It’s been a hot year for real estate sales and construction in the city of Aspen, while the pipeline for future development has slowed down noticeably. Through the third quarter, Aspen property sales are up nearly 60 percent and dollar volume is more than double what it was last year at the same time, returning the market to 2015 levels. And although the number of land-use cases has been steadily declining for the last three years, total building permit valuations through October are ten times what they were at the height of the recession in 2009, and it’s so far the second-busiest year for building permit in the last nine years.
Here’s your complete guide to what’s going up, what’s going on, and what it all means, in Aspen.
In downtown Aspen, construction continues full throttle on several prominent projects. With the recent completion of the new Victorian Square building on the corner of Hyman and Hunter, an entire block of East Hyman—anchored by the Aspen Art Museum—has been transformed. The former Sky Hotel on East Durant will open as an 88-room Marriott International W Hotel for the 2018-’19 ski season, complete with 11 W-branded fractional residences, following a complete rebuild. On Main Street, a major renovation project at the Hotel Jerome to be completed this winter includes a new courtyard and pool, a barbershop and speakeasy in the old Aspen Times building, and an addition to the hotel itself (behind the Times building) of five new guest rooms, totaling nine new keys. Meanwhile, a couple blocks east on Main Street, the new Aspen Police Department and Pitkin County government buildings are taking shape, even as Aspen officials continue to plan their own new City Hall at Galena Plaza. It’s only on Ute Avenue that the hammers have stopped and crews are mostly gone from the Aspen Club site, as its owners work on a refinancing plan for their project to build 20 new fractional residences and expand the main club. Meanwhile, both the bank financing the project and its general contractor have initiated foreclosure actions, and the site has been winterized with the hope that construction can resume in the spring.
West Side Story
Moving over to the west side of town, as the 14 One Aspen luxury townhomes near completion (and just four of the 4,021-5,780 sq ft residences remain unsold as of this writing) on a completely redone South Aspen Street, peace and quiet may settle in for a while around Lift 1A.
Review of the 61-room Gorsuch Haus lodge project has been on hold since this spring while a resort-planning consultant and local stakeholders—including Aspen Skiing Co. and the developers of the two major projects in the Lift 1A area—worked on lift access and transportation issues. A long-awaited replacement for the 45-year-old Lift 1A double chair had been included with the Gorsuch Haus plans, but many were not pleased that the lift would load 66 feet further up the slope than it does now. Council members called in the consultant to study the issue, and in late October, nine different potential scenarios for a lift loading lower down South Aspen Street were unveiled to the public.
Two of the most favorable lift scenarios include a lift terminal closer to Dean Street, but would require a redesign of the unbuilt Lift One Lodge, which has approvals for a 22-unit fractional project on the east side of South Aspen Street, to accommodate the lift corridor and skiway. Other issues to resolve with a lower lift terminal include impacts on the historic Lift One structures, the possibility of needing a tramway board variation for the proximity of the lift to nearby buildings, the challenges of grooming and snowmaking on the narrow lower slopes, and the ski experience itself. Following a recent public meeting, City Council sent the consultants back to the drawing board to further evaluate the options, including suggestions for an underground people mover and a midway load station.
Also on the west side of town, a redevelopment plan for the Boomerang, a 1950s-era ski lodge that was mostly torn down in 2007, has been dusted off only to be put in limbo again. Prospective new owners have asked the City to move forward with the project, which includes 47 hotel keys and five free-market condos in a four-story, 45,000 sq ft building, but with fewer, larger units. A group of neighbors opposed to the size of the project have mounted legal opposition, and there’s some question as to whether its 2006 land-use approvals would still be valid with the changes. The investors who have the Boomerang under contract are weighing their options.
Meanwhile, there is some action on the western edge of downtown as the redeveloped Hotel Lenado rises out of the ground. Once completed, the project will include four lodge rooms, with nine keys, plus two free-market condos in a 10,000 sq ft building.
Perhaps most notably silent on the development scene is Mark Hunt, whose downtown buying spree netted him and his investors about a dozen buildings, several of which he has approvals to redevelop. Plans on when to raze and replace the Bidwell Building at the corner of Cooper and Galena, the Crystal Palace building, the former Aspen Daily News building on East Hopkins, the Buckhorn Arms Building by City Market, and the Conoco gas station on Main Street are in the air as some tenants have received lease extensions and others have left in anticipation of redevelopment. To date, building permits for those projects haven’t been pulled. Hunt has only redeveloped one of his buildings (the former Gap building that’s now home to Dolce & Gabbana, Theory, and Lululemon), and since then has sold or backed off a few local investments, including the New York Pizza building on the Hyman Mall and the Seguin building, which Aspen Brewing Company and Aspen Over Easy have vacated under new ownership.
As for future development, there’s not much in the pipeline, especially compared to previous years. Two local experts agree that this is largely because of recent city land-use code changes that eliminated incentives to develop and upped mitigation requirements.
The code changes, which went into effect in spring 2017, ban free-market residential units in any area of Aspen where commercial uses are allowed, lower maximum building heights downtown to 28 feet, require that new commercial development provide some “second-tier space” (second-floor and alley space, for example, that theoretically would command lower rents for mom-and-pop businesses), increase the affordable housing requirement for new development, and make parking requirements more stringent. In a separate but related move around the same time, Aspen City Council adopted a policy on “formula retail,” which allows the City to review—and thus have the power to reject—chain stores in new development.
“The land-use code changes are absolutely influencing developers to not seek redevelopment,” says local appraiser Randy Gold with Aspen Appraisal Group. “The economics are now really challenging.”
Local planner Alan Richman agrees, but he adds that it’s also a natural lull, as many developers rushed to get their applications into City Hall before the yearlong moratorium that prefaced the code changes, a move that essentially glutted the development pipeline with “way more than was justified by any demand.”
Gold points out that there’s also a market component to the slowdown. After several years of downtown buildings changing hands at a rapid pace—led by Mark Hunt but including others, and often at eyebrow-raising prices—not only is there not much left on the market, but what is left is being influenced by those high-price sales.
Put all these factors together, and “it’s no wonder there’s not a lot of pending development applications,” says Gold.
Neither Gold nor Richman are concerned about the lull.
Some developers may be taking a wait-and-see approach on how all the approved development will be absorbed, says Gold.
“This is a very typical pendulum swing,” adds Richman, who has more than 30 years of local land planning experience. “Not only don’t I see it as a problem, but I think it’s appropriate for there to be something of a timeout now.”
If everything that’s already approved got built, and if there was even more pending redevelopment, that potential deluge of new development would skew the market even more toward the high end, Richman explained, leaving even less opportunity for younger people or lower-market businesses to get their start in less desirable spaces.
“If the market looks at every building as an opportunity, we’re in trouble here,” says Richman.
Gold, too, believes this more quiet period is healthy.
“It’s OK in terms of having the existing supply settle out a little bit more,” he says. “Things calming down is OK from a market perspective and in terms of quality of life. There will continue to be redevelopment of spaces, but not redevelopment of whole properties.”