“Spotlight on Denver”

By Andrew Dealy, Managing Partner

We mentioned in last month’s blog that we're investing in an adaptive reuse project in Denver's RiNo District that will eventually add a multifamily component next year. While we've been directionally bullish on Denver for some time (I know, hardly original), our diligence process only strengthened that belief once we really dove into what's happening on the ground level there.

Denver certainly had plenty of buzz prior to the pandemic but subsequent shifts in labor and housing markets increased the appeal of a year round, multidimensional city with a glut of outdoor activities. We're convinced that all of the trends point to Denver's sustained growth over the next 5-10 years and we're excited to track it more closely now that we have an investment there!

First, a few recent statistics on Denver that stood out. According to a 2021 study from CBRE, Denver was ranked 3rd among American cities for opportunities for future multifamily housing, 4th for new retail, and 11th for office space. In 2020, Denver also placed #2 on a list of major cities with the most inbound Millennials. And that's a group that's particularly well educated as ~75% of RiNo's residents report a bachelor's degree or higher with incomes that far surpass national averages.

Denver is now consistently ranked next to other real estate darlings such as Atlanta, Austin, DFW, Nashville, and Phoenix in terms of population and job growth prospects. In my opinion, Denver is able to differentiate itself from some of those competitors by simply avoiding the extreme heat in the summers and by providing unparalleled access to the mountains. Both of which are never going to change and there are few cities that can appeal to residents and visitors 12 months out of the year. Of those, Denver is perhaps the youngest and most established with an airport that's already the 5th busiest in the country.

Much of this migration to Denver can be attributed to a rising tech scene, with companies such as Apple, Facebook, Google, and HomeAdvisor opening significant offices in the region. An increasingly mobile workforce looking to relieve housing pressure on both coasts started selecting Denver more frequently when given the option of choosing new home bases. Employers responded by expanding their footprints in Denver, which in turn has created greater demand for residential and commercial real estate.

Our own investment intends to capitalize on both of those needs. 'Lot28 Phase One' will feature ~45,000 sq ft of repurposed retail, led by two anchor tenants that will bring immediate credibility to the space. The first is Puttshack, an upscale tech-infused mini golf concept that was founded by former executives of Top Golf. The second is Yardbird, a PE-backed elevated southern comfort restaurant with popular locations in Miami, LA, and Las Vegas. 'Lot28 Phase Two', set for funding 9-12 months from now, will consist of a 110-unit multifamily building that will complement the first phase by funneling more patrons to the businesses below.

To this point we've generally avoided retail but we think that RiNo is one of the few neighborhoods in this country that actually NEEDS more brick and mortar. I was recently in Denver, and specifically RiNo, and my impression was that the ratio of businesses to people is actually quite lower than in other cities of its size. RiNo itself has plenty of bars and breweries but the amount of businesses that aren't focused almost exclusively on drinking are relatively limited.

We're confident that both PuttShack and Yardbird will draw people from all over the city with its unique combination of entertainment and hospitality. And selfishly we're already looking forward to hosting our investors at the kick-off party this time next year!