A Denver real estate firm purchased The Confluence at Three Springs for $35.25 million and sees Durango as a potential market to expand its holdings and possibly to initiate new construction and development.
“We see Durango as an anchor to Southwest Colorado with a pretty diverse economy,” said Doug Elenowitz, co-founder and principal of Trailbreak Partners, which announced its purchase of The Confluence last week. “You have Fort Lewis College, you have a resort and the tourism industry, you have governments, and you’re the center point for medical services in Southwest Colorado.”
The Confluence is a three-story, 171-unit apartment complex that includes both one- and two-bedroom units. It also includes a Mexican restaurant, a yoga studio and a bridal boutique in retail space on its ground floor.
Durango has certain characteristics that create a high barrier of entry for new apartment complexes that protect existing apartments from facing competition from new construction, and that serves to protect Trailbreak’s investment in The Confluence, Elenowitz said.
A good portion of land in Southwest Colorado is owned by the federal government and tribal governments, and Elenowitz said that creates a shortage of available land for development. In addition, high construction costs and a labor shortage also makes developing large apartment complexes difficult in Durango, he said.
“There’s a confluence of things in Durango that makes it more challenging to deliver a new apartment product. And so that does act as somewhat of a protection for the investment,” Elenowitz said.
“In terms of apartments in Durango, it’s historically smaller buildings that are pretty diffuse. There’s quite high barriers to entry,” he said. “So we see a thriving, growing community, where there are significant barriers to entry.”
Trailbreak Partners viewed The Confluence as a high-quality existing apartment development in a well-designed master plan area that offered mixed uses and a favorable price, Elenowitz said.
Purchasing an existing apartment complex, he said, allowed Trailbreak Partners to avoid the risk that comes with construction of a new development and the risk of having to lease units in a newly built complex.
“We saw an opportunity to acquire a beautiful new building at a favorable price, and it’s located in an area that we think is poised for continued growth,” he said.
Durango, like many Western Slope communities, is seeing a hot real estate market as people look to leave more densely populated cities, and that is another factor that makes Durango an attractive market – both to buy existing apartments and possibly develop new apartments from the ground up – Elenowitz said.
“We don’t yet have empirical evidence of this, but with COVID-19, we hypothesize that communities like Durango will be a focus of people who are interested in quality lifestyles in more rural and smaller communities,” he said. “Places like Durango are going to be the beneficiaries of folks who are seeking to leave more densely populated urban centers, and be able to live a nice, quality life in a well-rounded smaller community.”