender, chief executive of the Cherry Creek Business Improvement District.
Improving the crosswalk across Speer Boulevard to the mall is in the works, and “countdown” lights to help pedestrians gauge how much time they have to cross already have been installed.
“There are going to be reasons to cross the street,” Bender said.
Staff writer Margaret Jackson can be reached at 303-954-1473 or mjackson@denverpost.com.
