Colorado Real Estate Journal -
The $48 million, 272-unit luxury condominium rental project to kick off at Vallagio at Inverness is not your father’s apartment development. “I’ve coined this phrase, ‘livability quotient,’ to describe how people really work and play and spend their time,” said Peter Kudla, chief executive officer of Metropolitan Homes, which recently received approval from the Arapahoe County Board of Commissioners for the first rental project at its Midtown neighborhood in the mixed-use Vallagio at Inverness. “It’s like a car. You can drive an eight-cylinder luxury model or you can have a stripped-down beater – they’ll both get you to the same place.” So what kind of car would Kudla consider these rental units to be most like? “A Lexus LS 460,” he said, without hesitating. The units will complete the first phase at Vallagio, at Interstate 25 and Dry Creek, which opened in 2005 and now has about 900 for-sale homes. The rental units will be in four four-story buildings with underground parking. Units will range from 550 square feet to 1,150 sf, with the average size at 828 sf. Monthly rents will start at about $950, rising in the $1,500 range. The location is one of its biggest selling points, Kudla said. “It’s not like when we were young and your lifestyle to a large extent revolved around the apartment development where you were living. Kids today look at it as more of a place to sleep. This is more of an urban-style development. This is a true transit-oriented development. When they come home from work, they will jump on the light rail and head downtown for restaurants, bars and sporting events. There is a shift in where people live, how they live and the perceived value of where they are living today. They are seeking smaller, cost-effective options close to work and transit.” However, if they decide to stay at Vallagio, there are plenty of restaurants. The development has 43,000 sf of inline retail, with only 3,000 sf vacant. Existing shops and restaurants include District 475, a 10,000-sf contemporary event center, Russo’s Kitchen and Tavern, Marco’s Coal-Fired Pizzeria, Street Kitchen Asian Bistro and CoreFirst Bank and Trust. “Vallagio is a unique and diverse neighborhood that supports Arapahoe County’s Comprehensive Plan for the future,” Kudla said. “The new condominium rentals draw architectural inspiration from the lightrail bridge, the businesses in the area and the existing homes. They are a true complement to the energy in the area. The vision has never changed, just the timing and the vehicles we used to get there.” He expects a large number of the renters to come from some of the nearby businesses, including Newmont Mining, Arrow Electronics, Jeppesen and DirecTV. But one of the biggest impacts on the corridor, he believes, is the 400,000-sf IKEA Centennial, directly north of his development. “IKEA is really changing the way people are living. It is a more European-influence.” Amenities will include public art, a resort-style pool and spa, health and fitness center and business center with state-of-the art technology. Kudla has built about 10,000 rental units in the Denver area, so this is not new to him. “It’s really beneficial to me over the years to be flexible enough to quickly move from the ‘for-sale’ product to multifamily, and vice versa. These are being built to luxury condo standards. So if the market shifts at some point, one exit strategy down the road could be to sell them as condos.” Julia Sherman, chief operating director for Metropolitan Homes, said the time is right for rentals, not for-sale properties, during this time of the real estate cycle. “We have carefully watched the market and scrutinized over potential options for the last three years,” Sherman said. “The goal was to create product that is in demand, support the values of the homes currently in the neighborhood and support the evolution of transit-oriented-development.” The Apartment Association of Metro Denver, a strong supporter of the project, had this to say: “Over the past two years, we have witnessed significant changes in vacancy rates as more people are choosing to rent. Because of the increased uncertainty in employment status and job markets, many people are seeking the flexibility and ability to move to another market, should an employment opportunity arise. And, with the instability in the market, many people do not wish to burden themselves with the 30-year mortgage. Additionally, the mortgage industry has seen increased regulations that limit the number of loans approved for home ownership. Each of these components has led the consumer to look to other alternatives, which include renting. By 2015, we expect 7 million new renter households, nationally, to form.” Jeff Hawks, principal of the Denver office of Apartment Realty Advisors, consulted with Kudla on the apartment community. “I went through a lot of financial scenarios and told him exactly what institutional investors wants – they want transit-oriented development or they want a downtown community. Basically, they are a TOD right in the middle of Vallagio, which is an urban-style development. So they’ve got all of these boxes that they can check off – transit-oriented development, check. Urban setting, check.” The other thing the development has going for it is its proximity to C-470. “Renters like the ability to jump on to C-470 and be able to hit the mountains faster.”