Page 10 —
COLORADO REAL ESTATE JOURNAL
— November 4-November 17, 2015
Greater Denver
double-digit rental growth that
has been occurring for several
consecutive years.
Terrance Hunt, a broker with
ARA Newmark, said the market
already has topped $3 billion in
sales this year, and will reach a
record $4 billion by the end of
2015.
Indeed, Shane Ozment and
Chris Cowan, brokers at ARA
Newmark, both noted that many
investors bidding for apartment
communities and land are new
to Denver.
Bruteig said that rents today are
the highest ever, not only in nomi-
nal dollars, but also in real dollars.
“Rents are above previous
peaks, but apartments are larger
and nicer, so I’m not sure they
truly are higher than they were
when adjusted for inflation,” Bru-
teig said.
On a percentage basis, rents are
growing faster for older prod-
uct than newer construction, he
noted.
Also, typically renters are pay-
ing an average of 19.7 percent to
27.7 of their income, depending
on how you measure it, on rent.
That is below the 30 percent or
so that is considered the maxi-
mum consumers should pay for
rent or on a mortgage. It also is
far below what many pay in rent
in major cities on the West Coast
and East Coast.
Hunt said one trend that bodes
well for the multifamily market is
that homeownership has fallen to
about 60 percent from a high of
about 70 percent.
He said the area also is ben-
efitting from its transit-oriented
developments and the air train
that will open between Union
Station and Denver International
Airport next year.
“And we’ve seen DaVita dou-
bling down on Denver (with its
corporate headquarters expan-
sion) and we will see other com-
panies moving their headquar-
ters here,” Hunt said.
“We think the market is going
to be a little bifurcated, with the
most pressure above the $2,000” a
month rents, saidBobbyHutchin-
son, who is director of invest-
ments for Denver-based RedPeak
Properties.
Hutchinson, who spoke on the
investor panel, said he antici-
pates rents will rise 2 percent to
3 percent for the high-end, luxury
apartments newly constructed in
downtown, while rents will rise 5
percent to 6 percent for properties
with rents in the $1,100 to $1,500
range.
Still, Denver‘s multifamily mar-
ket will continue to be one of the
best in the U.S., said Norman
Radow, CEO of the RADCO Cos.
“Denver is the epicenter” of
everything that is driving a bull
market in rental across the coun-
try, such as millennials who can’t
afford or don’t want to buy a
home. Denver also benefits from
its weather, quality of life, invest-
ment in infrastructure and its
nearby universities, he said.
However, a slowdown in
rental increases is coming at a
time when labor costs are going
through the roof, with no end in
sight, according to a number of
panel members.
The cost of building has dou-
bled since 2010, said Tim McEn-
tee, director of Wood Partners.
He said there is such a labor
shortage that “you are lucky to
have 200 workers” on a site that
should have 300 workers.
McEntee, who spoke on the
developer panel, said that he
had hoped the downturn in the
oil industry would mean more
workers would leave high-pay-
ing jobs in fracking fields and
return to residential construction,
but he hasn’t seen it.
Early in the conference, archi-
tect Jeffrey Sheppard, who spoke
on the design panel, challenged
developers to think outside of the
box, when designing apartments.
He noted that an editorial piece
he wrote last April (“Denver is
a great city, why the bad build-
ings?”) received more than 3,000
email responses.
“Meaningless, uninspiring
structures that feature mere sur-
face variation rather than genuine
innovation seem to be the zeit-
geist of the day,” he wrote about
Denver in the editorial.
Denver’s zoning, he said, has
“loopholes” that allow for con-
struction that does not enhance
the urban fabric.
He said he met with one devel-
oper that wanted to build a hous-
ing development that would
have created a 5-foot-wide side-
walk flanked by 50-foot walls
that would have “destroyed” the
neighborhood.
Instead, he came up with an
idea that incorporated stand-
alone micro-units in the front
and stacked townhomes at the
back that were an asset to the
area and just as profitable for
the developer.
He and Paul Campbell, pres-
ident of Kephart, also pointed
to Block 32 in RiNo, designed
by James G. Johnson of Johnson
Nathan Stroh, as an example of
a multifamily community that
works well with the neighbor-
hood.
Later, Bruteig asked members
of the developer panel how they
felt about design, noting that it
can drive up the costs in an indus-
try where prices already are esca-
lating.
W. Jeff Booth, vice president of
development for Embrey Part-
ners Ltd., which is developing
an apartment community in Ken
Caryl Ranch, said design is only
second to site selection.
And Darren Fisk, founder
and CEO of Forum Real Estate
Group, said it is important that
the design, as well as the amenity
package, appeals to the market it
will serve.
He noted that they developed
the Veranda High Pointe near
Interstate 25 and Hampden Ave-
nue, and Kent Place at University
Boulevard.
They are about two miles apart,
but they couldn’t be more differ-
ent, yet are both highly success-
ful, because they appeal to their
core demographics so strongly,
he said.
s
Multifamily
From left: Jeffrey Sheppard, Paul Campbell and moderator Dennis
Humphries.
From left: Bobby Hutchinson, Chad Bungcayao, Scott McClave, Stephen
Vacchitto and Norman Radow.
