This week, 10 apartment buildings that will house 230 luxury living units began to emerge at the undeveloped corner of Woodmen Road and Union Boulevard.
But, getting to this point has been a long — and expensive — road.
Developer John McWilliams of Talos Holdings said the project, called the Peaks at Woodmen, took two years and more than $25 million in permitting fees to initiate.
The Utah-based company owns and operates high-end apartment complexes throughout the southwest, but focuses on Arizona and Texas. The Colorado Springs property is McWilliams’ first in the state.
“It was my first and it may be my last,” he said.
The project has cost more money and taken longer than it would have in other markets.
“It’s very difficult to develop there,” McWilliams said.
It’s a complaint that’s often heard about the development review and permitting process in Colorado Springs and a problem Mayor Steve Bach vowed to address.
Still, McWilliams believes the investment will pay big in the end.
The Peaks at Woodmen is one of the first new apartment developments in Colorado Springs in recent years. And with rental vacancies hovering around 10 percent, it’s a wonder McWilliams chose to build in the Colorado Springs market at all.
When he first started working on the project in 2009, second quarter apartment vacancies in Colorado Springs were 9.8 percent, according to the Colorado Division of Housing.
Figures released this week, show improvement from with vacancies around 6.4 percent.
“The market has tightened up,” McWilliams said. “I guess I had my crystal ball out. Let’s hope I was right. We won’t really know until we open.”
While the 6.4 percent vacancy rate is an improvement, it is an increase from the 5.8 vacancy rate in the second quarter of 2010 and from the 5.7 percent vacancy in the first quarter of this year.
That shift toward higher vacancies came as a surprise to housing officials, who could not account for the shift.
Denver University economics professor Gordon Van Stroh said rent rates have been climbing, too.
They went from an average of $737 a month in the first quarter to $759 in the second quarter. If that trend continues for the rest of the year, rents will rise more than 10 percent, he said.
McWilliams is banking on a tight rental market and expects his complex to fill a luxury niche that is lacking after years without any new apartment construction. Rent rates are expected to competitive with market prices.
He said he expects the first building to be finished and ready to for residents in December with the others following quickly behind. He expects the entire complex to be open by June 2012.