The average rent for the region was up from $738 reported during the fourth quarter of 2010, and was down slightly from 2011’s third-quarter average rent of $778, shows the report by the Colorado Division of Housing and the Apartment Association of Southern Colorado.

The median rent rose year over year to $742 during the fourth quarter, rising 4.3 percent from 2010’s fourth-quarter median rent of $711. The average rent increased in all types of apartments measured, including all types of units from efficiency apartments to three-bedroom apartments.

The average rent also increased year over year in all sub-markets measured during the fourth quarter in all areas except the Central region where the average rent fell 1.8 percent to $699. The average rent increased the most in the Southeast region where it increased 12 percent year over year to $708.

“We generally expect the rent to drop off a bit during the fourth quarter,” said Ron Throupe, a professor of real estate at the University of Denver’s Burns School of Real Estate and Construction Management, and the report’s author. “Comparing year-over-year, however, we’ve now seen two years of solid rent growth in Colorado Springs.”

Average rents for all market areas were:

• Northwest, $819.
• Northeast, $742.
• Far Northeast, $900.
• Southeast, $708.
• Security/Widefield/Fountain, $615.
•  Southwest, $797.
•  Central, $699.

The apartment vacancy rate in the Colorado Springs metro area fell year over year to 6.7 percent during the fourth quarter of 2011, falling from 2010’s fourth-quarter vacancy rate of 7.2 percent. The fourth-quarter rate rose from this year’s third-quarter rate which was 6.2 percent.

The vacancy rate declined year over year in the Northeast, Far Northeast, Southeast and Security/Widefield/Fountain areas of Colorado Springs, while the vacancy rate increased during the same period in the Northwest and Central areas. The vacancy rate was unchanged in the Southwest area.

“Due to seasonal issues, the vacancy rate moved up a bit during the fourth quarter, but it was the lowest fourth-quarter vacancy rate for the metro area since the year 2000,” said Ryan McMaken, a spokesman for the Colorado Division of Housing. “The region saw some job growth during 2011, and that, coupled with little new multifamily construction, has sent the vacancy rate down to a 12-year low.”

Vacancy rates for all market areas were:

• Northwest, 6.8 percent.
• Northeast, 5.3 percent.
• Far Northeast, 6.5 percent.
• Southeast, 9.6 percent.
• Security/Widefield/Fountain, 10.7 percent.
•  Southwest, 5.4 percent.
•  Central, 7.1 percent.

Apartment Realty Advisors is also a major sponsor of this report. The Vacancy and Rent Surveys are a service provided by the Colorado Department of Local Affairs’ Colorado Division of Housing and the Apartment Association of Southern Colorado to renters and the multi-family housing industry on a quarterly basis.

Contact John Rebchook at JRCHOOK@gmail.com

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An early elevation of RedPeak's luxury apartment building along Lowell Boulevard.

Mike Zoellner, the top official at Denver-based RedPeak Properties, on Friday confirmed that his company is studying voluntarily down-zoning one of the three luxury apartment buildings it plans to develop in the Highland Square area to four stories instead of the five stories allowed under the current zoning.

RedPeak, facing heated opposition from some neighbors since last fall, initially planned to develop three, five-story buildings on Meade Street, Lowell Boulevard and West Moncrieff Place, just north of West 32nd Avenue.

Now, however, RedPeak is considering building a four-story building on Moncrieff Place, while keeping five stories on the other two parcels. InsideRealEstateNews first reported that was a possibility a week ago.

RedPeak also pointed out that the heights of the proposed buildings are below the 70 feet maximum allowed under the current U-MS-5 zoning.

The tallest building, at 62 feet tall to the top of the parapet, would be on Lowell, next to the existing church that would be incorporated into the new apartment community. The Meade building would be 56 feet high and the Moncrieff building 46 feet high.

The new buildings would not be as tall as the 65-foot tall church; the 68-foot tall condominium building at the corner of Lowell Boulevard and West 33rd Avenue; and the nearby 12-story Eden Manor at West 32nd Avenue and Julian Street, RedPeak said.

“The current designs are roughly 50 percent of the allowable building sizes when considering height and floor area,” according to RedPeak.

RedPeak said other concessions and solutions to neighborhood concerns it is offering, include:

• Setbacks from the street that are greater than required under zoning. First-floor units along Meade and Moncrieff would be setback as far as possible from the street to more closely mimic single-family home setbacks. Those units also would have exterior entries and front porches.
• Eliminating roof-top decks to address privacy issues of adjacent neighbors. Instead, it would provide smaller patios on the top floor of the building. Fewer than a dozen of the 150 or so units would have balconies and all of those would be facing the street.
• Provide more parking than required under the zoning and work with Councilwoman Susan Shepherd to create a master-parking plan for a three-block radius around the properties.
• Pursuing a car-share and B-Cycle stations to provide additional transportation options. Bicycle storage at the project will exceed code requirements.

Officials with RedPeak have met with a design advisory board to hammer-out details on 23 concerns – including height, density, traffic and parking impacts.

Members of the board include representatives from Councilwoman  Shepherd’s office; the West Highland Neighborhood Association; merchants along West 32nd Avenue; and the grassroots opposition group, No High Rises in West Highland.

“Shape and improve”

“RedPeak is very excited about the progress that has been made with the design advisory committee,” Zoellner said. “There have been numerous changes that have been made to the design of the project to address the concerns raised by the committee, which has helped shape and improve the overall project.  We have received a great deal of support for the project from West Highland neighbors since the release of the Meade and Lowell building elevations.”

Last week, RedPeak for the first time released preliminary elevations, or renderings, of buildings on Meade Streete and Lowell Boulevard. This week, officials from RedPeak and the No High Rise group presented their cases to the editorial board at the Denver Post.

The No High Rise group since the get-go has been concerned about the height and density of the three buildings on the parcels that RedPeak has under contract from an investment group headed by Tom Wootten.

As far as the density, the Lowell and Meade Street buildings would have 81,000-square feet and 40,780 square feet, respectively. That equates to a 24.4 percent reduction from the 53,970 square feet allowed on the Meade Street site and a 16.3 percent drop in the 96,800 square feet allowed on Lowell. RedPeak has not yet released the square footage for the down-sized Moncrieff Place building.

The maximum number of units on the three properties would be about 200 units, while RedPeak is planning 140 to 150.

Before the property was rezoned to U-MS-5 from R-4 in June 2010, Denver-based Mercy Housing considered buying the property for affordable rental housing. Mercy Housing planned to develop buildings to the maximum density allowed under R-4. At an average size of 700 square feet per unit, it would have resulted in more than 300 units. Mercy Housing dropped the plans when it couldn’t get financial help from Denver to help finance the project.

Goode: Not a compromise

Laura Goode, founder of No High Rises in West Highland, which now has about 1,800 signatures from supporters, said that RedPeak is not offering enough.

“Clearly, we would still have two five-story buildings,” Goode said. “That is not a compromise.”

A compromise, she said, would be for RedPeak to build three-story buildings on Meade and Moncrieff, and keep a five-story building on Lowell.

She also doesn’t care that the proposed buildings would not be as tall as the church.

“It’s kind of disgusting that they would even compare their building to the church The church is a historic, beautiful building,,” that has been there for more than 80 years, she said.

Asked if height is height, regardless of the use of the building, Goode answered: “No. The church has a steeped-roof and is steeped in the history of West Highland. I’m kind of offended they would compare their buildings to the church. When you are talking about mass that is comparing apples and oranges.”

Councilman Susan Shepherd, who represents the district, did not immediately return a call on Friday.

Downzoning 

But Goode said that she expects Shepherd to keep to an earlier statement she made that Shepherd would seek a legislative action to downzone the parcels on Meade and Moncrieff to three stories. For such a motion to pass would take a super-majority of 10 council votes, as Wootten has said he would oppose a downzoning.

Last week City Council President Chris Nevitt told InsideRealEstateNews he would not support a downzoning and he doesn’t think most council members would, either. Earlier, Shepherd said she was reconsidering pushing for a forced downzoning in light of a recent incident in her home. On the evening of Jan. 16, two women came to her home without an appointment, and after they brought up the possibility of recalling Shepherd, a shouting match occurred.

However, Goode said even if a council vote on the downzoning is doomed to fail, Shepherd should still introduce it.

“In front of the Denver Post editorial board I committed that our organization will not hold (Shepherd) responsible if she could not deliver all of the zoning for downzoning,” Goode said. “But we will hold her responsible if she does not send a message of solidarity to this community and submit the application to downzone.”

Compromise between the neighbors and RedPeak, is in the interests of both parties, said Mark Lee Levine, Professor and Director of the Burns School of Real Estate and Construction Management, Daniels College of Business, University of Denver.

“Just because you have the right to build something doesn’t mean you should build it,” Levine said. “Compromise means give and take on both sides. If the choices are single-family homes or 300 units, you want to meet some place in the middle.”

On the other hand, he said if the neighborhood group draws a line in the sand and says under no circumstances will it allow five-story buildings, the deal may not make financial sense for RedPeak and it is unrealistic for neighbors to expect it to develop a money losing community.

“They may need five stories for the numbers to pencil out,” Levine said. “It’s a tough one.”

Goode and other neighbors have repeatedly said they are not against development, only what they consider irresponsible development, such as five-story buildings in a neighborhood of primarily Victorian-style single-family homes.  They have said that the RedPeak proposal would be appropriate on busier streets such as West 38th Avenue, Federal Boulevard and West Colfax Avenue. However, extremely busy streets typically do not have the cachet to draw renters to luxury apartments such as RedPeak is proposing.

Levine said it is not unusual for neighbors opposing a development to take a similar stance to that of the No High Rise group.

“It sounds to me like a traditional conflict between neighbors and a developer,” Levine said. “They are saying not in my back yard, but it is Ok in somebody else’s back yard. It’s NIMByism. Everybody wants to have New York plays, but they don’t want New York traffic.”

Contact John Rebchook at JRCHOOK@gmail.com

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For the past nine quarters, the vacancy rate has fallen when compared to the same quarter one year earlier. The last time the quarterly vacancy rate rose year over year was during the third quarter of 2009.

From the fourth quarter of 2010 to the same period of 2011, the vacancy rates dropped in Adams, Denver, Douglas and Jefferson counties. Vacancies rose in Arapahoe County and in the Boulder/Broomfield area.

Renters hunting for lower rates

“Vacancies continue to decline year over year as demand grows faster than the production of new rental product,” said Ron Throupe, professor of Real Estate at the Burns School of Real Estate and Construction Management at the University of Denver, and the report’s author. “However, since the third quarter of 2011 we’re seeing some additional frictional vacancy as tenants move around in response to rising rents.”

As vacancy rates moved down, the area’s median rent increased. During the fourth quarter of 2011, the median rent in metro Denver rose to $870, increasing 2.8 percent from 2010’s fourth-quarter median rent of $846.

The median rent rose in all counties measured, with the largest increases found in Denver County and in the Boulder/Broomfield area where the median rent grew year over year by 3.4 percent and 3.7 percent, respectively. The county areas with the highest median rents were the Boulder/Broomfield Area and Douglas County where the median rents were $993 and $1,046, respectively. Denver County reported the lowest median rent at $834.

“The overall median rent in the Denver area has now increased year over year for eight quarters in a row, and the median rent has increased by almost 60 dollars over that time,” said Ryan McMaken a spokesman for the Colorado Division of Housing. “The rent growth we’re now seeing is more robust than what we saw during the last expansion between 2002 and 2008.”

Rental losses due to concessions, discounts and delinquencies fell to a ten-year low, dropping to 8.8 percent during the fourth quarter of 2011 from 2010’s fourth-quarter rate of 9.8 percent. Fourth-quarter rental losses have not been lower since 2002.

2011’s second-quarter vacancy rates by county were Adams, 5.3 percent; Arapahoe, 6.8 percent; Boulder/Broomfield, 4.4 percent; Denver, 4.8 percent; Douglas, 4.7 percent; Jefferson, 4.4 percent.

Median rents for all counties were:

• Adams, $873
• Arapahoe, $840
• Boulder/Broomfield, $993
•  Denver, $834
•  Douglas, $1046
• Jefferson, $836.

Contact John Rebchook at JRCHOOK@gmail.com

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A first look at what the RedPeak apartment buildings could look like.

Even as officials at RedPeak Properties are meeting with a consortium of interested parties on its proposed trio of five-story buildings in the heart of West Highland, it has provided a first glimpse of what  the buildings might look like.

RedPeak posted the first public renderings of the buildings on its website today. It noted that they are preliminary, but encouraged viewers to click on them and share them with others.

Tonight, RedPeak is meeting with a consortium called the Design Advisory Committee that includes representatives from Susan Shepherd’s office, the West Highland Neighborhood Association, the No High Rise in West Highland group, and retailers along West 32nd Avenue. Brad Buchanan, of RNL Design, is the architect. RedPeak plans to incorporate the church on Lowell Boulevard into the $35 million development. RedPeak has three parcels north of West 32nd Avenue on Lowell, Meade Street and West Moncrieff Place under contract.

A number of neighbors oppose the plans, saying they are too dense, too tall and will bring too much congestion to an area that already is starved for parking. Some vocal members of the neighborhood want Shepherd to downzone the property. City Councilman Charlie Brown, however, a staunch defender of property rights, said that he would oppose any downzoning, which took place in June 2010. Shepherd was recently involved in a highly publicized shouting incident in her home from two women opposing the current development. Brown, Council president Chris Nevitt and Mayor Michael Hancock, among others, called for civility when dealing with public features. Shepherd said she plans to become a “warrior for civility.”

Mike Zoellner, CEO of RedPeak, said his company ” never intended to create controversy or a confrontation with the neighborhood when it began the redevelopment of this site. Before entering into a contract to purchase the property, we evaluated the history of the project and the current entitlements. We had no indication that our vision would not be welcomed and supported by local residents and business owners. Our design intent has never assumed the construction of a high rise building by any industry standard.”

The project is believed to be the single largest private investment in West Highland.

“RedPeak Properties believes strongly that in order to attract investment capital into the City of Denver, there must be a predictable and supportive public process for land use issues,” Zoellner said. “Our industry and the economic growth of the city depend on this.  RedPeak is proud of the redevelopments we have created and our long term commitment as owners of quality Denver multifamily communities. We remain focused on creating jobs and increasing the assessed value of neighborhoods in which we invest.

Laura Goode, founder of the grassroots opposition group, No High Rises in West Highland, is disappointed that RedPeak is going forward with its plan for three, five-story buildings.

“Despite the clear, widespread message our community has sent, Red Peak Properties regrettably has insisted on proceeding with a project that, as Councilwoman Susan Shepherd has stated, is inappropriate for its location and is based on a flawed zoning change,” said Goode, whose group has gathered more than 2,000 signatures objecting to the project in its current form.

“There is overwhelming evidence that the zoning Red Peak wants to exploit is an anomaly — the parcels on which it wants to build are the only places in the entire City of Denver where an MS-5 designation has been given to Interior Local Residential Streets in a designated Area of Stability,” she continued. “We remain committed to halting this opportunistic attempt by Red Peak and its out-of-state financiers to ignore the wishes of thousand of local property owners, while destroying the character and charm of our neighborhood, and will continue working to support respectful, appropriate development in our neighborhood.”

On Friday, Evan Lichtenfels, development director at RedPeak, said most of the people who attended Wednesday night’s Design Advisory Committee reacted favorably to the elevations it released. “Here at RedPeak, we were very excited to release the elevations for the buildings on Lowell and Meade for the first time to show the public what our project will look like,” he said. “We think that will defuse a lot of the negative commentary based on inaccurate elevations that had been released earlier and distributed widely by the No High Rise group. This shows it is not the monstrosity that had been depicted in the inaccurate elevations released by No High Rises.”

However, some No High Rise members have pointed out that the streets depicted in RedPeak’s elevations appear wider than they are in real life. Lichtenfels that is a fair criticism, but resulted in getting the drawings released in time for the meeting, not by design. “You have these 3-D models and you layer in the images into the rendering. The street width showed up inaccurately. It was not intentional. Our design team was working right up to 5 p.m. That is something we are going to tweak and correct.”

Others, have complained that the drawings to not portray that the church sits on a “hill.” Lichtenfels was unaware of that criticism and said he doesn’t understand it.

“But if you aren’t a member of the Design Advisory Committee, you might not know that there is currently is a four-foot or five-foot landscaping wall in front of the church that brings the entrance to the church several feet higher than the sidewalk. We are going to lower that elevated courtyard in front of the church to bring the entrance to the front of the church basically to the sidewalk.”

Contact John Rebchook at JRCHOOK@gmail.com

For comparison, here is a rendering released and distributed earlier by No High Rises in West Highland.

A preliminary look at the RedPeak project from Meade Street.

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RedPeak's plans call for buildings about the same height as this church on Lowell Boulevard

Take a poll at the end of this blog on downzoning.

While RedPeak Properties still plans to develop three, five-story buildings in the heart of West Highland, the maximum height has been lowered, an official of the company told InsideRealEstateNews today.

As earlier reported today by IREN, RedPeak has addressed a number of concerns by neighbors and merchants regarding its plan just north of West 32nd Avenue on Lowell Boulevard, Meade Street and Moncrieff Place.

While RedPeak is removing retail from Meade and Moncrieff and dealing with issues such as lighting, the number of stories in the buildings – the most controversial portion – remains.

“Well, our current design is five stories,” said Evan Lichtenfels, Development Director for Denver-based RedPeak. “But we have lowered the heights quite a bit from what is allowed.”

The U-MS-5 zoning allows 70-foot tall buildings and the initial plan, before RedPeak hired architect Brad Buchanan of RNL Design, was to reach the maximum height.

“Now, from the sidewalk to the top of our parapet, we think will be 60 to 65 feet,” Lichtenfels said. For a comparison, the existing church on the site is 65 feet tall from the sidewalk, he said. While the city allows the mechanical heating, ventilation and air conditioning systems to be as tall as 28 feet on the roof, Lichenfels said he does not think that they will be anywhere approaching that height. “They probably will be more like four or feet, total,” he said. Also, because the mechanical systems will be in the center of the roof, they will not be visible for pedestrians on nearby sidewalks, he said. He also said that putting mechanical systems on the roof is the best solution, because it minimizes the noise neighbors might hear from the system.

Also, RedPeak plans to “step-back” the buildings at various levels, where they face residential properties. One set back will be after the second level and another at the fourth floor. RedPeak also will “pull-back” the buildings as far back from the property line as allowed. “Stepping back off the property line helps buffer that change,” from single-family homes to the apartment buildings, he said.

Unit a moving target

RedPeak also said their development would have “roughly 150″ units, while initially it said 160. But the final number remains a moving target. “One hundred and fifty is just an estimate at this time,” he said. “It is not a final count. It still may go up or down a bit.”

Also, RedPeak has moved ground-floor retail off Moncrieff Place and Meade Street, but the total amount of retail will remain the same – 10,000 to 12,000 square feet, but now all of it will be on Lowell.

“There were some concerns at the neighborhood advisory committee meeting that Meade and Moncrieff were primarily residential, so we pulled the retail from those sites to respect those concerns,” Lichtenfels said. “So now they will have more of a residential feel and look. Putting retail on Lowell seems to be a more logical choice.”

RedPeak’s next meeting with the advisory committee is scheduled for mid-January.

A construction date has not yet been set.

“We pulled back a little bit on our plans after we hired Brad Buchanan,” he said.

Also, RedPeak wants as much input from the neighborhood it can get before moving forward.

“We are listening to the neighborhood. They are the ones that know the neighborhood the best. They’ve voiced about 25 concerns and we’re going down the list to address them the best we can. Our goal is trying to make the best possible development for the neighborhood.”

It remains to be seen whether the changes will be enough for neighbors who believe that five-story buildings are too high, no matter what other changes RedPeak makes. Councilwoman Susan Shepherd is deciding whether she will try to force a downzoning, which a number of vocal residents support. Others, including the owner of the land, an investment group headed by Tom Wootten, believe that a downzoning is an attack on private property rights and would set a terrible precedent for the city, which could cripple economic development going forward. Because Wootten would protest a downzoning, it would require a super-majortiy of 10 out of 12 votes on the council to approve it. Shepherd, if she moves on a downzoning – or a legally complicated moratorium – would need to recuse herself from any vote.

Rather buy than rent? Check out housing options in West Highland at this COhomefinder.com link.

Contact John Rebchook at JRCHOOK@gmail.com

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Home builders in the metro area – from Boulder to Castle Rock, Erie to Englewood – pulled 2,959 permits in the first 10 months of the year for single-family detached houses, 2 percent more than the 2,896 during the same period in 2010, according to the report by the HBA of Metro Denver.

On a month-over-month basis, permit activity rose by 9.7 percent to 261 in October from 238 in October 2010.

Single-family attached homes, such as condos and townhomes, saw even greater  improvements. In the first 10 months of the year, permit activity – a signal of future construction, or starts – rose by 11 percent to 724 in the first 10 months from 652 in the same period last year. On a month-over-month basis, permit activity soared by 111 percent, but the numbers were small, rising to 95 in October from 45 in October 2010.

Apartment permit activity rose by 25.7 percent on a year-to-date basis, and were up 100 percent when October is compared with October 2010.

Moving in the right direction

“The numbers are encouraging,” said Jeff Whiton, President and CEO of the HBA of Metro Denver. “We have seen month-over-month improvements every month since April. The numbers aren’t big. We are still at the bottom of the cycle and it is too early to call an upswing. The buzz going around the industry is that builders are having a brighter outlook, are seeing more traffic and are finally being able to hit their projected sales numbers. That has not been the case for the past few years. Builders are much more optimistic than they were a year ago.”

That is certainly true about Gene Myers, the President and CEO of New Town Builders.

“I think customers are calling the bottom,” Myers said. “We sold around 30 homes in Stapleton until the beginning of October. Since then, we have sold 15. The numbers in the last 30 days have been amazing. It’s not just us. I was at a Vectra Bank dinner last night and I was talking to the guys at Wonderland, and they were seeing the same thing. And we are carrying more backlog of unsold homes into 2012 than we have in years.”

The HBA report includes the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson, as well as all of the individual communities in those counties.

Myers said he didn’t know if the pick-up in activity is only occurring at places such as Stapleton, or is market-wise.

“I think a lot of time the recovery starts in the most attractive communities, like Stapleton, and moves outward from there,” Myers said. The HBA report showed that permit activity in Denver rose by 11.7 percent to 525 in the first 10 months of 2011 when compared with the same period in 2010.

In any case, he said there are several reasons driving the increased demand:

1. “There’s a penting-up of demand. Families continue to grow and households are forming even in these tough economic times. Grown kids are tired of living in their parent’s basements.”
2. “The affordability factor. People are starting to realize that home prices are not going to get any lower. And it’s crazy to think that interest rates are getting any lower.”
3. “The resale market is very tight. There isn’t much inventory of resale homes, creating more demand for new homes.”
4. “Rising apartment rates. In many parts of the country, it is cheaper to buy than to rent. I think that is true in Denver, especially if you are renting in downtown or near downtown Denver.”

The report shows that 1,259 permits were pulled for apartment units in the first 10 months of the year, compared with 1,002 during the same period in 2010. Developers in October pulled permits for 176 apartment units, compared with 88 in October 2010.

All of that apartment construction is good for the economy, and ultimately will be good for housing, said Peter Niederman, CEO of Kentwood Real Estate.

“Nationally, there is an incredible amount of construction moving forward for apartments,” Niederman said. “It may not be for new homes, but at least it is construction activity. Think of all the concrete being purchased, all of the steel, lumber, fixtures, roofing material, copper pipes and glass for windows. That creates jobs. Ultimately, some of those people working in the trades, building apartments, will buy homes. And some of those renters, especially as rents continue to rise, will eventually buy, when they are secure enough in their jobs.”

“Cautiously optimistic”

Denver housing consultant S. Robert August said that he, and most builders, are “cautiously optimistic.”

August, who has weathered many economic downturns during the past four decades or so, said that in the past, when the inventory falls and the population increases, “we see a tremendous direction with pent-up demand taking place.”

The pent-up demand hasn’t yet manifested itself as strongly as it has in the past, because consumers are reluctant to make the big economic commitment of buying a home, the unemployment rate is still high, and consumer confidence remains low.

“Denver, unfortunately, has been in this economic malaise for such a long-time, people are afraid to call the bottom,” August said. “But I really believe the worst is over.”

Contact John Rebchook at JRCHOOK@gmail.com

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Hundreds of people gathered on Wednesday night at a listening session on the RedPeak development in West Highland.

The raucous four-hour West Highland neighborhood meeting on Wednesday night that that drew more than 200 people and dozens of speakers – all of whom spoke against the three, 5-story apartment buildings planned by Denver-based RedPeak Properties – raised some questions in my mind.

I’m bringing up some of these still unanswered questions and observations in this column, not because I am taking sides, but because I truly believe an open dialogue is fundamentally important to a free society. Also, I think this proposed development, and the issue swirling around it, such as forcing a down-zoning against the wishes of the owner of the property, could very well prove to be a microcosm of future developer-neighbor disputes across Denver.

As in West Highland, other neighborhoods may very well be in the dark about potential construction allowed under last year’s massive overhaul of the zoning code. Many other neighbors may reach the same conclusion as many in West Highland fear – that tall and dense developments could change the character of an area and accelerate congestion and parking woes.

The motto of E.W. Scripps, the owner of the Rocky Mountain News, where I was a reporter for 26 years, before it shut down in 2009, was “Give light and the people will find their own way.”

So in the interest in shining light, here are some observations.

1. Does the construction quality matter? One of the audience members who packed the “listening session” at the Highland Event Center at West 29th Avenue and Julian Street, said that he did not care, nor does he think the neighborhood cares, that RedPeak is proposing luxury apartment units on the parcels just north of West 32nd Avenue on Lowell Boulevard, Meade Street and West Moncrieff Place. Mike Zoellner, president of RedPeak, said they plan finishes and construction levels higher than found in most luxury condo projects.

I wonder what that resident and others would have thought about another proposal for the land, which until now has not been publicized.

Mercy Housing close to developing land

What few people know is that Denver-based Mercy Housing Inc., one of the nation’s largest owners and developers of affordable housing,  had those three parcels under contract about four years ago, when the land was zoned R-4.

Mercy Housing, a well-respected non-profit that has developed more than $2.2 billion in affordable housing across the country, was planning to develop the three parcels to the maximum allowable density, which was far greater under R-4 than the current zoning of U-MS-5. The deal, which would have included market-rate rental apartments and retail, as well as housing for low- and moderate-income residents, did not happen because the Denver Office of Economic Development had not targeted that area for affordable housing and wouldn’t help finance the deal.

Jennifer Erixon, senior vice president of real estate development for Mercy Housing, was unaware of the RedPeak proposal, but when I told her about it on Friday afternoon, she said she thought the sites would be “incredibly marketable” as a luxury development.

If the RedPeak deal fell through, she said she thought the sites would be just as appealing as an affordable housing development.

“Absolutely,” she said. “We are seeing an affordable, rental housing shortage in Denver. We have long waiting lists for our multifamily projects. We really liked that site because of its proximity to downtown and public transportation. We also think it is important to diversify neighborhoods with affordable housing.”

While many people embrace affordable housing, I have found over the years that many people do not want it near their homes, even though groups such as Mercy Housing develop units that are virtually indistinguishable in appearance from high-end units.

3. Impact of the church. The existing church has a congregation of 500 people and offers many wonderful services to the neighborhood, such as baby-sitting to couples wanting a date night.

I couldn’t help but wonder if a lot of people arriving and leaving a church at the same time contributes to as much, or even more traffic, than renters who are leaving and exiting three new buildings at different times.

One of the readers of InsideRealEstateNews had the same question, posting this comment on Friday on my blog: “John – mentioned in the meeting was the fact that the church is used by hundreds of families/kids for activities during the week, and for date night babysitting. I would be curious to know how much those activities now affect parking and traffic, and if the addition of multi-family housing unit dwellers would make any more impact, or possibly less impact if they have a parking garage for their vehicles?”

It seems one could argue that traffic is traffic, whether generated by renters or church-goers. Brad Buchanan, the architect hired by RedPeak, said a traffic study will be conducted. It will be fascinating to learn what it concludes.

Architect Brad Buchanan fields questions at the listening session sponsored by Councilwoman Susan Shepherd.

38th zoning calls for three-story buildings

3. Right development, wrong place. One constant from many of the opponents has been that this is a “great development at the wrong place.” Numerous people have said that it would be more appropriate along West 38th Avenue. However, I hadn’t heard from anyone from that area six-blocks north of the site. I wondered if they would welcome five-story buildings near their homes and was prepared to make some calls. But with a bit more research, I discovered that apparently is a moot point. Almost all of 38th Avenue between Sheridan and Federal boulevards is zoned U-MS-3, allowing a maximum height of three stories.

4. On board with the right plan? Another oft-repeated battle-cry from opponents is that they are not anti-development, but only this development in particular, which they believe is the result of a zoning error. I believe them.

Yet, a number of the speakers, including shop owners along West 32nd Avenue, voiced concerns of what 18 months of construction would do to their businesses. That is totally understandable, especially in light of the toll on merchants along Tennyson Street during its construction.

On the other hand, if the parcels are down-zoned to three stories from five, it would have an incremental impact on the construction time-line. It would trim 3 1/2 months to 4 months from the 18-month construction process, a veteran Denver developer, who is only vaguely aware of the RedPeak project, told me today. In other words, the area would still be a construction zone for more than a year, under a best-case scenario. Since a number of people at the meeting voiced skepticism that it would only take 18 months to complete, would they welcome a smaller project that by their assumptions would still take a year and a half or more to complete?

Other observations

Separate from the meeting, I feel the need to make some other observations.

I have been criticized for writing an article that cites numerous studies that found that nationwide, high-density developments do not tend to lower nearby home values. In some cases, homes near high-density developments appreciate a bit more than the overall market.

There seems to be a fundamental misunderstanding of what these studies are saying.

Tall buildings cast shadows, block views

The studies are not claiming that some people will not be robbed of sunlight and views by tall buildings. Without a doubt, losing views or sunshine or green-space is heart-wrenching. If you are forced to look at an ugly building, or a concrete wall, the psychic pain is all that much greater. Do you deserve that fate, just because you didn’t keep tabs on potential land-use and stop it dead in its tracks? Sure, that’s easy to say, but the truth is it would be generous to say that is on the radar screen of even 2 percent of the population until they are confronted with the possibility of bulldozers tearing up the ground.

However, keep in mind that every building casts shadows and most buildings – most likely including the house you live in – blocks a view of someone else, just as your neighbor’s house blocks your view to some extent, especially if you live in a city. If you live on a ranch in Elbert County that will not be a problem, but it also means you can’t step out your door and walk to Stella’s or bang!

That aside, what the research shows is that the benefits of well-built, dense buildings can increase the vibrancy of a neighborhood, making it that more attractive to home buyers. Indeed, it is not unreasonable to think that a certain percentage of people who are paying rent of $1,400 to north of $2,000 each month will ultimately buy a home in the area.

Of course, maintaing the value in your home may be small comfort if you lose something precious like a view, which can be priceless, even if you can’t hang a specific dollar amount on it.

Along the same lines, some people have criticized these studies because some have included cities such as Chicago, where big buildings are more common than in Denver.

I used to live in Chicago (2400 North and 3200 North, which you will only understand if you are from the Windy City with its grid-street system.)  I assure you there are many pockets in Chicago that are very comparable to West Highland. Chicago is more than downtown, the Loop and the Gold Coast. Indeed, some neighborhoods in Chicago, such as Wicker Park, not only share many traits of West Highland –  such as a historic housing stock and a bustling, walkable retail and restaurant area – but it also has weathered neighbors protesting numerous apartment developments they considered too dense and not a good fit.

And when I took  my brother-in-law, Bruce Horowitz, to West Highland about a dozen years ago, he surprised me by saying it reminded him of the part of Brooklyn where he grew up. Indeed, we had lunch that afternoon at Heidi’s Brooklyn Deli.

Could be the first down-zoning of its kind

On another issue, it has been pointed out since the massive rezoning took place, a number of properties have been down-zoned, the argument being that down-zoning these parcels is not the ordeal that some in the city have argued.

The first part is correct.

The Denver Planning Board has considered about 15 zoning changes since the overhaul of the zoning code took place in June 2010.

There are two ways to look at it: That represents, on average, almost one zoning change request per month since the zoning code was overhauled. On the other hand, they represent 0.01 percent of the 150,000 parcels in Denver that were rezoned.

But more importantly, when I asked the Denver Community Planning and Development department how many of the zoning change requests came from someone who did not own the land, the answer was: “Zero. All have been with the consent of the owner.”

In other words, convince Tom Wootten, who owns the parcels with partners, to down-zone the land and it will be a slam-dunk.

Good theater, but were people respectful?

Finally, anyone who attended Wednesday night’s meeting knows it didn’t exactly follow Robert’s Rules of Order.

People shouted out questions and comments throughout much of the night. As a reporter who has covered thousands and thousands of mind-numbing, tedious meetings and trials during the past 35 years, I thought it made for very good theater.

And since no one was shouting fire in a crowded theater, it was certainly was within their First Amendment rights. It also was exactly what I had expected, because in this increasingly polarized society, there seems to be little or no tolerance of opposing views, whether you are on the right or the left.

On the other hand, Buchanan, by my count, called out the names of at least nine people who, like Elvis, had left the building, before it was their turn at the microphone.

Many of them, I’m sure, would have spoken against the project.

Chilling effect on supporter

On the other hand, one person told me she was planning to speak in favor of the RedPeak proposal,  but ducked out before her name was called because she was scared.

“I was intimidated,” said the person, a resident of West Highland for more than 15 years, who is not a public figure and had no desire to be publicly derided. “I didn’t want people booing me and yelling at me.”

She said that people were so full of rage that the thought even crossed her mind that someone might find out where she lives and smash her car windows, if she dared take an unpopular stand.

The woman also didn’t think the behavior of many in the crowd reflected well on the neighborhood that she loves as dearly as any of the opponents to RedPeak’s proposal, but for environmental, social and diversity reasons, welcomes a mix of housing.

“I was embarrassed. Some of the people there seemed so nasty. I can’t believe they’re my neighbors.”

At the same time, she not only believes that the residents have every right to pursue a down-zoning, she thinks they are right to do so.

“Honestly, I have two minds about it,” she said. “Even though I knew the zoning change was happening – there were signs all over the place; you would have had to be blind not to see them – I didn’t pay too much attention. I like density and I think density is good for a city. We have to make the city more dense. The alternative is suburban sprawl that increases our commutes, pollutes the air and eats up our farm land. I also want to see a diversity of housing in this neighborhood. We can’t just be a neighborhood of single-family homes. I would support affordable housing on that site, if RedPeak walks away.”

Still, listening to some of the arguments of the neighbors, especially those on Meade Street, she admitted they were not without merit, and she sympathized with their concerns. That was reinforced when I told her the land had initially been re-zoned to allow only two-story buildings.

She just wishes the people had been a little nicer when presenting their side of the case.

“I really felt sorry for Susan Shepherd,” the city councilwoman who put together the listening session, and was jeered when she didn’t immediately support a call for a down-zoning. Some already are talking about efforts to recall her,

“Susan really looked like a doe caught in a headlight. I don’t think she was prepared for that kind of a reaction.”

Anyone wishing to volunteer for a citizen committee regarding the proposed RedPeak project should email info@westhighlandneighborhood.org and include any qualifications or expertise you might have that could be a benefit to the process. The committee expects to have its first meeting on the week of Dec. 5.

John Rebchook, who has lived in West Highland since 1984, can be reached at JRCHOOK@gmail.com

Related Posts:

• RedPeak gets an earful
• Buchanan hired for NW Denver church project
• 5-story Highland apartments pilloried, praised
• RedPeak concessions could include 4-story building
• Dowzoning unlikely

Hundreds of people gathered Wednesday night for the first neighborhood meeting with RedPeak Properties.

Take a poll at the end of this blog

With the passion and fervor found in a fundamentalist congregation, hundreds of people gathered Wednesday night – appropriately in a church – and voiced their  opposition to an apartment community planned in the heart of the trendy West Highland neighborhood.

But the only soul the people attending “listening session” in the Highland Event Center at West 29th Avenue and Julian Street, which is also a Presbyterian church, was that of the neighborhood, which many in the audience feared will be irreparably harmed if RedPeak Properties, a $400 million multifamily housing developer based in Denver – is allowed to build three, five-story buildings on three parcels just north of West 32nd Avenue and Lowell Boulevard.

During the four-hour meeting – twice as long as scheduled – applause followed dozens of speakers – some shouting out from the audience, others from a microphone at center stage – every time they spoke against the proposal in its current form.

Even an “Amen,” was shouted out from time to time.

No one spoke in favor of the five-story plan.

Shepherd put on hot seat

The only sustained boos and catcalls fell at one point on Susan Shepherd, the recently elected city councilwoman, when many in the audience called for her to take a stand against the current plan and support the residents‘ desire to down-zone the properties. More than 1,100 people are supporting a grassroots group, No High Rises in West Highland.

“We should participate in a dialogue,” Shepherd said, and was overwhelmed with jeers.

Pressed on the spot to voice her position on a down-zoning, she said she would not call for it that moment, but said “nothing is off the table,” and she would not rule-out supporting a down-zoning down the road.

“I will be open to consider it,” she said. If Shepherd called for a down-zoning, she would need to recuse herself from voting on it. While property owners have successfully down-zoned their own property, for the City Council to do so against the wishes of a landowner would be a long and lengthy process, an assistant city attorney said.

Shepherd, who organized the meeting, the first chance the neighborhood had to meet with RedPeak and its recently hired architect, Brad Buchanan, kicked it off by saying meeting that she understood there is a lot of emotion in the room, and a lot of people are frustrated, but call for a “respectful dialogue.”

The idea was to have people who signed up to speak to do so, but happen until two hours into the meeting.

The tone was set early on when a woman from the back of the room shouted: “You remember Wal-Mart? The largest company in the world and we kicked their butt. You’re a slam-dunk, honey.”

The woman was alluding to plans by Wal-Mart to open its first Neighborhood Market grocery store concept in the Highland Gardens development on the former Elitch’s amusement park in 2004. Following months of public protests by many in the neighborhood, Wal-Mart pulled the plug on the project and Sunflower Market built a store at West 38th Avenue and Wolff Street, instead.

Buchanan, who recently joined RNL Design, replaced Humphries Poli as the architect.

“We’re starting from scratch,” Buchanan said.

His goal was to gather input from concerned citizens, take notes, and meet again to discuss them in detail, to see if any common ground could be found between RedPeak and the neighbors.

He ended up collecting almost 200 talking points on four large pieces of paper from several dozen people who voiced their concerns.

Down-zoning battle cry

“There has to be a down-zoning,” said Bill Johnston, a long-time neighborhood activists and a past president of the West Highland Neighborhood Association, said before the meeting started.

That was the call of many people throughout the night.

This prominent sign is on a home on Meade Street

Much of the criticism of the proposed RedPeak project revolves around the height – opposed by all of the speakers as being too high. Others worried that an already congested area  would become intolerable. Some neighbors complained they already have trouble parking their cars in front of their homes and traffic back-ups are common. Buchanan did say that a traffic study will be conducted to determine the impact of the new residents.

One neighbor, Chauncey Tanton, said  said that a four-story condo building next to the church property casts such a large shadow on his home that he cannot use passive solar heat to warm his house. He also said that snow and ice basically never melts on Moncrieff Place in front of his home, because of shadows from the condo project. The proposal includes three parcels on Moncrieff, Meade Street and the church site on Lowell. RedPeak has the lots under contract. The current landowner has extended the lease on the church from the end of the year until March, one person said on Wednesday night

Bill Menezes, who lives on Meade Street, brought a photo of his two young children to the front of the room when it was his time to speak from the microphone. He said if the RedPeak sticks to its original plan, he and his family will lose their view of the “beautiful downtown skyline,” and sunrise, or what his daughter calls “sun-rainbows.”

Laura Goode, who started the grassroots opposition group, said that while technically many say the buildings are not high-rises, they are to anyone who loses their views, their sunlight or deals with the problems of congestion she said the buildings are sure to bring. The initial plan called for 160 apartment units, which people believe could add as many as 300 people to the area. Mike Zoellner, president of RedPeak, noted they will have more parking spaces than required under code, they will sponsor a B-cycle bike sharing  program, and will provide a car-sharing plan. Zoellner initially was not going to attend, because the meeting date selected by Shepherd conflicted with his mother’s 80th birthday. But he decided it was important to address the neighbors and arrive at his mother’s party late. “My mother understands what I do for a living,” Zoellner said.

Minds made up

While Buchanan told the crowd a number of times that he was committed to doing something that would be good for the neighborhood and there are design elements that can mitigate height and density, that argument was a no-started for Goode and many others attending the meeting. He does not yet even have initial drawings. RedPeak, which receives funding from a state public employee pension fund, withdrew the first initial plans submitted to the city by Humphries Poli.

Design remedies are like “putting a lipstick on a pig,” she said. A number of people in the audience said they had believed developers in the past, only to be lied to. Others said they feel their elected officials are not representing them strongly enough on this issue and the deck is stacked in favor of the rich and powerful. A number of people worried that businesses would suffer greatly during the construction process, as retailers and restaurant owners have during street work on Tennyson Street in the nearby Berkeley neighborhood.

Signs opposing the RedPeak project are found in many lawns across from the Highlands church where three, 5-story building can be built.

At the same time, she emphasized that she and many others are not against development – they simply think this is the wrong development at this site. A number of people called it a “great project at the wrong location.” They said such a project would be welcomed on a busy street such as West 38th Avenue.

“We’re not extremists,” Goode said. In fact, she said she would welcome to “calmly and rationally” discuss a smaller and less dense project that would still be financially feasible for RedPeak.

One speaker called for RedPeak to cut its losses now and simply leave the project, much like an investor might do with a bad stock investment.

While the suggestion was met with applause, following the meeting a small group of people who were still in the room said that might not be a good idea, as then the parcels could be sold to another developer that would likely demolish the site and slap-up buildings on the site as soon as possible.

Despite the adversarial relationship, RedPeak, Shepherd and a smaller neighborhood group, plan to get together for future meetings.

First up on the agenda, will to meet with members of the Denver Community Planning and Development Department to learn the justification for rezoning the land last year to U-MS-5, during the biggest rezoning overhaul in Denver’s history. Initially, the land was to be rezoned as U-MS-2, which only would have allowed two stories on the site, which many people described as an “error” that must be remedied with a down-zoning.

Anyone wishing to volunteer for the citizen committee should email info@westhighlandneighborhood.org and include any qualifications or expertise you might have that could be a benefit to the process. The committee expects to have its first meeting on the week of Dec. 5.

Contact John Rebchook at JRCHOOK@gmail.com.

Related Posts:

• Dowzoning unlikely
• RedPeak releases drawings
• Shepherd: Warrior for civility
• 3 stories in West Highland?
• Shepherd likely to seek downzoning

According to a report released Thursday by the Colorado Division of Housing, the combined vacancy rate for apartments in 22 markets across Colorado during the third quarter was 5.0 percent. The vacancy rate was 5.5 percent during the third quarter of last year, and the rate was 5.2 percent during the second quarter of this year.

The Colorado statewide vacancy rate has not been below 5.0 percent since the first quarter of 2001 when the rate was 4.3 percent.

The year-over-year drop in the statewide rate reflects declines in the vacancy rates in eighteen of the twenty-two markets surveyed. All metropolitan areas of the state reported declines in vacancies, year over year. Among smaller markets, only Canon City, Durango and Montrose reported increases in the vacancy rate.

Statewide trend

Among the state’s metro areas, the largest drop was found in Greeley where the vacancy rate fell from 3.9 percent during the third quarter of 2010 to 1.8 percent during the same period this year.

The metro Denver vacancy rate, measured last month in a separate survey, fell year-over-year from 5.3 percent to 4.9 percent.

Vacancy rates in all metropolitan areas were Colorado Springs, 6.2 percent; Ft. Collins/Loveland, 2.3 percent; Grand Junction, 7.7 percent; Greeley, 1.8 percent; Pueblo, 7.3 percent.

“Declining vacancies are now a statewide trend, and it’s no longer a matter of just a few tight markets,”  said Ron Throupe, an assistant professor of business at the University of Denver and the report’s author. “Even among the areas with sizable drops in vacancies, northern Colorado stands out with rates in Larimer County and in Greeley now dropping below 4 percent.”

Average rents across the state have increased as vacancies have fallen.

Rents rising

The statewide average rent in Colorado increased 3.1 percent from the third quarter of last year to the third quarter of this year, rising from $871 to $898. Across metro areas in the state, however, growth in average rents varied considerably. The average rent in the Colorado Springs area, for example, increased 6.7 percent, year over year, while the average rent in Pueblo fell 1.8 percent. During the same period, the average rent in Greeley increased 3.1 percent while the average rent in Grand Junction was unchanged.

The largest increase in the average rent was found in the Fort Collins/Loveland area where the average rent increased 8.5 percent from the third quarter of last year to the same period this year.

“Now that a trend of declining vacancies has been firmly established in some areas, we’re starting to see rent growth accelerate,” said Ryan McMaken, a spokesman with the Colorado Division of Housing. “Not surprisingly, Fort Collins and Loveland are showing some of the largest growth, but Colorado Springs is also starting to show a solid upward trend as well.”

Average rents in all metropolitan areas measured were Colorado Springs; $778, Ft. Collins/Loveland, $954; Grand Junction, $655; Greeley, $682; Pueblo, $541.

The metro Denver average rent, measured in a separate survey, was $936 during the third quarter.

The Vacancy and Rent Surveys are a service provided by the Colorado Division of Housing to renters and the multi-family housing industry on a quarterly basis. The Colorado Vacancy and Rent Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, age of building, and apartment type.  The report is available online at the Division of Housing at this link.

Contact John Rebchook at JRCHOOK@gmail.com

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Here is what the WSJ had to say: “Equity Residential, the apartment company headed by real-estate mogul Sam Zell, has emerged as the lead bidder in the contest to buy roughly half of rival Archstone in what would be one of the largest real-estate transactions since the downturn, according to people familiar with the situation.

Equity Residential has offered more than $2.5 billion in cash and stock to buy the 53% equity stake in Archstone currently held by Bank of America Corp. and Barclays PLC, the people said. An agreement is still uncertain and a higher bidder could step in. The rest of the company is owned by the bankruptcy estate of Lehman Brothers Holdings Inc., which led a group that purchased Archstone in 2007 and is keeping its holding. Lehman and the banks earlier this year disagreed over how to unwind Archstone, leading the banks to put their stakes up for sale.”

The WSJ said that Zell’s offer values all of Archstone-Smith at $16 billion, about $6 billion less than when it sold in 2007. When Tishman bought Archstone, debt and debt and equity capital was provided and arranged by Lehman Brothers Holdings Inc., Banc of America Strategic Ventures, Inc., Barclays Capital and their affiliates. Lehman drafted a pair of debt-market beacons of liquidity, Fannie Mae and Freddie Mac, to provide structured financing and credit for the transaction. As part of the transaction, Fannie Mae purchased a $7.1 billion credit facility secured by 105 Archstone multifamily properties. Freddie Mac executed a $1.8 billion structured transaction that provided new financing for 32 multifamily properties across the country and approved assumption of an additional 15 properties. It may seem ironic now, given the government take over of Fannie and Freddie, but when the deal took place, David Worley, a senior vice president of management at Fannie, had this to say: “Fannie Mae is pleased to serve as a constant and reliable source of liquidity in today’s ever-changing capital markets.”

The markets did change, of course, but probably not in the way he imagined.

Meanwhile, the WSJ article did not delve into how Archstone-Smith created the apartment powerhouse from Denver.

Following is a story I wrote in May 2007 for the Rocky Mountain News, when the blockbuster deal was first announced.

“A New York City real estate firm that owns trophy properties, like the Rockefeller Center, made a $22.2 billion bid Tuesday for Arapahoe County-based  -Smith, the nation’s second largest apartment real estate investment trust. Tishman Speyer, partnered with Lehman Brothers Holdings Inc., offered $60.75 per share for Archstone -Smith – which is 6.2 percent below its 52-week high of $64.77 per share. The price represents a 22.7 percent premium over the price last Thursday, before the deal was publicized. The stock closed at $61.42 on Tuesday, slightly above the offer price, which indicates some investors think there will be a higher bid offered for the company, said Troy Johnson, a partner of Greenwood Village-based Quixote Capital Management.

“Archstone-Smith has created a fantastic portfolio of apartment communities and has developed an industry-leading platform that includes more than 2,500 talented associates who are vital to our success,” said R. Scot Sellers, chairman and chief executive officer, Archstone-Smith. “We have always been committed to maximizing value for our shareholders, and we believe this merger accomplishes that objective, offering a significant premium over the unaffected share price. We are looking forward to continuing to provide great apartments and great service to our customers as part of the Tishman Speyer family, and continuing to grow our business for many years to come.”

Tishman Speyer’s $40 billion real estate portfolio also includes the Chrysler Center in New York. If consummated, the deal would represent one of the largest privatizations of a public real estate investment trust.

Tishman Speyer offered to pay $13.5 billion and assume $8.5 billion in debt. Archstone -Smith’s market cap has risen to $13.6 billion from about $12.5 billion since the deal was announced. Archstone -Smith, which focuses on owning and developing luxury apartment communities, primarily on the East and West coasts, is the 10th largest company in Colorado based on market cap. Denver-based Apartment Investment and Management Co. has a market cap of about $5.3 billion but has about 260,000 apartment units in its portfolio, about three times as many as the 86,014 owned by Archstone -Smith.

Archstone moved to Denver in 1998, when real estate financier William Sander’s Security Capital Group bought an Atlanta company and moved it here. Another former Security Capital company became Denver-based ProLogis, the world’s largest industrial REIT.

R. Scot Sellers, Archstone -Smith’s CEO, will remain with the Tishman Speyer, but the fate of the 300-plus other Denver-area employees is unknown. The company has about 2,500 employees nationwide.

“By keeping Sellers on, it is also clear that the buyers intend to run Archstone as a healthy company, rather than to simply pick over a carcass,” Peter Slatin wrote in his Slatin Report newsletter on Tuesday.

Denver loses HQ

The metro area would lose another publicly traded company headquarters in the deal.

“Obviously, given the choice, I wish all of the New York Stock Exchange-based companies were headquartered in Denver,” said John Lay, CEO of the Southeast Business Partnership. “We hope to have the opportunity to convince them to keep a big presence here.”

A spokesman for Archstone said he could not discuss any aspects in the deal beyond the press release, including whether the company would keep its name and presence in the Denver area, and whether there would be layoffs.

The company’s Web site only lists one apartment project in the Denver area, the 156-unit Champion Park in Thornton.

The company sold its apartment community in the Riverfront neighborhood in Denver’s Central Platte Valley last year for $55 million, to concentrate on more lucrative markets such as New York and San Francisco. The REIT calls itself the largest public owner of apartments in Manhattan.

Johnson, of Quixote Capital, said the deal marks a “long-term play in real estate,” for the buyers, and is indicative of the amount of capital available to buy companies.

“There’s a lot of private money chasing stuff,” Johnson said.

 INFOBOX

Archstone -Smith at a glance

•  Headquarters: 9200 E. Panorama Circle, Centennial
•  Size: An S&P 500 company, it is the nation’s second largest apartment REIT in the country by market cap.
•  How it ranks locally: 10th largest, with a market cap of about $12.5 billion
•  CEO: R. Scott Sellers, who is staying on with Tishman Speyer, the buying entity
•  Holdings: 86,014 luxury apartment units in 344 communities. It has sold most of its Denver holdings to concentrate on more profitable markets, such as Washington, D.C., Southern California, the San Francisco Bay area, New York City, Seattle and Boston.
•  Strategy: It develops, owns and operates luxury apartments in niche markets that have a high barrier to entry, making it difficult for competitors to get a foothold.

Tishman-Speyer holdings

This New York company has acquired, developed and operated more than 230 commercial properties with more than 100 million square feet and 14,000 residential units.

•  Portfolio: Valued at more than $40 billion, with properties in the U.S., Europe, Latin America and Asia.
•  Buildings: Holdings include trophy buildings, such as the Rockefeller Center, and the Chrysler Center, in New York. It also owns the Torre Norte tower in Sao Paolo, Brazil.

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