Deals With 'A Little Hair' Are Exactly What This New York Developer Wants In Denver

Not everyone’s looking for tricky deals in a risky multifamily market, but New York-based Quinlan Development Group says that is where it thrives — and it’s dropping cash in Denver.

The firm closed on The Atrii Apartments, a 197-unit property in Glendale, for $32.5M in cash earlier this month. The deal, a $17.1M discount from its 2021 price, is the beginning of a broader play.

“We wouldn’t have done this for just one deal,” principal Tim Quinlan said in an interview. “We think of ourselves as having planted a flag in the market and plan on building a portfolio around it.”

Quinlan is targeting Class-B properties with room to add value — often the kinds of deals others might pass over. 

“We like things with a little hair,” Quinlan said.

A little hair could present itself in the form of challenges on the development or management side. The Atrii, for example, requires a “management-intensive strategy,” Quinlan said, including improvements to common areas and several units. A full rebrand is also in the works, with Urban Phenix handling property management.

Quinlan, which has been in operation for more than 50 years and has a 3M SF portfolio, has been eyeing expansion opportunities in the multifamily space, waiting for the numbers and timing to line up.

While The Atrii was its first multifamily buy outside of the New York area, the company already has a large national footprint through its industrial arm called CrestBay, its Spacious Skies brand of RV campgrounds and a self-storage portfolio under the Quinlan brand. 

It is looking at markets like Austin for expansion opportunities, Quinlan said. But when opportunity presented itself in the form of a Glendale property, it found unique upsides to the Denver market.

“Denver has repriced itself more quickly than other markets with heavy supply,” Quinlan said.

That supply tends to be Class-A luxury stock.

“We’re value-add guys. We’re not just going to hope rent growth gets us there,” he said.

Denver rents dropped by 3% last year as 20,000 new units flooded the market, with thousands more on the way. The Mile High City led the nation in monthly rent cuts in January, according to Zillow. That has slowed the urban pipeline for deals and development while the suburban market gains momentum.

The Atrii’s location, near booming Cherry Creek and the planned 10-acre Four Mile District entertainment development, was a draw — but so was the partnership. Quinlan teamed up with local group Leetsdale Acquisition Partners after a mutual contact introduced them.

“We’ll pass on a deal if we’re not comfortable with the partnership,” Quinlan said. “Partnership risk is as big as project risk.”

And with no LPs and no investment committee, the firm says it brings speed and agility to any partnership it enters.

“We wear a lot of hats. You’re kind of talking to the investment committee when you’re talking to me,” Quinlan said.

While future office conversions aren’t off the table, multifamily is the focus. Quinlan is tracking similar opportunities in and around the Denver metro.

Quinlan points to his hometown of New York as an example of what a fresh perspective can bring. The Meatpacking District, he said, once “stunk and was disgusting.” Now it’s among the city’s trendiest neighborhoods.

“A lot of old-timers couldn’t see it,” he said.