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Page 8 — Multifamily Properties Quarterly — January 2015
I n the past four years, Colorado
has gained national attention
as one of the most attractive
apartment markets in the
country. Denver established
itself as a premier market with
favorable apartment fundamentals,
consistent employment with a sta-
ble economy and a vibrant down-
town with social attractions. We’ve
projected that Colorado Springs
would soon follow suit and estab-
lish itself as suitable alternative for
both investors and renters. These
projections are now a reality, as
we’ve seen Colorado Springs begin
to realize its potential. Looking back
at 2014, Colorado Springs benefited
from record-setting apartment
fundamentals, vastly improved
employment and economic condi-
tion, and received national recog-
nition with city attractions. These
recent developments led to a truly
remarkable year, with 2014 pro-
ducing the most apartment sales,
by total sales volume, in Colorado
Springs’ 128-year history.
Stable Apartment Fundamentals
At the end of third-quarter 2014,
market vacancy reached a level not
seen in Colorado Springs in 13 years
at 4.79 percent. Market rents also
grew at the fastest rate in the past
eight years at 5.9 percent year over
year. Much like Denver, Colorado
Springs’ vacancy tightened and
renters have few options as units
turn over. Owners quickly capital-
ized on the competitive vacancy
and pushed rents aggressively.
New investors are seeing this rent
growth and have bought in at a
price point that is
well below what is
available in Denver.
Equally important,
Colorado Springs
still remains an
affordable option
for renters in
comparison with
Denver. Histori-
cally, we’ve seen
about a 10 cent
to 15 cent gap in
average market
rents per square
foot between
metro Denver and
Colorado Springs.
In third-quarter
2014, the spread
has more than
doubled to 35 cents
per sf. As cost of
living continues to
increase in Den-
ver, many renters
will consider mov-
ing to Colorado’s
second-largest
metropolitan city.
All of these factors
contributed to the
ideal market con-
ditions that we’ve
known Colorado Springs is capable
of producing.
Improved Employment
and Stable Economy
Colorado has remained one of
the nation’s leaders in decreas-
ing unemployment rates. Colorado
Springs followed the state’s lead
with current unemployment rates
hitting a five-year low in Febru-
ary 2014 at 7.5 percent. Despite
these favorable developments, some
still fear that Colorado Springs will
remain unstable with future military
cuts, and base realignment and clo-
sure. Fort Carson remains a national
focus because the single base has
doubled in size over the past 10
years. In previous base realignments,
Fort Carson benefited with a net gain
and received additional troops from
other bases around the country.
The strongest example of the
country’s continued confidence
in Fort Carson is the $242 million
approval for military construction for
new facilities that was announced
in January 2014. These facilities
will be instrumental in supporting
the now fully operational Fourth
Infantry Division, Combat Aviation
Brigade. This budget represents
more construction funding than any
other base in the nation. In addi-
tion, according to the military’s most
recent BRAC report, Fort Carson was
ranked sixth out of 88 bases in the
country in terms of strategic impor-
tance. Clearly, the Army views Fort
Carson as a staple instillation. As a
result, Colorado Springs’ economy
should remain stable even as the
military reduces its international
footprint.
Significant City Attractions
In 2014, Colorado Springs received
Colorado Springs Update
Kevin McKenna
Vice president,
ARA Real Estate
Investments
Services, Colorado
Springs
Saul Levy
Associate, ARA
Real Estate
Investment
Services, Colorado
Springs
The Villages at Woodman is listed with ARA.