Colorado-Real-Estate-Journal_429145

Page 18 — Multifamily Properties Quarterly — November 2024 www.crej.com DESIGN A s Denver’s multifamily development sector faces unprecedented headwinds, developers are navigating complex challenges – from rising operational costs to strin- gent state regulations. Pressures surrounding property taxes, insur- ance and regulations are squeez- ing revenue streams and slowing the pace of development. Against this backdrop, commercial interior design firms have become essential partners, helping projects remain financially viable and delivered on time and within budget. Challenges developers face Denver’s multifamily developers are contending with regulatory and financial headwinds: n Regulatory pressures and tenant- focused laws. Recent legislation in Colorado has inadvertently increased property owners’ bad debt while making collections more difficult. Rising insurance costs and property taxes are fur- ther straining financial models. This regulatory environment has led many institutional investors to pause activity in Denver. n The shift to the Sunbelt. As regu- lations in Colorado scare away cap- ital, more development funds are flowing into Sunbelt states, where conditions are perceived as more favorable. This shift offers design firms an opportunity to showcase their versatility by following clients into new markets while maintain- ing local operations. n Urban vs. suburban dynam- ics. Developers are shifting their focus from urban infill projects to renovating older suburban proper- ties. Suburban areas are see- ing more activity from developers with cost-efficient operations, often using vertical inte- gration and better material sourc- ing. Designers must understand both urban and suburban markets to create successful projects that balance renovation and new con- struction. n Construction defect laws. Colo- rado’s stringent construction defect laws complicate the development landscape, particularly for condo projects. These laws require exten- sive disclosure of defects, making it harder to deliver affordable units for first-time homebuyers. n Increasing costs and inflation. Inflation, rising interest rates and increasing construction material costs are adding to the financial strain. In areas like RiNo and the Golden Triangle, oversupply is lead- ing to project delays, redesigns or cancellations. Designers must adapt to shifting budgets, scopes and structural elements to keep projects viable. n Workforce housing shortage. Workforce housing is in high demand, especially in our moun- tain regions, but budget constraints are limiting development. Creative problem-solving is essential to make these projects viable. Rela- tionships with local trades have been crucial for keeping costs down in smaller markets. The role of interior design in addressing development challenges In this challenging environment, interior design firms are not just focused on aesthetics but are inte- gral to ensuring project viability. Here’s how we contribute: n Market knowledge and strategic flexibility. As design professionals, we bring market knowledge to each project, ensuring design decisions align with tenant needs, financial viability and market demands. Our role extends beyond aesthet- ics to optimizing properties within broader development goals. n Design for financial feasibility. With rents stagnating or declining in some areas, design choices must support achieving rental income targets. We help developers by creating spaces that enhance ten- ant experiences and justify higher rents, while controlling construc- Interior designers: Strategic development partners Ashley Clendenin Director of sales and marketing, Studio 10 A holistic, integrated approach to design supports not only the property’s aesthetics but also the financial and operational goals of each project. Please see Clendenin, Page 29