Developers of downtown condominium projects are raising their prices, even as much of the metro area is in the midst of a housing slump.
Great Gulf Group will raise prices soon for the 200 residences in its 51-story tower at 1401 Lawrence St. by up to 5 percent, depending on where the unit is located.
“It’s typical of any project to raise pricing as units sell,” said Dee Chirafisi of Kentwood City Properties. “It real ly reinforces the value for the early investors who got in months ago. They have some instant equity, and they know the pricing is heading in that direction rather than the developer doing discounts.”
Those buying downtown condos represent a wide demographic, including empty-nesters, young singles, young couples and second-home buyers, Chirafisi said.
Many potential buyers have not reserved or put condos under contract because, given the broader housing market, they’re waiting for prices to drop.
“I think the public was anticipating that would happen because of everything they hear about the market,” she said. “But raising the prices is the way to get projects sold. You’ve got to give people deadlines.”
That’s a strategy that developers need to be cautious with, said Byron Koste, director of the real-estate center at the University of Colorado at Boulder.
“There have been folks who have done published price increases in the hopes it encourages people sitting on the fence to close with the lower price because they’re worried about the price increase,” Koste said. “You can do that once, as long as you carry through on your threat, but as soon as you say never mind, your credibility is eroded.”
Among the other reasons for price increases on new proj ects are unexpected costs for building the project, leaving the developer no choice but to raise prices.
Another is when the market allows it — and that seems to be the case with downtown condos.
“If the market is telling you there is more than enough demand for the supply you are providing, that gives you the opportunity to raise prices,” Koste said.
During presales of the Pinnacle across from City Park and Wynkoop Residences along Cherry Creek, developer Opus Northwest raised prices several times.
“It really depends on when the units sell,” said Scott Menefee, the company’s vice president of real estate. “If we’re selling units fairly quickly, we want to make sure we’re capturing the value in the marketplace.”
So why not start with higher prices?
“We want to make sure the velocity of the sales is good enough that we can be close to sold out when the building opens,” Menefee said.
Developer Amy Harmon said she’s getting ready to raise prices on the 43-unit project she’s developing at 15th and Delgany streets. When she started presales at Komorebi, prices started just under $500 a square foot. Now, some units are as much as $700 a square foot.
“We have not been finding price resistance,” Harmon said. “There are very few opportunities to purchase a special home in downtown Denver.”
Ken Miller, a broker with Kentwood City Properties who is marketing 1401 Lawrence, said Denver real estate is in better shape than Detroit, Las Vegas or Miami.
“When you’re the No. 1 activity center, sports center and cultural center, you’re somewhat immune to fluctuations in the market,” he said.
Koste said downtown is distinct from the rest of the metro market, where prices and sales have been dropping for months.
“It’s a good place to consider investing,” he said. “They’re not making more downtown. They’re making more suburbs and minidowntowns that are transit-oriented. But there is real ly only one downtown.”
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
