Lofts of Luck
Back in 1998, the dot-com wave was at its peak, and it seemed like money -- big money -- would flow forever. Chris Sword, then 29, had just moved to Denver from Detroit for his job with Lincoln-Mercury and was living in corporate housing down in the Denver Tech Center.
"I was just dying to get out of Michigan," recalls Sword. "Even before I came to Denver, I knew that LoDo was exactly where I wanted to live."
And he wanted to live not just in LoDo, but in a loft -- a real loft in a converted warehouse, not one of those "loft-style" buildings that had started springing up all over lower downtown and around Coors Field. After a few months of looking, Sword bought a 1,700-square-foot place in the Acme Lofts, one of LoDo's earlier projects, for just over $250,000. "It was the real thing: high ceilings, exposed brick, hardwood floors, big columns," he explains. "And I loved the neighborhood."
By last fall, Sword was director of mergers and acquisitions for Applied Theory -- a company that soon went out of business, adding Sword to the ranks of Denver's thousands of unemployed who have had to reassess their finances. All too often, that involves selling a home bought when prices were high.
"I think that in the past six months, people really started freaking out, saying, 'Get me out of this,'" Sword says of the loft resale market. "When I moved in, it was a really strong market, and tons of developers saw the same thing. But development ideas concocted during boom times are coming to completion during the bust. It's the classic phenomenon of real estate being a lagging indicator of the market. It's mind-boggling."
Not sure where his job search would take him, Sword put his one-bedroom loft on the market. After more than nine months, he finally sold it last month for $400,000 -- a hefty amount, but almost $20,000 less than he was originally asking. "I put it on for an aggressively high price," says Sword, who is now director of marketing for the outdoor division of Russell Athletics in Atlanta. "Once I got serious about selling, I dropped it and sold it in about a month, for what I consider a fair price.
"There are a lot of people out there who are bumming," he adds. "I think that I definitely lucked out to sell when I did."
Dee Chirafisi, a realtor with Kentwood City Properties who specializes in downtown lofts, agrees that the market is more crowded than ever. "There is a lot of inventory," she says. "I'm not going to pretend that it's like it used to be: We're definitely seeing things sit on the market longer. A few years ago, there was nothing in the Platte Valley, nothing north of 20th Street. The neighborhood itself is getting so much bigger." (According to the Downtown Denver Partnership, there are 6,720 people living in downtown Denver.)
Chirafisi currently has downtown listings ranging from $179,900 for an 820-square-foot one-bedroom to $1.475 million for a 2,875-square-foot three-bedroom in Riverfront Park.
"Clearly, price is the greatest amenity," says Brad Buchanan, principal of the Buchanan Yonushewski Group, which is helping to develop the Watertower Lofts by Coors Field. "People are now looking for downtown living for under $250,000 instead of $400,000 or even $600,000. It's more like it was in the early 1990s."
And still, new projects keep breaking ground -- including Urban Neighborhoods' Prospect Place Village. Urban Neighborhoods is headed by Dana Crawford, a pioneer in LoDo redevelopment responsible for the Acme, among other loft buildings. Prospect Place will include the Ajax Lofts, already under construction, as well as the Tomboy and Jack Kerouac lofts. "I find that more and more people want to live downtown," Crawford says. "I always say that for every loft that is finished, it creates a market for two more."
Many of the new projects are in the Platte Valley, where Donally King is selling Riverfront Park units for East West Partners. The company has sold 93 percent of the first phase of development -- 197 units priced from $700,000 to $2.5 million. "From our point of view, things are definitely still moving," he says. "Interest rates are so low, and a lot of people are looking to diversify their investment dollars, and real estate is a good spot for it." So good, in fact, that East West is about to break ground on the second phase.
But Chirafisi and Buchanan concur that units in historic loft buildings such as the Acme are hotter on the resale market than units in the newer "loft-style" developments. "In my opinion, the real lofts in the old buildings are going to hold their value because there are only a limited number," says Chirafisi. And that's exactly the criteria Sword used in picking the Acme Lofts. "My theory was, you can build an endless supply of new buildings, but there are only a finite number of historical buildings, so it would appreciate better," he says.
Despite how slowly some units are moving, lofts are still a good investment, according to Chirafisi. "The market is depressed, but it's not by any means flat," she says. Chirafisi estimates that about 10 percent of her current clients -- all of them selling lofts -- are laid-off dot-commers. "We're just starting to feel people panicking," she adds, and as a result, developers and owners are offering more incentives and making concessions on prices to keep the lofts selling.
Much of that panic is misplaced, according to Buchanan. "They have to remember what they bought those places for," he says. "That market has been growing at astronomical rates for the past ten years. We forget very quickly how bad the '80s really were."
Still, Buchanan sounds a note of caution. "It has definitely slowed down," he says. "It's all about absorption. There are a lot of people not pulling the trigger right now because they think they won't be able to sell the units."
Although Sword loved his loft, he was relieved to unload it. "All things considered, downtown city living in Denver is as good as any city in the country, " he says. "LoDo is unique. There's nothing quite like it."
And Sword's not even trying to find the Atlanta equivalent: He's about to purchase a townhouse in a quasi-suburban neighborhood.
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