February 2016

Most of the recent new condominium and lodge developments in Breckenridge have been timeshare units. Grand Timber Lodge, Grand Lodge on Peak 7, and Grand Colorado on Peak 8 are the most recent developments all by Breckenridge Grand Vacations. Soon BGV will announce plans for another lodge encompassing the end terminal of the Gondola at the base of Peak 8.

The availability of large multifamily tracts of land in Breckenridge is extremely limited, most of which are owned by Vail Resorts. VR announced that it will not build any future residential projects itself. Instead, it will work with other development companies on these remaining parcels. VR has a seemingly close working relationship and success with BGV, so this partnership will likely continue.

The Town of Breckenridge and Summit County also own some of the remaining large multifamily tracts, but most of these have been slated for affordable housing projects. Therefore, the few remaining privately owned large multifamily parcels will likely be developed as timeshare units. I wonder what effects that may have on the Town of Breckenridge, the Breckenridge Ski Area, the local community and real property values as a whole.

A timeshare unit, whether it be a 1,2,3 or 4 bedroom unit, is sold 52 times (52 weeks per year) to multiple people. It has an average vacancy rate of 15-20% per year, which equates to an occupancy rate of about 300 days per year. The average owner of a timeshare will use their week. If they do not, they may rent the unit out or swap it for a week somewhere else with a cooperating company.

In contrast, a wholly owned 2 bedroom unit is typically owned by one entity and the average number of nights it is occupied is 120.

It would be reasonable to assume that the remaining multifamily timeshare developments are going to have a significant impact on the number of visitors to Breckenridge compared to that of traditionally wholly owned units. This means increased visitation to Breckenridge as a whole. The positive effect may be that the community financially benefits from more commerce for lodging, retail, restaurants, ski area, etc. The negative consequences may be more crowding at the ski area and in town, traffic congestion and parking scarcity, as well as strain on existing resources.

From a real estate perspective, the development of these few remaining multifamily/lodge parcels of land into timeshare units will reduce the future supply of wholly owned units. Most likely, some visitors and owners of timeshare units will want to spend more than a week in Breckenridge resulting in a desire to purchase a wholly owned property. This will increase the demand for wholly owned units in Breckenridge, the supply of which is now almost totally limited to the existing properties available. This will likely result in a significant upward pricing pressure for these existing units.

Posted by Andrew Biggin on
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