Nichols Partnership

Nichols guides Spire back from the brink for a fall opening

By Daniel DeCristoforo

Despite daunting challenges, the Spire, a $175-million, 41-story residential high-rise in downtown Denver’s Theater District, appears destined to be a special building for buyers who are going green and seeking a walkable urban lifestyle.

(Photo by Terry Shapiro)

Developed by Denver’s Nichols Partnership under the leadership of firm president Randy Nichols, the Spire is aimed at buyers who prefer urban living, convenient mass transit, in-building recreation and nearby shopping and entertainment. Designed by Denver architectural firm RNL, the 474-ft tower is comprised of 33 stories of residential space resting on an eight-story podium that includes parking and street-level retail.

But it almost didn’t happen. On Sept. 13, 2007, four months after groundbreaking and when the building was just four stories above ground, German lender Hydro Real Estate Capital Corp. pulled Nichols’ $160-million primary construction loan after Hydro decided to abandon the U.S. multifamily residential market.

“It was like getting tossed from a plane and having your parachute chord cut,” says Nichols’ partner Chris Crosby.

Nichols Partnership was on the eve of its first draw against the loan; $20 million had already been spent, and daily expenses were running between $300,000 to $400,000. Meanwhile, world capital markets were freezing up. Denver contractor JE Dunn was forced to halt construction activity on the tower.

“We feared that our project might wind up being the Stub instead of the Spire,” Crosby says. “Overnight, we were faced with having to raise huge amounts of additional equity. Nonproductive costs—maintaining the tower crane, trailers, barricades and skeleton crew—ate up $20,000 a day.

“Randy liquidated whatever he could to make a multimillion dollar, unsecured good-faith payment to JE Dunn, demonstrating an absolute personal commitment to the project. When Dunn saw that, it did everything it could to help by investing in the project and keeping us on life support,” Crosby says.

Randy Nichols adds: “Oddly enough, it never occurred to me that Spire would just sit there as a rotting shell. In my mind, Spire would get built. We briefly considered apartments or hotel-condo, apartment-condo combinations, but in the end, condominiums geared for young professionals, 25 to 35, were what we set out to do, and we held to that. Cutting quality was never an option.”

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In just a few months, the Nichols Partnership secured a total of $173 million from multiple lenders, and the project resumed construction at the end of January 2008.

“The effort to replace the loan was pretty unbelievable. We spoke to 150 different groups, but it was tough to find anyone that was lending, especially to speculative condo projects. The market was evaporating out from under us,” Nichols says.

RNL principal Doug Spuler says Nichols “risked his neck and miraculously pulled his financing back together. He had us making numerous presentations, but had he not possessed the intestinal fortitude to put up his own equity, this project would never have happened.”

“We had never run into anything of that magnitude before,” JE Dunn Rocky Mountain Region President Steve Hamline says about the loss of financing. “But Randy is a straight shooter, and we all were determined to make it happen.”

(Photo by Terry Shapiro)

Nichols says the most gratifying aspect of the project “is creating a high-quality product at a price point that people can afford. Young professionals who want to live downtown constitute a woefully underserved market. Pricewise, everything (downtown) is totally out of reach. In an ideal world, my next project would be another Spire.”

One of the largest LEED-certified residential towers in the country and the first for downtown Denver, the glass-clad Spire boasts 600,000 sq ft of residential space—496 condos priced from $212,000 to $1 million, with 74% of units priced under $500,000.

Spire also features 35,000 sq ft of amenities that include a 3,000-sq-ft fitness center, multiple clubrooms, a screening room and an outdoor terrace featuring pools, a fire pit and magnificent city and mountain views.

Storefront retail will include a coffeehouse, upscale restaurant, pilates and yoga studio and Connect by Hertz, a car-sharing service where, for $8.50 an hour, Spire residents can lease hybrid vehicles. Bicycles can be borrowed from the B-Cycle station—part of the free citywide network.

Condo sales to the public began in April. Presales were deemed inappropriate for Spire’s target market. “It’s tough to ask young professionals to commit three years or more ahead of delivery,” Crosby says.

Spire topped out in March and is slated for completion on Oct. 31, 62 days ahead of the amended schedule.

The tower is a key element in the $1.5-billion (roughly 50-50 public and private financing) 14th Street renaissance, an effort marked by several landmark projects: the Colorado Convention Center expansion, Four Seasons Hotel (under construction), Curtis Hotel, Inn at Auraria, Embassy Suites (under construction), Hilton Garden Inn, Hyatt Regency Convention Center Hotel, Wellington Webb Building, Ellie Caulkins Opera House and a residential high-rise planned for Bell Park.

“Randy has set a high standard for design and been a strong advocate for streetscaping 14th,” says John Desmond of the Downtown Denver Partnership.

Randy Nichols
President and Founder
The Nichols Partnership

Years as a developer 21. Began real estate career in 1981, founded private development company in Chicago in 1988.

Education Master’s degree in real estate development, MIT; bachelor’s in business, CSU

Hometown Decatur, Ill.

Important projects Clayton Lane, Janus Capital Group Headquarters, Manor Homes, Daniels College of Business, DU, 1899 Wynkoop, Larimer Corporate Plaza.

Current Market Challenges “The future, at least for my career, lies with urban infill and adaptive reuse. One of the ways to survive in a downturn is to come up with more creative projects such as taking a Class B building and doing an upgrade to Class A-. When the environment improves, I would love to do another Spire-like tower, but I don’t think there is anyone out there who would finance one right now.”

Spire Project Team:

Developer The Nichols Partnership
Construction Management DAE
Contractor JE Dunn Construction
Architects RNL, Communication Arts
Electrical Riviera Electric
Mechanical RK Mechanical
Structural JIRSA Hedrick
Specialty Construction Spacecon