The Residences at 29th St. under construction

The Great Recession of 2008 to 2010 may now be over, at least according to the measurements used by economists. Boulder’s economy was affected but not as badly as that in many other locales. The unemployment rate remained well below the state and national levels and Boulder continued to star on many “best of” lists.

Where the recession was particularly evident in Boulder was in commercial and residential construction, and even there the effects weren’t as bad as in most places. Boulder’s strict growth controls kept developers from getting overly ambitious with speculative projects. Because of that the vacancy rates for most types of commercial properties remained relatively low. The damage in the housing market was concentrated mainly at the upper end of the spectrum.

So, Boulder is well position to benefit from the nascent economic recovery. One of the drags on real estate development, however, is the difficulty in obtaining financing. We won’t be seeing too much speculative development for a while, even in a city like Boulder where the economic and market conditions justify some new construction.

Even with tight financing developers did start to expand their efforts in Boulder in 2010. However, there are a lot of “buts” and “maybes” as qualifiers. For example:

• The number of residential building permits issued by the City of Boulder rebounded from 167 in 2009 to 508 in 2010, but almost half of the units permitted last year were in one large apartment project.
• Permits for single family units (both detached and attached) rose from 76 in 209 to 111 in 2010, but over half of last year’s permits were in one new neighborhood, the affordable Red Oak Park on the site of the old Boulder Mobile Manor trailer park on Valmont Road.
• The number of multi-family units (apartments and condos) permitted quadrupled from 103 to 414, but most were in that one large apartment complex, the Residences at 29^th Street, with 238 units.

So the “recovery” in Boulder housing construction in 2010 was not as widespread as a brief look at the numbers would indicate. Even though the city’s economy is in better condition that many other places it will still take a while before the lenders loosen up. A return to the construction boom years of 2006 and 2007 is probably not on the near horizon.

However, we will probably see more multi-family housing constructed in Boulder this year. Boulder has one of the tightest rental markets in metro Denver and that situation is starting to attract developers and investors. The Residences at 29^th Street (actually at 30^th and Walnut streets) is the first large market rate apartment project erected in Boulder since 2003. More are now on the drawing boards, including:

• High Mar, a 59-unit affordable building by Boulder Housing Partners on Moorhead Drive north of Table Mesa Drive.
• Junction Place, 319 units of transit-oriented apartments on Pearl Street east of 30^th Street, across from the planned RTD bus station (and future rail depot).
• Violet Crossing, 98 apartments at the northeast corner of Broadway and Violet Avenue.
• Waterview, 294 rental units on Arapahoe Avenue east of 55^th Street.

We may also see more small-scale condo projects started in 2010, especially at what passes for the “lower” end of the price spectrum in Boulder. The City Council, for example, recently approved the Armory, a 41-unit condominium complex on the site of the long-vacant US Army Reserve Center on Table Mesa Drive.

Commercial development could get a boost if lenders become more willing to fund well-planned office, retail, and light industrial projects. Having a substantial amount of space pre-leased is probably going to be a lender requirement for some time.

Covidien is likely to start construction on another building at its campus in Gunbarrel. A major downtown project may be the redevelopment of the former Daily Camera building at 11^th and Pearl streets. Rumor has it that a major national company may take most or all of the office space in the mixed-use building.

So, the rebound in residential permits in 2010 does not necessarily presage a return to more construction, especially in for-sale housing at the upper end of the price range, or in more “pops and scrapes.” The McMansion trend that created so much controversy in Boulder a few years ago seems to have run its course. What is likely in 2011 is a continued trend towards higher density housing, particularly in the tight apartment market.

Since 2001 more multi-family units have been permitted in Boulder than single-family, although until recently most of those have been condominiums instead of apartments. The attraction of higher density housing in Boulder is both economic and demographic. Land costs are higher than in sprawling communities and that encourages development of apartments and condos. Boulder’s demographic trends are moving in two directions, towards younger people attracted by Boulder’s healthy economy and lifestyle and older residents who no longer want to put up with maintaining a single family house. Both of those categories are candidates for apartments and condominiums.

One caveat for readers: the City of Boulder’s online building permit recording system is rife with errors and duplications. We have endeavored to correct those in the totals in the following table but we suggest they are best used mainly for understanding trends until the city staff corrects the long-standing problems with specific numbers.

SF: single family, MF: multi-family, Demo: full structure demolition

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