Penthouses in the Aspen core are a hot commodity with two recent sales downtown for over $6 million each.
The penthouse in the newly expanded Crandall Building, located on the corner of Spring Street at 630 E. Hyman Ave., sold in January for about $6.277 million after being on the market for 30 days. Two units on the second and third floors of the Ute City building at 308 E. Hopkins Ave. sold together for about $6.275 million in August.
Last year, the most expensive residential sale per square foot downtown was a penthouse located across from Koch Park called Aspen West. The 1,618-square-foot apartment went for $3.595 million, which comes out to about $2,220 per square foot.
“There’s certainly still a demand for penthouses in the core,” said Galen Bright, real estate broker for Setterfield & Bright.
Bright frequently receives calls from people interested in purchasing penthouses, and he attributes the popularity to their scarcity in the core, he said.
“The special and unique, that’s what people want,” Bright said. “And it’s all about being downtown.”
Currently there are a handful of downtown top-floor units on the market including a 13,297-square-foot pad in the Motherlode building that spans multiple levels, which is on the market for $24.475 million, and a 3,078-square-foot unit above the Silver Queen lounge at 520 E. Hyman Ave., which is listed at $7.45 million.
The high demand for penthouses in the core serves as a backdrop to the recent deal that Aspen Core Ventures and managing partner Nikos Hecht made with City Council this week to save two Aspen landmarks in exchange for an approval to build a 6,900-square-foot condo on the third floor of a new mixed-use building. The city’s land-use code currently caps downtown residential units at 2,500 square feet.
The parcel of land in question houses the popular bar and restaurant Little Annie’s and the Benton building, which Aspen artist Tom Benton built in phases to be his studio and residence. Hecht originally planned to tear down the structures.
This week council voted 4-1, with Mayor Mick Ireland dissenting, to approve the condo as well as to allow Aspen Core Ventures to provide employee housing for nine employees out of a total of 55 generated by the new building’s commercial components (city codes typically require developers to provide affordable housing for 60 percent the workers a project generates). Both buildings will be designated as historic, the Little Annie’s space will be deed restricted as an affordable restaurant and Hecht is required to put $2 million into a Benton building restoration.
In light of the deal, Greg Hills, principal of Austin Lawrence Partners, which did the Crandall Building project, expressed his frustration with the city for being inconsistent in its regulation of the size of penthouses.
There’s something wrong with the legal process if a developer can successfully challenge the city’s building codes without going to court, Hills said.
“I guess the biggest thing for me is I don’t know what the rules are anymore,” he said. “We respect the rules and we’ve been told the unit’s allotted square footage and a variety of different things. You try to work in the process knowing you have certain guidelines you can follow ... and we’re not sure what those are anymore.”
In 2009, Hills voluntarily sought historic designation of the Crandall Building, which was also designed by Benton. Local-serving business Sandy’s Office Supply was offered a chance to buy its space in the newly renovated building.
At the time of the designation, City Council allowed Hills to develop the 2,500-square-foot residential unit that sold for $6.277 million in January.
If a developer can challenge the city regarding certain rules and negotiate to get around those rules, that means there must be something wrong with the process, Hills said.
“We never ever in our wildest dreams thought that someone would be able to build a 6,900-square-foot apartment in the downtown core,” Hills said.
It is expensive to save buildings considered valuable to the community and have them properly restored, said Hills. Financing commercial retail space in a historic building with a free-market condo is a viable option, but it is only workable for certain buildings in the downtown core, he said.
“I think it’s a very small compromise to allow [a penthouse] to go on top,” Hills said. “But I think the buildings need to be selectively done.”
The $6.275 million Ute City building sale in August included a 3,500-square-foot penthouse and a 1,800-square-foot unit on the second floor, both which were unfinished at the time of the sale. The penthouse was approved before there was a 2,500-square-foot cap on downtown residential units, said John Provine, principal of the development firm JW Ventures.
The way the building is laid out, it would have been impossible to split the larger space into two units to fall within the current cap, he said.
There should be a cap so that there won’t be Red Mountain-sized penthouses in the downtown core, but the limit should be much larger than 2,500 square feet, Provine said.
“I don’t think the city should be in the business of having a cap at 2,500-square-foot [units],” Provine added. “That’s too small.”
The Ute City units were on the market for about a year and a half before they sold. The length of time it took to sell them is mainly because they came on the market right after the economy took a downward turn, Provine said.
Ultimately, free market units on top of buildings downtown pay for retail and commercial space on the ground floors, therefore the free market units on top drive the economy, Provine said.
Meanwhile, the new building at the old Cooper Street Pier location will house a penthouse that will go on the market in the next year. The new building, partially owned Hecht, will be four stories tall and feature a 4,500-square-foot penthouse — a concession the developers won in a settlement. A basement-level commercial space in the building is required to be a mid-priced “affordable” restaurant, a settlement term the city won. Some other retail use is expected for the street-level space.