Colorado Real Estate Journal - May 4, 2016
Who would win the 14th annual NAIOP Rocky Mountain Real Estate Challenge wasn’t clear when judges finished their deliberations just prior to the April 28 event. Was the University of Denver’s pragmatic proposal for a mostly residential community the best scenario for the city of Westminster’s first transit-oriented development site? Or were University of Colorado graduate students on track with an innovative plan to bring community gardens and indoor agriculture into their proposed mixed-use community? In the end, an unflappable team from DU’s Franklin L. Burns School of Real Estate and Construction Management was declared the winner. But it was evident during the judging process that each team’s proposal had its merits and its faults and that selecting a winner would be no easy task. The 800 commercial real estate professionals, students and others who attended the event at the Denver Marriott City Center saw only part of what goes into deciding the outcome of the annual real estate competition. For those unfamiliar with the NAIOP Rocky Mountain Real Estate Challenge, presented by Land Title Guarantee Co., CU and DU grad students are asked to act as developers of a preselected site within the Denver metro area. This year’s challenge was Westminster Station TOD, a 21-acre parcel on the west side of Federal Boulevard near 69th Avenue. With commuter rail opening this year, the site will be 11 minutes nonstop from downtown Denver. Student teams, which are paired with architectural firms that volunteer their resources, compete internally to represent their schools at the real estate challenge. This year’s directive was for each team to: 1) create a proposal directed toward a potential equity partner that meets the city’s vision for the site, 2) develop a market-driven plan that responds to fundamentals in the real estate market and capital markets, 3) position the property to maximize developer risk-adjusted returns and 4) realize the benefits of proximity to the rail station. Each team was required to provide a written proposal, pitch its plan to a panel of judges, respond to the judges’ questions during the afternoon and then present their proposals again to the audience at the evening event. Judges debated each proposal prior to the evening session, individually submitting their final votes following the audience presentations. Judges include some of the best minds in Denver commercial real estate, and a behind-the-scenes look at this year’s process demonstrated they take the job quite seriously. Charged with acting as investors – and not “holding back” – they scrutinized financial analyses of both projects, expecting students to explain how they arrived at their returns, construction costs, etc. They wanted to know why neither team chose to incorporate tax-increment financing, how infrastructure would be financed, why certain uses were selected over others and more. DU’s proposal, The Mosaic, was residentially focused, including affordable and market-rate apartments, for-sale row homes, and a 24 Hour Fitness and Sprouts Farmers Market on Federal Boulevard. The plan included child care and dog day care facilities, a neighborhood restaurant, coffee shop and reuse of an existing warehouse as a new home for TheBigWonderful marketplace. The four-woman, two-man team found no market demand for office or multitenant retail, but left flexibility for an office building in a final phase of development, should market conditions change. W Station, CU’s proposal, was mixed-use and agriculture focused, with an agricultural and craft marketplace; climbing gym; live-work and market-rate apartments; a healthy living center with senior housing, a medical office building, an urgent care center, parking garage and community rooftop gardens; and an Ag Tech Innovation Center that would house a second, indoor GrowHaus farm. Genuinely impressed by both proposals, judges generally viewed DU’s plan as “safe” in that it focused on product that is in demand: residential. It was pointed out, however, that putting all one’s eggs in the residential basket may not be safe in the long run, and there was a general lack of enthusiasm about what they felt was essentially a residential community. CU’s proposal elicited excitement among the judges, some of whom said TOD sites should be the kind of dynamic places the team envisioned. Looking at it as investors, though, they had difficulty understanding the very detailed financials, and some couldn’t get beyond what they felt were “unrealistic” returns. They were impressed that the plan reused several existing industrial buildings on site. With no clear consensus on which proposal to choose – and no expectation that students should know what only on-the-job experience can provide – judges were instructed to consider which plan they could adapt, and which team they would be most comfortable investing with. Even then, there was no unanimity. Neither the judges nor audience knew, until the formal announcement by NAIOP Corporate national President and CEO Tom Bisacquino, that DU would take first place. While the Rocky Mountain Real Estate Challenge currently ends in Colorado, NAIOP is considering creating a national event in which the winner would compete against teams from other chapters, according to Bisacquino. Kathryn Spritzer of the city and county of Denver’s North Denver Cornerstone Collaborative chaired the 2016 Rocky Mountain Real Estate Challenge. This year’s judges were: Doug Bakke, CBRE Inc.; Dean Barber, McWhinney; Karen Blumenstein, Flower & Stone Ltd.; Tracy Huggins, Denver Urban Renewal Authority; Jim Neenan, Prime West Cos.; Dan Metzger, Brue Capital Partners; Ashley Powell, NAIOP corporate chairman, of Bentall Kennedy; Rebecca Stone, OZ Architecture; Mary Sullivan, HFF LP; and Rick Wells, REGen LLC. Leanne Toler of Stifel Financial Corp. coordinated the judging process.