September 2-September 15, 2015
—
COLORADO REAL ESTATE JOURNAL
— Page 13B
that are located beyond a
60-minute walk from the
nearest light-rail station have
the largest average unit size
of 942 sf, approximately 6.4
percent larger than the average
size of units located within a
15-minute walk of light rail.
These apartment units also
are the cheapest, with average
rents of $1,631 per month or
$1.73 per sf, approximately
18.4 percent lower than the
rate per sf for the average
of all units located within a
15-minute walk of a light-rail
station.
It is interesting to note
that while the average of all
unit types increase in sf and
decrease in rates from the
15-minute-walk proximity to
the more than 60-minute-walk
proximity, the individual 16- to
60-minute walk time unit sizes
and rates do not appear to
follow this trend consistently.
For example, rental rates per
sf for studio apartments were
slightly higher in the 16- to
60-minute walk than for any
other proximity. The highest
rents per sf within a 15-minute
walk of any light-rail station are
found at apartments located
near the 20th and Welton, 25th
and Welton, Union Station and
University of Denver stations.
Studios and one-, two- and
three-bedroom units that are
located within a 15-minute walk
of light rail command rents
per sf that are 3.8 percent, 14.4
percent, 19.4 percent and 9.8
percent higher, respectively,
than those unit types located
beyond a 60-minute walk,
according to THK Associates.
Chart 3 details apartment
development by unit type
and by proximity to light rail
over the past five years as well
as for units that are under
construction and planned.
Analyzing units developed
over the time frame of January
2010 to August 2015 shows
that within a 15-minute-walk
time, 9.9 percent of the total
apartment units constructed
were studios. As the distance
from light rail increases to
encompass apartments that
are located within a 16- to
60-minute walk and located
beyond a 60-minute walk,
the percentage of studio
units constructed drops to
6.2 percent and 3 percent,
respectively. The percentage of
one-bedroom units constructed
is relatively constant as the walk
time distance from light-rail
stations increase.
The percentage of two-,
three- and four- bedroom
units built as a percentage of
total units, however, generally
increases with distance from
light-rail stations. This change
largely is due to the fact that
light-rail stations are built
closer to downtown core areas
with higher land values and
rents that translate into a
higher demand for smaller,
affordable units. As people rent
apartments in locations farther
from light-rail stations, larger
units become more affordable.
The trend is proven, as four-
bedroom inventory largely only
exists in apartment buildings
that are located beyond a
60-minute walk from light-rail
stations.
The units coming on line,
however, appear to consist
of unit mixes that are not
tailored based on proximity
to light rail. Over the same
time frame, studio apartments
as a percentage of total
units developed decreased
as distance from light rail
increased. In contrast, studio
apartments as a percentage of
total units under construction
and planned appear to
increase with distance from
light rail. The unit mixes of
apartments that are under
construction and planned
depart from the last five years
of construction when higher
concentrations of smaller units
were found closer to light-rail
stations. This counterintuitively
suggests an assumption by
developers that demand for
smaller units over the next
few years will not decrease
as distance from light rail
increases.
To elaborate further on a
comparison between the two
time horizons of construction,
there is a great shift occurring
within each unit type built as a
percentage of total units built.
Although there are a total
of 4,399 units, out of 27,716
units, under construction and
planned that have not revealed
unit mixes, approximately
85 percent of unit mixes are
available.
Over the last five years,
studio apartments built within
a 15-minute walk of a light-
rail station accounted for 9.9
percent of total apartment
unit development. Over the
next few years, the number for
studio apartments will jump
to 42.7 percent of the total
apartment unit development.
In contrast, the number of
one-bedroom units under
construction and planned
within a 15-minute walk
of light rail is projected to
decrease from 54.4 percent
to 35.5 percent over the next
several years. The number
of two-bedroom units under
construction and planned
within a 15-minute walk of light
rail is projected to decrease
from 33.3 percent to 4.9
percent over the next several
years.
From January 2010 to August
2015, all studio units accounted
for only 6.4 percent of the
22,425 apartments constructed.
Moving forward, studio units
are projected to account for a
staggering 52.2 percent of the
27,716 apartment units under
construction or planned. In
contrast, this figure decreases
from 11,517 to 6,311 for one-
bedroom units, from 8,466 to
2,271 for two-bedroom units
and from 836 to 272 for three-
bedroom units from the last
five years to the next several
years.
Chart 4 indicates that the
station that saw the largest
number of developed units
in the past five years is Union
Station, with a total of 2,988
units. This represents 32.5
percent of the total units
constructed within a 15-minute
walk from light rail. Over
the next several years, units
constructed at Union Station
are projected to account
for only 22.5 percent of all
apartment units within a
15-minute walk of light rail.
This is because the local
environs surrounding Union
Station have less available land
for development. The next
largest active station, Belleview
Station, is projected to
decrease from 10.5 percent to
2.3 percent of total apartment
development occurring within
a 15-minute walk from light
rail. Apartment developments
at 18th and Stout, Alameda,
and Littleton-Mineral stations
are projected to decrease in
percentages over the next
several years as well. However,
apartment developments
at 20th and Welton, Dry
Creek, Lincoln, and 30th and
Downing stations are projected
to increase in percentages of
total apartment development
occurring within a 15-minute
walk of light rail over the next
several years.
Chart 3: Apartment unit size, rent and rent per square foot by proximity to light-rail stations in Denver
Chart 4: The number of apartment units constructed at each light-rail station
