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Alliance buys former RedPeak sites in West Highland

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Highlights:

  • The former RedPeak sites in NW Denver have sold.
  • Alliance Residential bought the 3 sites in West Highland.
  • The price is one of the highest in the area by one metric.
Alliance Residential will incorporate the former Beth Eden Church into a new apartment development in West Highland.

Alliance Residential will incorporate the former Beth Eden Church into a new apartment development in West Highland, setting the stage for constructing what had been the RedPeak plan.

Construction likely will begin soon on luxury apartments in the heart of the trendy Highlands Square area of West Highland at a long-planned development that a neighborhood group unsuccessfully tried to stop in a campaign that included a court battle.

Phoenix-based Alliance Residential Co. can start construction on the 148-unit community because it has completed its purchase of a trio of sites along Lowell Boulevard, Meade Street and West Moncrieff Place, just north of the popular West 32nd Avenue restaurant and bar corridor.

Records show that Alliance, through a company called Broadstone Highlands Square LLC, paid about $9.7 million to a group headed by Tom Wootten for the properties.

An Alliance executive could not immediately be reached for comment last Friday.

At one point, Denver-based RedPeak Properties had the land under contract for $4.55 million, according to court records from the lawsuit in Denver District Court. The lawsuit had been filed by members of a grassroots opposition group called No High Rises in West Highland. Wooten’s group paid $3.75 million for the property in 2007, but spent more than another $1 million on the project after purchasing it. Expenses included the costly legal battle, removing asbestos from a church building, and razing a portion of the church, as well as another building on the site.

The neighbors could not convince a judge during a three-day trial last year that the U-MS-5 zoning was an example of illegal spot zoning or that the 5-story buildings were incompatible with the mostly single-family home neighborhood and a violation of Blueprint Denver, a transportation and zoning guide for the city’s development.

Alliance building RedPeak’s plans

Alliance also bought the architectural plans, engineering and other reports from RedPeak.

While RedPeak declined to comment, observers said those type of plans would cost about $1 million, making Alliance’s total entry cost about $10.7 million.

Paying $1 million for the plans, however, would be less costly than the time-consuming prospect of starting from scratch, a scenario in which Alliance also would have to worry about increasing construction costs, according to industry sources.

A preliminary rendering from RNL on what has been called the Highland Square project.

A preliminary rendering from RNL on what has been called the Highland Square project.

The plans that Alliance bought call for building 5-story buildings on Lowell Boulevard and Meade Street and a 4-story building on Moncrieff.

The former Beth Eden Church building on Lowell has been designated as a historic landmark and will be renovated and incorporated into a new building.

History trumps height

Wootten was willing to contractually require a future buyer to build a maximum height of 4-stories on Meade Street, but in exchange he didn’t want the church designated as a Landmark.

A number of neighbors, and people from other parts of Denver, convinced the Denver City Council to approve the Landmark designation, however.

Even though the Moncrieff plan is zoned for a maximum height of 5-stories, RedPeak agreed to a lower the height by one floor and Alliance will honor that decision.

While the lower heights may allow a developer to charge a small premium for better views on some of the units in the Lowell building, that was not the reason for the voluntary downsizing, a RedPeak official said when it still had the land under contract.

And there would be no problem constructing a 5-story building on the 13,400-square-foot Moncrieff site, a number of experts agreed.

However, a 5-story building would have required another level of  underground parking on the Moncrieff site,  which would have been extremely costly, especially given the relatively high water table, explained one person familiar with the project. In total, the plan submitted to the city calls for 184 parking spaces.

Adding a few more units on a fifth floor on the Moncrieff site  only would only incrementally add to the value of the project, given the cost of underground parking, he said.

Price high for West Highland

The sales price equates to almost $158 per square foot for the 62,150-square-foot site.

“This is one of the highest priced sales in the Highland area on a price per square foot basis, eclipsing the Denver School District site,” said John Winslow, president of Winslow Property Consultants.

“This price is analogous to prices paid (for land) near Union Station,” for future apartment buildings, said Winslow, who wast not involved in the sale, but is an expert on valuing real estate and closely monitors the Denver-area commercial real estate market.

Winslow said that Alliance likely would be anticipating rents in the $2.30 to $2.50 per square foot range.

At $2.50 per square foot, the monthly rent in a 750-square-foot would be $1,875.

Records also show that Alliance received a loan from Bank of America for about $29 million for the project.

“Typically, the developer pays at least 50 percent cash for acquisitions and the $29 million (BofA loan) would be for the construction and 50 percent of the land cost,” Winslow said.

Winslow estimated that after Alliance has completed construction and “stabilized” the building by leasing a substantial amount of the units, it likely could sell it for about $330,000 per unit. That would represent a sales price of about $48.5 million.

Interested in buying a home in West Highland? Please visit COhomefinder.com to learn what is available.

Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee Co. and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.