Penny Flats will phase into market over 3 years

FORT COLLINS – Fueled by optimism that a market for downtown loft apartments will strengthen, developers of the biggest mixed-use project in downtown Fort Collins history are moving toward a late-summer groundbreaking.

And the Downtown Development Authority will pitch in to the tune of about $1 million for façade and street improvements as the phased development of 147 new residential lofts and 30,000 square feet of commercial space progresses.

A joint project of the city of Fort Collins and Boulder-based Coburn Development Co., Penny Flats, as the project is known, is larger than all other proposed downtown loft-and-business projects combined.

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But it is the track record of earlier downtown residential developments that is leading the public-private partners, and their lead real estate consultant, to forecast Penny Flats’ success long before dirt is turned in September.

“All of my analysis indicates we should move about 30 of these units a year,´ said Eric Nichols, a downtown property specialist with Re/Max Alliance in Fort Collins. “Just in the last 24 months, we’ve had 80 loft sales downtown. It’s a new product, and the market is still developing.”

Penny Flats will target the middle of the local housing market, with prices near the median for single-family homes.

Brokers who are marketing two downtown loft projects, one planned and the other under construction, said the market is strong enough that contracts and reservations for units in the two buildings are running well ahead of expectations.

“Our goal was to have 15 reserved by the time we go to hard contract,´ said Bob Loner, a Group Inc. Real Estate broker who is marketing Belle Claire, the six-story, French Country-style building that’s planned for the southeast corner of College Avenue and Olive Street. “We were planning on having that done by June, but we can almost fast-forward that 30 days.”

During an early-March presentation to fellow Group brokers, Loner and marketing partner Don Zwitak secured reservations for three of the 31 luxury lofts that developer Archie Solsky, the owner of two Lee’s Cyclery locations in Fort Collins, will build.

With prices ranging from $275,000 to $895,000, Belle Claire shares the highest-end market with the recently completed and sold-out Cortina loft project, where penthouse residences sold for $1.3 million.

Loner said he and Zwitek estimated the market for the higher-end properties to be between 50 and 60 buyers.

Meanwhile, the Magnolia Lofts project that broke ground last month on the northwest corner of Mason and Magnolia streets has 11 buyers already under contract for 18 units.

Priced between $320,000 and $700,000, the Magnolia Lofts are being snapped up by young professionals and retirees alike, said Group broker David Muth.

“It seems like most of the people we see are empty-nesters, people who have been around Fort Collins forever, and who might have homes elsewhere,” Muth said. “They want to have a zero-maintenance place here in the city.”

Penny Flats will begin taking shape in grand fashion, with the building of a four-story commercial-residential building on the now-vacant corner of Mason and Maple, just north of the Fort Collins municipal office building.

In advance of the groundbreaking, the Boulder development company and city partners are concentrating on a plan for energy-efficiency and on securing financial help from the DDA.

The later came in early March, with the downtown agency’s board voting to commit approximately $1 million in tax-increment financing to the project. The tax-increment plan projects revenue from increased valuation of the property, and captures that rising tax revenue to pay for façade and transportation improvements.

DDA Executive Director Chip Steiner said he and board members were encouraged by signs the market for downtown lofts would continue building, especially by Nichols’ estimate of 30 buyers per year during the phased construction.

“If we absorb all that, it’s great,” Steiner said. “But it’s more than I would have guessed.”

Fort Collins planning specialist Anne Aspen, who is the lead planner on the project, said Penny Flats will contribute mightily to the health of downtown Fort Collins’ commercial sector.

“There’s a lot of energy going into this area now,” Aspen said. “We need to have a 24-hour presence, and we need to connect the existing neighborhoods to the downtown. This is another big stitch in the fabric that needs to be made.”