Real Estate & Construction  November 24, 2006

Penny Flats rolls toward groundbreaking

FORT COLLINS — Having cleared its last remaining financial and logistical hurdles, a downtown Fort Collins housing-and-retail project larger than all other recent developments combined is headed toward a December groundbreaking.

The Boulder-based developers of the Penny Flats mixed commercial and residential project, with 147 residences for sale and nearly 30,000 square feet of retail and office space, said they are encouraged by early interest from prospective buyers.

“I think we’re bringing a pretty unique product to the market, and that’s going to drive the interest,´ said John Koval, development director of Coburn Development Inc., which emerged as the project’s steward after a competitive review of applicants two years ago. “It’s a little more edgy, a little more urban than anything else on the market there.”

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Spreading over three-fourths of a city block bounded by Mason, Howes, Cherry and Maple streets on the northwest edge of downtown Fort Collins, Penny Flats will include eight buildings with a mix of housing that ranges from high-ceilinged loft apartments to Georgetown-style row houses. First-floor retail and office space will front the buildings.

Drahota Construction Co. of Fort Collins will get the project under way next month with an underground parking structure beneath the corner of Mason and Maple streets, where Penny Flats’ five-story signature building will rise in the spring.

Coburn has agreed to purchase the city-owned land for $1,624,000 at an early December closing. The city and the developer have so far been partners in the venture, collaborating on the planning and permitting process in a relationship unique to the city’s development history.

Coburn principals and Penny Flats marketing director Eric Nichols, a broker with Re/Max Alliance Real Estate in Fort Collins, said they are undaunted by market conditions for downtown housing that have slowed in recent months, with vacancies in several new high-end loft projects.

Average housing prices at Penny Flats, while slightly above those for single-family homes in the city, remain less than for units in some of the more prominent new downtown projects, where unit prices between $500,000 and $1 million are common.

Prices will start at $269,000 for 1,050-square-foot, one-bedroom units, rising to $469,000 for 1,400-square-foot, fourth-floor apartments with spacious terraces, Nichols said.

Buyer interest

Although the first Penny Flats units will not be ready for occupancy until spring 2008, Nichols said he had already gotten inquiries from prospective buyers.

“We’re getting close to having decisions from people,” he said. “When this builds out, you’re going to have hundreds more people living downtown. If I own a restaurant downtown, or a store, or a bar, I’m saying, ‘Hey, bring it on.’”

Even city planners, normally well outside the realm of project marketing, have gotten indications that demand for the new space is rising.

“We had a couple of neighborhood meetings that were really well attended, drawing 50 or so nearby residents,´ said Anne Aspen, the city’s lead planner on the Penny Flats project. “We had people come in to express concern about the price of these units, and then one would ask, ‘What does that corner unit look like on the inside?’ That was interesting.”

Coburn would not disclose a budget figure for the project. But Koval said overall construction cost estimates had edged upward during the two-year planning and permitting process, and ranged between $257 and $355 per square foot.

“Those cost-per-square-foot numbers are creeping up pretty significantly,” he said.

Based on those numbers, Penny Flats’ construction cost would likely top $50 million.

Nichols said leases for the retail and office portion of the project would fall in the $18- to $22-per-foot range, not including taxes, insurance, maintenance and utilities.

Penny Flats residents can expect interior finishes that rival those of higher-priced residential offerings in downtown Fort Collins, Koval and Nichols said.

“I think we’re going for a true loft look, and making that a cohesive package with a lot of solid upgrades,” Koval said. “Oak flooring throughout, for example, and stainless steel countertops.”

Building ‘green’

Nichols said the development would also include plenty of “green” features — high-efficiency furnaces and energy-saving windows, for example — that would substantially reduce energy costs for homeowners and commercial leaseholders.

Coburn’s project portfolio includes new construction and historic redevelopment projects in Boulder that have fit the market almost perfectly, with successful mixed-use projects like Twelve Maples and Steelyards serving as examples. Nichols said he expected the developer would build for the Fort Collins market in the same way.

“Coburn has been down this road before,” Nichols said. “They have not had to go through the learning curve that some other local developers have had to deal with.”

If not for a little-used rail spur owned by the Burlington Northern Santa Fe Railway that nicks the northeast corner of the Penny Flats block, groundbreaking for the project could have come months sooner, planners said.

The railroad in mid-November signed the final plat for the development, taking down the final logistical roadblock for the project.

“There were some fairly delicate negotiations there,” Aspen said. “But Coburn is very creative, very innovative and very tenacious. They got it done, and that’s not easy when you’re working with a railroad.”

FORT COLLINS — Having cleared its last remaining financial and logistical hurdles, a downtown Fort Collins housing-and-retail project larger than all other recent developments combined is headed toward a December groundbreaking.

The Boulder-based developers of the Penny Flats mixed commercial and residential project, with 147 residences for sale and nearly 30,000 square feet of retail and office space, said they are encouraged by early interest from prospective buyers.

“I think we’re bringing a pretty unique product to the market, and that’s going to drive the interest,´ said John Koval, development director of Coburn Development Inc., which emerged as the project’s steward after…

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