Building frenzy follows real estate boom
Aspen’s booming real estate market is apparently fueling another sort of boom – an onslaught of construction.The two are undoubtedly linked, according to one local real estate broker.Clearly, both industries are setting records. Real estate sales in Pitkin County surpassed the $1 billion mark by the end of June with 870 sales, compared with 591 deals closed through the first half of 2004.During that same stretch, Aspen’s Building Department set records for the number of permits it issued and the value of the construction associated with those permits. By roughly Aug. 1, the department had hit its projections for 2005 permit activity and revenue, with some five months yet to go, according to Stephen Kanipe, chief building official.”Everybody seems to be doing something – there has been lots of activity,” he said.Kanipe’s office issued 351 building permits by July 1, compared with 253 for the same period last year and 169 in the first half of 2003.The value of construction associated with building permits in the first half of this year totaled $180.9 million, up from $161 million for the first six months of 2004 and $106.2 million in the first half of 2003.”It seems like there’s a logical connection between real estate sales and investment in the community,” Kanipe said, though he declined to speculate on exactly why real estate transactions seem to go hand in hand with construction activity.Local broker Rich Wagar, of Rich Wager Associates, can offer several explanations.For one, he said, the hot market has driven up prices, resulting in an even wealthier stratum of buyer.”When the buyer’s paying a higher price for property, that usually means it’s a smaller percentage of their net worth, which means they’ve got more money to remodel,” he said.”In a town of perfectionists, people who have a lot of money tend to want things perfect.”The rising market is also luring speculators who buy a home, remodel or replace it, and then try to resell at a profit, according to Wager. With local land values disproportionately high, compared with buildings that may be as little as five or 10 years old, properties are purchased for the lot, not what’s on it, he said.”As soon as you rebuild, you’re ahead of the game,” Wager said.The residential boom, however, also includes the first phase of a new subdivision – Aspen’s Burlingame Ranch worker housing – which is expected to get under way shortly. Several large commercial projects are also driving up the numbers.The Residences at The Little Nell, a $300 million construction project at the base of Aspen Mountain, began last spring. The redevelopment of the Conner cabin properties next to City Hall is also proceeding and redevelopment of The Mother Lode restaurant property is expected to start in the coming weeks.While various projects either under way or looming on the horizon are bumping up the workload in Kanipe’s office, the department has reduced the time it takes to issue permits. The streamlining efforts were noted at a recent City Council discussion, as council members contemplated the need to regulate the pace of construction. One city official suggested the council simply direct the building department to slow down in its processing of permit applications; council members didn’t respond to the idea.Janet Urquhart’s e-mail address is email@example.com
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