If your organization would like to take advantage of either of these opportunities, please contact Bill James at bjames@jres.com or 303-316-6768.

A Couple of Corrections

I can always rely on Michael Henry of Capitol Hill United Neighborhoods for a “reality check”.   His comments on the October Cherry Creek Perspective follow:

The paragraph about the Main Street zoning on Colfax is not exactly accurate. While City Council did approve the Main Street zoning language amendment on September 12, it has not yet re-zoned or mapped any specific parcels along Colfax or anywhere else. There is one parcel at 1480 Madison that will have a controversial re-zoning hearing in December, which will be the first parcel considered for the new zoning. Most of the rest of East Colfax (between Grant and Colorado Blvd.) will be considered a few months after that for rezoning.

On November 14^th the City Council passed a resolution expressing the Council’s intention to initiate the process of changing the zoning map along Colfax between Grant Street and Colorado Boulevard.

Also, contrary to the October issue Bruce Maltz is not one of the purchasers of the former Veldkamp’s property at 3^rd/Harrison.  Bruce is an advisor to the owner/developer and reports that plans are being finalized for development of 6 townhomes.

Fillmore Plaza – How Will It Be Redeveloped?

A number of development forces are converging rapidly at and near 1^st Avenue/Fillmore Plaza.  As reported here in the past, the entire block on the west side of Fillmore Plaza in Cherry Creek North is undergoing dramatic changes in preparation for redevelopment by Western Development Group, LLC with condominiums, retail and office space.  At the same time, the owner of the block on the east side of the mall represented by the Sturm Financial Group has expressed a desire to improve the retail rentability of its space on the Plaza by returning Fillmore Street to automobile traffic.

As it happens management of the Cherry Creek Shopping Center eagerly anticipates the opening of a Nordstrom store in the former Lord & Taylor building nearby 1^st/Fillmore.  Incidentally, according to Nick LeMasters, General Manager of the mall, Nordstrom is now talking to the City of Denver and the mall owner, Taubman Co. about expanding the 120,000 SF store to some 160,000 SF, the preferred size of Nordstrom’s stores.  This would likely move the front wall of the store much closer to 1^st Avenue, perhaps all the way to the sidewalk and would delay the store opening to Fall 2007.

Fillmore Plaza and the intersection of Fillmore Street have been intended to be the “center of gravity” of the Cherry Creek area since the mall was built, the Cherry Creek North Business Improvement District (BID) was formed and the street was converted to a plaza some 15 years ago, but that dream was never realized.  Now an opportunity presents itself to do just that as these development forces converge.

Of course, the residential and commercial interests in the area are watching this process very carefully.  Residents tend to want to preserve Fillmore Plaza as a pedestrian mall with the movies, ice rink and other events produced by the BID and commercial interests want to generate retail sales.  As often happens, many members of these groups at first think they have divergent interests, when they more likely desire the same result.  An attractive pedestrian mall will produce increased retail sales for the properties adjacent to it.  But it must be designed well to produce that result.

So, how do you coordinate three different major developments with three different owners, not to mention, the surrounding independent business interests, the BID, other major developments such as Clayton Lane, and perhaps most vocal, residential interests?  At the Cherry Creek Steering Committee (CCSC) meeting in September, Nick LeMasters first brought up the idea of retaining an outside consultant to find a way to coordinate the various developments to maximize the benefit for all.  Marilee Utter of the Urban Land Institute was kind enough to attend the September meeting of the CCSC where she outlined the process necessary to commission and most important, actually use the results of a professional study.

Denver City Council Member Jeanne Robb immediately saw the potential for synergy and arranged, with the help of Marc Schtul of the BID for a few representatives of all of stakeholders in this process to meet.  It was realized that a very short time was available for a consultant team to do its work.  Western Development needs to know in a few months how Fillmore Plaza will be configured, so it can design its development.  Similarly, the BID is planning a bond issue for later in 2006 to improve many aspects of its infrastructure and needs to know what to finance in the next few months as well.

Before the stakeholder meeting in mid-November a number of potential consultants were considered and various ideas about sharing the cost of a consultant were discussed.  Henry Beer of Communication Arts, Inc. of Boulder was contacted and was kind enough to facilitate the stakeholder meeting.  He assisted the group in identifying the "ends" or results that the various stakeholder groups desired and differentiating them from the means to get there.  Ends were concentrated in the type of environment that was desired and means included the physical design issues of Fillmore Plaza, 1^st Avenue and its surroundings.  The Cherry Creek Steering Committee representatives expressed the desire to integrate any redesign of Fillmore Plaza with an effort to make all of 1^st Avenue more pedestrian friendly.   The BID representatives appropriately wanted the design to integrate well with the rest of the BID. While the Daniels Fund was not represented at the meeting, the Fund has expressed concern for pedestrian safety along 1st Avenue between Steele Street and Colorado Boulevard for the benefit of its Young Americans Bank and the surrounding residential areas.

So a process is off and running that has tremendous potential to enhance result of the transformation of the heart of the Cherry Creek area that is underway.  It is tempting to think that preconceived notions about the end result have already been established, but they certainly have not.  It will remain unclear for some time whether Fillmore Plaza will remain a pedestrian mall or be converted to a street.  And something in between is certainly a possibility too.  While it has not been tried yet, Clayton Lane provides an example of a low–traffic street from which autos could be prohibited occasionally for pedestrian oriented events.

Cherry Creek Residential Real Estate Market Update

The Metrolist and Denver Board of Realtors market sub-area in which Cherry Creek is located is called the Denver Southeast sector. Metrolist and Denver Board of Realtors survey all single-family properties. Recent market surveys by Metrolist and the Denver Board of Realtors are summarized as follows:

Source: 

Metrolist, Inc. and Denver Board of Realtors

James Real Estate Services, Inc.

 *September 2005

The number of available properties in the sector increased from year-end 2004 through September 2005 with the average listing price increasing as well.  The number of available properties in the sector decreased from year-end 2003 to year-end 2004, while the number of sales increased by more than 500 homes. While the number of sales during the year remained fairly stable from 2000 to 2003, the sales level during 2004 was the strongest to be experienced. The number of sales through September 2005 trends down the number sold from 2004 by slightly more than 100 homes. The average sale price increased 8.8% during 2005.  In 2004, the average number of days on market decreased with the increase in the number of sales. The average sale price increased nearly 6% during the same time as well. The average number of days on market has decreased slightly through the 3^rd quarter of 2005 while the average sale price continues to increase.  The submarket is beginning to stabilize and recover indicating a strong market.

The Cherry Creek North residential market has been experiencing a strong redevelopment trend since the early 1990s.  The trend has continued through the general economic recession albeit at a slower pace and developers continue to build and find a market for their product.  Over the years new homes have increased in size in the area and evolved from attached townhomes to detached residences with prices increasing from the $400,000 to $600,000 high end of the range in the early 1990s to the $2,000,000 to $3,000,000 range and higher more recently.

Although Metrolist tracks condominium sales – the ability to track townhome sales is somewhat more difficult. Many brokers list townhome units in the single-family category while others list them in the condominium category.  In the Cherry Creek neighborhood there have been 31 townhome sales since the beginning of 2005. Sale prices range from $258,000 (older smaller units) to $1.9 million (newer luxury style units) and from $231/SF to $567/SF.  The average days on market ranges from a low of 7 days to 379 days. The sales with the higher days on market are new construction units that were placed into Metrolist prior to completion of construction. Average days on market for existing units are less than 30 days to almost 90 days.

Currently there are 38 townhome units available for sale. Listing prices range from $399,900 to $3.5 million and from $261/SF to $657/SF.  Ten of the 38 available townhomes are new construction. Listing prices for these units range from $635,000 ($280/SF) to $2,499,000 ($593/SF).  The number of days on market for listings is ten days to two years. The two at two years are currently under construction and will close once construction is complete. The majority of units available for sale have been listed for nearly 90 days.  This indicates either an oversupply of units available or a possible market slowdown.

According to Hanley Wood, a national residential market data source, there are five active new townhome communities within the Southeast Denver County market.  All of these communities are larger than the typically found in Cherry Creek and located in markets that do not compete directly with Cherry Creek North. Three of the tracked communities are located in the Lowry redevelopment, one is in the Hilltop neighborhood and the fifth is in southeast Denver.  Sale prices range from $135,000 to $597,900 for units with 912 SF to 2,897 SF equivalent to $91/SF to $267/SF. These communities are typical “mass” builder communities without the detail finishes (elevators, granite, marble, subzero appliances, etc.) that the luxury builders in Cherry Creek add to their product. The Hanley Wood communities indicate absorption rates from 0.1 unit/month to 4.7 units/month.

Recent market surveys of condominium (including townhome) units in the Denver Southeast section conducted by Metrolist and the Denver Board of Realtors are summarized as follows:

Source:

Metrolist, Inc. and Denver Board of Realtors

James Real Estate Services, Inc. *Through September 2005

The condominium market has shown steady growth over the past three years with continued increases in average sales price.  The number of sales has remained fairly consistent, and 2005 appears to be on track with the previous years.  The number of active listings through the first half of September 2005 is higher than previous years, and average days on market have increased somewhat.  According to MLS, there have been 385 condominium sales in the Cherry Creek area over the past year, 110 of which were newly constructed or converted within the past five years, and 45 constructed within the past year.  Of the units constructed within the past 5 years, the sales prices ranged as follows:

According to the Hanley Wood, there are a total of 16 condominium projects marketing new units in Southeast Denver County within the past 18 months.  The projects range from 12 to 264 units and from 410 SF to 3,620 SF with sale prices from $79,950 to $1,595,000/unit. The projects indicate absorption rates from 0.68 to 4.07 units/month with concentration in the 3 to 4 units/month range.

Three of these communities are located in the “Cherry Creek” market area. 191 Clayton Lane, located in Cherry Creek North business district offered a total of 25 units. Twenty- four of these units have sold since construction began in July of 2003. Prices at 191 Clayton Lane ranged from $325,000 to $1,595,000 for units with 845 SF to 2,532 SF equivalent to $350/SF to $630/SF.  Portico Cherry Creek is located south of the Cherry Creek Mall along South Cherry Creek Drive. All of the units at Portico Cherry Creek have been sold. Prices ranged from $302,900 to $1,199,000 for units from 1,100 SF to 2,500 SF equivalent to $275/SF to $480/SF. The Greenhouse located at South Harrison Street and East Alameda Avenue in the Cherry Creek East neighborhood will have a total of 240 units when completed.  Of the completed units in the first phase, prices ranged from $156,000 to $580,000 for units from 644 SF to 1,454 SF equivalent to $231/SF to $399/SF.