December 16, 2015-January 5, 2016 —
COLORADO REAL ESTATE JOURNAL
— Page 17
The Denver area is adding
40,000 to 45,000 jobs a year and
almost all of those new hires
are renters, she said.
“No condos are being built
and a lot of people can't afford
$580,000 single-family homes,”
Koster said.
“Plus, there are only about
5,000 homes listed on the mar-
ket, so even if you want to buy,
there is nothing out there,”
Koster said. “In 2007, there
were about 30,000 homes on
the market.”
She said that value-add deals
like the Tamarac community
are especially popular among
investors.
“TruAmerica had already
spent close to $4 million on
capital improvements to the
property,” she said. “And Gelt
will continue where they left
off and finish the renovations
of the units and upgrade com-
mon areas.”
The more-than-$3.7 mil-
lion TruAmerica spent on the
improvements for about 200
units paid off handsomely.
According to Gelt’s website,
TruAmerica was able to realize
an increase of $120 per month
in rent on the renovated units,
which equates to a 24 percent
annual return on investment.
The purchase was in Gelt’s
wheelhouse, according to
Koster.
“Gelt kind of specializes in
workforce housing,” Koster
said.
“Tamarac is not in the Den-
ver Tech Center, but it is near
the tech center,” Koster said.
“It is a great location,” she
said. “And when you compare
Tamarac to a lot of the newer
product in the Denver Tech
Center, a lot of renters can’t
afford to pay $2 or more per
square foot for the new prod-
uct, but can afford the $1.40 or
so at Tamarac.”
Tamarac was not only the
first apartment community
Gelt purchased in Denver, but
also its single largest purchase
to date, both in terms of price
and number of units.
“Thirty Three Hundred Tam-
arac checked all the boxes for
our acquisition criteria,” said
Jeff Harris, director of acquisi-
tions with Gelt.
“The asset is strategically
located in an infill submarket
with immediate access to major
transportation, key employ-
ment centers and an array of
retail options,” Harris said.
As Koster said, Harris noted
that it would continue the val-
ue-add, capital improvements
started by TruAmerica.
“We see continued upside
through renovation of the
remaining classic units and the
addition of new amenities such
as a bike room, additional stor-
age and an outdoor recreation
area,” Harris said.
Damian Langere, partner of
Gelt, noted there has been a
“tremendous transformation”
in the area during the past few
years, including a Whole Foods
two blocks away and a Target
across the street.
“The asset’s stellar location
ensures a long-term competi-
tive advantage for apartment
housing in the local market,”
Langere said.
The 15-building, pet-friendly
property offers studios, one-
and two-bedroom units rang-
ing from 450 to 1,035 sf. Units
have private balconies or pati-
os, fireplaces and extra storage.
Amenities include three out-
door swimming pools, a club-
house, barbecue grills, fitness
centers, a racquetball court,
business center and lounge
area.
“We like the Denver region
for investment as it has diverse
economic drivers, impeccable
migration statistics as a result
of job growth, great quality
of life and a growing popula-
tion of millennials. All of these
key fundamentals are driving
a healthy apartment market,”
said Keith Wasserman, a part-
ner with Gelt.
Hart said TruAmerica con-
tinues to see Denver as an
attractive market for multifam-
ily investment as demand for
affordable, quality apartments
far outpaces supply.
In September, TruAmerica
acquired the Cherry Creek
Club, a 561-unit community,
for $71 million. With the sale of
Tamarac, TruAmerica’s Denver
portfolio totals 1,675 units.
s
Gelt
year, as completions slow some-
what over the first part of the
year.
The average effective rent in
the metro area will surge 10.9
percent in 2015 to $1,347 per
month, surpassing even the
sizable increase posted in 2014,
the commercial real estate firm
noted.
However, the gap between
the cost of renting versus own-
ing continues to increase, with
renting still far more afford-
able.
The supply of new rentals
will outpace growth in demand
in 2015, especially with a glut
of completions in the fourth
quarter. This will cause vacan-
cy to rise 110 basis points over
third quarter and above the
2014 level to 4.8 percent.
With vacancy remaining
tight, the pace of rent growth
will remain high, jumping 10.9
percent to $1,347 per month in
2015. This follows a year-over-
year increase of 10.7 percent in
the previous year.
Investor activity remains
strong as demonstrated by an
uptick up in transaction veloc-
ity of about 13 percent in the
past year.
Average cap rates range
from the low-5 percent span
for properties built since 2010
up to the mid-6 percent area
for 1970s and earlier-vintage
product.
Buyers paid an average of
$186,530 per unit during the
past 12 months, an advance of
16.2 percent year over year.
The dollar volume surged
41 percent year over year, to
roughly $3.4 billion as a result
of a larger number of higher-
value transactions occurring.
Marcus & Millichap remains
bullish about the Denver area’s
apartment market.
“Solid job growth and contin-
ually rising rents means inves-
tors remain keen on the Denver
market, while many owners
realize they have a lot of equity
and are cashing out,” accord-
ing to Marcus & Millichap.
“This will keep transaction
velocity elevated.”
s
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