Here is an update on a Denver project that Kairoi Residential is also involved with – One River North.

One River North is the unique and impressive new luxury multifamily rental building at 3930 Blake St, Denver, CO 80205

Please visit their website for images of the ‘biophilic’ design:  https://onerivernorth.com/

Here’s the problem.  Kairoi Residential’s One River North luxury apartment complex is showing 54 of their 187 total units are still FOR RENT!  Wow!  (As of 11-28-2024.)

That’s 29% of the units in the entire building!  And leasing began back in April of 2024.

Rents range from $2,188 to $16,410 per month.

Since so many units are still available, we have to ask:

WHY WAS IT BUILT?  Is there too much money that needs to be invested that is driving projects like this and also the proposed but unnecessary 777 S Yarrow Street luxury project in Lakewood again from Kairoi?

It is not just this one building.  There are over 10,000 rental apartments available within 5 minutes or so of the location according to Zillow.com.

Suppose you have a billion dollars to invest.  Just call Vanguard or another investment firm and you can get it done very quickly.  So why invest in real estate development instead given the additional risks including possible lack of a market for the product?  The investors might even be purchasing riskier unregistered securities to participate in such projects. But why?

One River North is yet more proof that the supply and demand mechanism is broken with respect to housing.  The One River North example shows that they have built too many luxury units since 29% are available to rent yet the asking rental dollar amounts have not been reduced to a level that would allow the occupancy rate to be higher.  Typically, a landlord offers great incentives and very attractive rent on a new building in order to get the units leased.  Once they are leased, then the landlord can consider small rent increases over time to test the market as leases come up for renewal.

What is happening at One River North defies that supply and demand logic that fans of the ever-popular build-build-build mentality typically tout in order to justify a seemingly endless amount of housing that is not affordable and not needed as shown by the whopping 29% availability at One River North.  These supply-and-demand zealots claim that over building is not a concern because if it happens, rents will come down and some units will become affordable to a much wider income range including below 100% of Area Median Income.  But THAT is not happening.  Too many units have obviously been built but rents are not coming down!

Property management expert Gemma Smith of Azibo notes that: “a market average vacancy rate of between 2% and 7% is considered healthy in a balanced rental market.”

The Denver area apartment vacancy rate was 11% as of October 2024! 

The Denver area apartment rental market is way, way overbuilt.

And rents have only declined an average of $16 over the last year.  Why are rents not lower?  One possible explanation is that some real estate investors are not in it for the rental income and are not particularly concerned about the high vacancy rate.  Perhaps they expect their building to be sold in a few years and hope for asset appreciation at that time rather than long-term rental income

Since Denver’s mid-2024 office vacancy rate is an even larger 34%, local office employment is not helping the situation.

Wait!  There’s more. Other than the name of a privately owned LLC, the public often knows nothing about the ownership of these housing projects.  Where does the money come from?  Who are the true owners?  Are they even in the US?  And why is there such pressure from civic leaders to get these obviously unnecessary projects built?

And it has never been disclosed how much ORN cost to build.

Another gotcha.  Due to particulate pollution in the vicinity referred to as Denver’s ‘dusty atmosphere’, the building exterior may ‘darken’ over time which is already being referred to as the ‘character’ of the building.

We hope residents will not be breathing those particulates and that none of their possessions will be soiled by them.

The luxury housing fans on Nextdoor.com will be ready to repeat their mantra of ‘housing shortage, housing shortage’ if anyone dares to suggest we do not need so many new luxury projects.  But everyone knows there is no shortage of such luxury units because so many are available for rent.

For the few who can afford the high rent, many of them would likely use their funds to purchase a single family home, townhome, land, business franchise, etc. rather than pay north of $16,000 per month in rent. After all, why rent when you can own real estate yourself at the same price point?

The average rent at One River North is $5,000.There are only 187 units in the building.  54 units were showing as available to rent at time of writing!

It was reported when they opened for business last April 2024, over 2,500 prospective renters lined up for building tours.  Many of those folks could have been lookieloos, but the building has had lots of media coverage and still has 29% of the units for rent!

What is wrong with this picture?  Can anyone suggest a legitimate financial metric where this building makes sense?

The impressive luxury building also has a view of the Denver rail yards.  Whoopee!

Let’s compare to another Kairoi project in the area.The proposed 777 S Yarrow St luxury building would be built on the edge of Kountze Lake at Belmar Park.

Can you imagine the rent that might be extracted for the prime Lakewood Belmar Park location as opposed to overlooking the train tracks in RINO?

Lakewood – you’re next!  Get ready for an unnecessary housing project that will degrade a valuable wildlife habitat and violate the best available science according to Colorado Parks and Wildlife due to no raptor buffer zone.

By the way – that $16,000 unit with a view of the train tracks?  Today is your lucky day because it is still available!