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Page 24 —
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 1remodeled 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 12visionary 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 20Griffis/Blessing will manage a freestanding Denver PetCo building.
HFF sold Sonoma Resort at Saddle Rock sold for almost $100 million last year.