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Colorado Multifamily Real Estate Market

June 09, 2019

Multifamily Real Estate Boom in Denver

As we reported in the Denver Colorado Housing market report, the opportunities for multifamily property buyers and property management companies remains positive in 2019. Denver is one of the hottest cities for multifamily real estate this year.

Sales and listings are up and Denver rent prices are rising. Other favorable conditions covered below, are low unemployment, rising wages, low vacancy, and a strong economy. Denver, Aurora, Colorado Springs, Boulder, Fort Collins and Pueblo have positive fundamentals for multifamily housing investment.

Denver Multifamily Market

A report from CoStar Group suggests Denver is a hot multifamily market. They report a glut of new apartment construction volume being released and much more coming. They say it will be hard for demand to keep up with supply.

While healthy competition is encouraging some developers and property managers to offer concessions, the glut of releases will ease over the next few years.

However they note that Denver is attracting high quality renters and the Colorado economy should keep them well employed.

2018’s total multifamily housing sales decreased in 2018 to $4.6 billion in from the $7.1 billion cycle peak of 2016. However, developers are showing a lot of confidence in the market here.

The ManageCasa team will be in Denver in June 26,27,and 28 for the big multifamily event of the year — Apartmentalize. Check out the range of helpful seminars from multifamily industry experts, new technology and leading edge services that could make a difference for your multifamily ROI.

Please visit our booth so we can hear your challenges in multifamily investment and property management.

Waypoint Residential, LLC of Florida is building in Denver. Their latest project is the The Walcott Denver, a 122-unit multifamily project in the popular Jefferson Park neighborhood. The company began construction in October 2018 and expects to completion sometime 2020. The Walcott Denver property will offer high-end amenities within walking distance to restaurants, boutiques, nightlife and light rail rail station, as well as convenient automobile access to downtown Denver, Interstate 70 and Interstate 25.

According to the Colorado Real Estate Journal, the price of an apartment in Denver rose from $73,000 in 2010 to $216,000 in 2017. That’s almost 300% price growth in 7 years. Average rents have risen 61% since 2011. They believe this makes Denver a Tier 1 city for multifamily developments.

The current issue for new construction developers is rising materials and labor costs, to where it costs $400,000 per unit to build a Denver multifamily development. With interest rates flat however, they’re seeing Cap rates stay where they are, important for multifamily property investors.

New Multifamily Construction in Denver/Aurora

In a news release, Milehighcre report that “Outside of downtown Denver there’s approximately 11,000 units under construction and more than 6000 of those are within a mile of a light rail station — more than 3000 of those are within a mile or a mile and a half of a station along one of the recently opened light rail lines.

Rent concessions are rising because of the competitiveness of the new developments. However, they’re not sure whether these are month discounts or a waived admin fee.

There’s a trend with Colorado developers to create more affordable unit sections within their new buildings and try new creative lifestyles such as co-living arrangements.

Denver’s Renter Market is bolstered by:

  1. strong rental demand
  2. good in-migration of high quality renter-age tenants
  3. strong job growth
  4. strong wage growth
  5. strong government infrastructure spending
  6. tech employment up by 3.5%
  7. average rent grew 3.7% to reach $1,525 which is $100 higher than the U.S. national average
  8. renter by necessity is up 4.1%

Multifamily property values reached a $241,039 per unit last year—56% above the $154,634 US national average.
Wage growth has outpaced rent growth and with unemployment very low, the outlook for multifamily ROI is rosy. Both renter by necessity and the lifestyle renter segments have seen big growth recently.

Expert Reviews of Denver’s Multifamily Market

In an interview, Share Ozment of Knight Frank Multifamily says lack of developable real estate is making matters more difficult. He noted the quality of multifamily developments in Denver which makes them extra attractive. High end pools, fitness centers, quartz countertops, and plank flooring among other amenities that distinguishes Denver multifamily properties from other cities.


We’ll be exhibiting at the NAA Apartmentalize Trade Show & Expo in Denver June 26,27, 28 at the Colorado Convention Center. We’d love to meet with you and talk multifamily. Please stop by our booth. The event will draw 10,000 visitors to see over 500 exhibitors and attend leading edge seminars from top experts in multifamily, HOA, apartment management, and new technology companies. This is the big event where you can get answers for your management and investment questions. Plan your trip to Denver now.


Yardi Matrix Multifamily Report

In the Q4 Yardi Matrix report, it’s reported that 14,457 multifamily apartments were released in 2018 (double that of 2017) and 10,620 more units will be released in 2019. And despite that glut of apartments for buyers and renters, they believe rents will rise 3.4% in Denver in 2019.

See more on the Denver Real estate market, and review the US multifamily real estate report for best cities to invest in multifamily properties.

Fort Collins Multifamily Market

Unique Properties of Fort Collins Co, have released a detailed report on the Fort Collins Multifamily market. With a dearth of new construction releases, vacancy rates are climbing, and rent growth is only 1.7%. They report that 1500 units are in development at the beginning of the year which is much higher than usual.

Concessions have jumped in 2018 and given what’s happened in Denver, might be increasing further in 2019. Many developments have offered one month free rent concessions.

Rents average from $1000 to $1475 depending on quality and cost $1.70/SF for 2-bedroom apartments, to $2.25/SF for smaller 1-bedroom apartments.

Screen Capture courtesy of UniqueProperties and Yardi Matrix

Colorado Springs Multifamily Market

According to Red Capital Group property investors showed interest Colorado Springs multifamily properties in 2018, acquiring $500+ million worth of apartment assets for the third straight year. They reported yields in the 5% range in the most active market of East Colorado Springs. Vacancy rates are low at 5% on average. Cap rates are expected to hit 6.2% in 1st quarter 2019. You can read in more detail at RedCapital.com.

When we can locate in-depth information on the Boulder Multifamily Market and the Pueblo Multifamily Market, we’ll add them here. Please read our new State of Property Management 2019, and learn more about what property managers are doing to improve their businesses.

 

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