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COLORADO REAL ESTATE JOURNAL

— January 21-February 3, 2015

“At the beginning of 2014, I

predicted we would experience

sales of just north of $2 billion,

after we had dropped slight-

ly under $2 billion in 2013,”

Hawks said.

So what happened?

One important factor was that

interest rates stayed unexpect-

edly low last year.

Almost every economist and

observer had predicted rates

would rise last year as the econ-

omy improved.

“If not for such low interest

rates, investors would have

offered less money for apart-

ment communities and the own-

ers would not have sold,” since

they were enjoying such great

returns and cash flow from their

properties, Hawks said.

Jordan Robbins, a director

of Denver’s HFF office, said

another reason that the local

multifamily market was on fire

last year is because investors

increasingly wanted to plant

their flag in the metro area.

“I think it is a testament to

Denver being on everybody’s

radar screen,” said Robbins,

whose team made the largest

sale in the fourth quarter, the

$99.88 million sale to Eaton

Vance of the Sonoma Resort at

Saddle Rock.

“Institutional investors, high-

net-worth individuals and fam-

ily offices, and value-add inves-

tors, were among the new buy-

ers in Denver,” Robbins said.

One factor driving investor

interest was the “staggering”

increase in rental rates.

Indeed, during an apartment

tour of developments last fall,

put together by the Colorado

Real Estate Journal and Bruteig,

every apartment community

boasted higher rates and higher

occupancies than projected.

That was true whether it was

a garden-style apartment com-

munity in Broomfield, along the

southeast corridor, or a high-rise

tower in downtown Denver.

“Denver has really become a

major market,” Robbins said.

There is no sign that the mar-

ket will be slowing, he said.

“I think there is a lot of meat

on the bones,” Robbins aid.

“I think the overall trend will

be for rents to increase over the

next five years or so,” he added.

Bruteig, in his report, did offer

a short-term “cautionary flag.”

The overall apartment vacan-

cy rate increased to 4.13 percent

at the end of the fourth quarter.

That was a 21 basis point

increase from the third quarter.

“However, it is the lowest

fourth-quarter vacancy in the

11 years of our survey,” Bruteig

noted.

Still, with 9,136 units being

completed in 2014 and 13,500

scheduled to be completed this

year, the vacancy rate will rise.

Indeed, with more than 14,000

units in the lease-up stage, the

vacancy rate could double to

more than 8 percent this quarter,

Bruteig warned.

Still, no one can argue that

2014 was the best multifamily

market ever in the metro area,

said David Potarf, a senior vice

president in CBRE’s Denver

office.

“It is crazy,” Potarf said.

“The big question now is,

ʻCan we do it again?ʼ”

The short answer, Potarf said,

is he does not know.

Pressed to look into his crystal

ball, he said there are a couple of

factors in play.

“Theoretically, we can’t eclipse

last year’s sales record, because

so much has been sold in the last

three years that there just isn’t

that much to sell,” Potarf said.

On the other hand, a number

of recently completed develop-

ments in downtown Denver

and transit-oriented develop-

ments in the suburbs will sell

this year for record prices, he

said.

“I kind of think that last year

will be the high watermark

for quite some time, but who

knows? If you had asked me in

2013 if we would have seen the

kind of market we saw in 2014, I

wouldn’t have predicted it.”

One bullish mid- and long-

term factor for the Denver-area

apartment market is that the

metro area has become a mag-

net for millennials, those born

between the early 1980s and

early 2000s.

“I think Denver’s apartment

market is going to have a pretty

long run with the millennials,”

Potarf said.

“Young professionals, and

other demographics, want to

live here because of our qual-

ity of life and our strong job

growth,” Potarf said.

“I don’t see that changing. If

anything, Denver will become

more attractive for millennials,”

he said.

He agreed that more investors

are discovering Denver.

“Last year, we saw a lot of

new investors coming to Den-

ver,” Potarf said.

“A lot of themwere from Cali-

fornia, but we also saw a lot of

new investors coming from the

Midwest and the East Coast,”

he said.

Indeed, the biggest challenge

this year is a shortage of willing

sellers, Hawks said.

“The year has just started and

we already are getting calls from

investors who want to buy in

Denver,” Hawks said.

“We have to tell them that we

just don’t have that much to sell

them right now,” Hawks said.

“I think that is true for our

competitors, too. There is a real

shortage of properties to sell,”

Hawks said.

While this year’s potential

sales volume is probably a bet-

ter question for brokers, Bruteig

said it certainly is possible that

2015 could set a record for sales.

“I see no reason why it

couldn’t,” he noted.

“Denver underwrites very

well and with strong rental

growth and low vacancy rates,

there will be a substantial inter-

est from investors this year,”

Bruteig said.

“Really motivated buyers

willing to pay top dollar could

convince apartment owners to

part with their properties.”

s

Buyers Continued from Page 1

remodeled andwill accommodate

the district’s behavioral health ini-

tiative.

Steve Kawulok

of

Sperry Van

Ness/The Group Commercial

represented the buyer.

Russ Baca

of

Re/Max Eagle Rock

represent-

ed the seller,

DAB Fort Collins LLC.

n

Walker Landscaping

pur-

chased 34,892 sf of land at

5837 Lockheed Ave. in Love-

land from

SpruceTop LLC

for

$150,000.

Steve Stansfield

of

Realtec

Commercial Real Estate Ser-

vices

was the listing broker.

Erik Broman,

also of Realtec,

represented the buyer.

n

Broman

and

Jeffrey

Doran

of

Realtec Commercial

Real Estate

represented

Clark

Properties LLC

in leasing 5,070

sf of office space at 4745 Board-

walk Drive, Building D, Suite

200, in Fort Collins, to

J-U-B

Engineering Inc.

Annah Moore

of

Realtec

represented the tenant.

n

Three Four Brewing Co.

leased 3,345 sf of retail space at

829 Shields St. in Fort Collins.

Cobey Wess

of

Sperry Van

Ness/The Group Commer-

cial

handled both sides of the

transaction.

s

Larimer Continued from Page 12

visionary concept of creating

Denver’s first 21st century office

tower, complete with leading-

edge sustainability features to

maximize efficiency, produc-

tivity and comfort,” said Rich

McClintock, managing partner

of Westfield Co. “1800 Larimer’s

success confirms tenants are

hungry for modern, innovative

spaces.”

The building currently is 98

percent leased to local tenants

Monticello Associates Inc., KRG

Capital Partners LLC, West-

field Co. and Citywide Banks of

Colorado Inc.; investment-grade

tenants include Xcel Energy,

McGraw-Hill and Newmark

Grubb Knight Frank.

Completed in 2010, the build-

ing’s systems and design ele-

ments include open floor plans

with under-floor air distribution,

advanced lighting features and

floor-to-ceiling windows. These

elements enhance tenant pro-

ductivity and comfort, reduc-

ing operating costs, some by as

much as 40 percent.

In 2011, the building was pur-

chased by Invesco Core Real

Estate–U.S.A. Property manage-

ment services are provided by

Westfield Property Services, and

Newmark Grubb Knight Frank

provides exclusive leasing and

marketing services.

Griffis/Blessing adds PetCo

building to portfolio

Griffis/Blessing was selected

by Mexico & Bellair LLC to

manage the freestanding PetCo

building in southeast Denver.

Built in 1993, the 23,057-square-

foot retail building is located at

4100 E. Mexico Ave.

Dora Fessler, property man-

ager, and Katie Kier, portfolio

assistant, will oversee the day-to-

day operations with assistance

from Josh McFarland, property

accountant, and Ari Skyton, ser-

vice technician.

“The opportunity to manage

another retail building for this

group of owners out of Cali-

fornia is very exciting for us,”

said Senior Vice President Rick

Davidson, CPM. “Our qual-

ity service and management of

their retail shopping center in

Colorado Springs as well as our

expansion into the Denver mar-

ket were key factors in being

selected to manage the Denver

property.”

s

PM News Continued from Page 20

Griffis/Blessing will manage a freestanding Denver PetCo building.

HFF sold Sonoma Resort at Saddle Rock sold for almost $100 million last year.