May 4-May 17, 2016 —
COLORADO REAL ESTATE JOURNAL
— Page 21
Colorado Springs/So. Front Range
by Jennifer Hayes
Colorado Springs’ apartment
market outshone the Denver
metro area during the first
quarter, according to Apart-
ment Insights’ recently released
Statistics/Trends Summary.
While the metro area had
back-to-back soft quarters, the
Colorado Springs market saw
substantial improvements in
both rents and absorption, with
annual growth in excess of 7
percent for gross rents and 9
percent for effective rents.
“Although vacancy creeped
up this quarter, it remained
well below 5 percent and still
represents a downward trend,
giving property managers pric-
ing power in the marketplace,”
according to Doug Carter of
Sperry Van Ness/Doug Cart-
er LLC, who co-authored the
report with Cary Bruteig of
Apartment Appraisers & Con-
sultants.
The co-authors also noted
they expect continued strong
rent growth in the quarters
ahead, as the construction
pipeline remains moderate. As
well, rents in both Denver and
Fort Collins have been much
higher than in the Springs,
indicating the market has room
to move rents much higher.
The stabilized vacancy rate
for Colorado Springs increased
by 31 basis points during the
first quarter to 4.53 percent,
however, the rate is still lower
than all quarters prior to last
quarter, according to the report.
The trailing four-quarter aver-
age vacancy rate decreased by
38 bps to 4.7 percent – a record
low for the 10 years of sur-
veying the Colorado Springs
market. A year ago it was 5.36
percent.
Vacancy for tax credit proper-
ties decreased 11 bps to a new
record low of 1.91 percent –
well below first-quarter 2015’s
vacancy rate of 3.17 percent.
The average rent for the
Springs area increased by $7
in the first quarter, the report
noted, moving to a new record
high of $893 per unit, or $1.09
per square foot.
The total 12-month increase
in rent was a record high $64,
which resulted in a record 7.7
percent rental growth rate for
Colorado Springs.
Rent growth over the last
12 months has occurred fairly
evenly across all age groups.
The slowest annual growth was
6.4 percent for properties built
during the 2000s. The highest
rent growth of 7.9 percent was
for properties built during the
1990s.
The marketwide net (effec-
tive rent) increased by $6 dur-
ing the quarter to a new high
of $885. This is $74, or 9.1 per-
cent, higher than a year ago,
both record annual increases.
The current concession of $8
equates to just 0.9 percent of
gross rents, and is down from
the $18 concession offered a
year ago. Economic rent, which
is net rent less vacancy, has
increased by 10.9 percent over
the last 12 months, reflecting
the improvement in both rents
and vacancy, the report added.
Other News
n
Mercury Real Estate
Partners LLC,
a Denver-based
group purchasing its first asset
in Colorado Springs, acquired
the Gallery Apartments for
$2.7 million.
The 58-unit community, built
in 1970, is located just east of
Academy Boulevard on Galley
Road. Mercury is the fourth
owner of the community in the
last two years.
“Though the majority of our
holdings are in Denver, we like
the Colorado Springs market
and have been tracking it close-
ly for the last couple of years.
This was an opportunity to
acquire a value-add multifam-
ily asset in Colorado at a more
compelling cap rate than we
can find in Denver,” according
to an unidentified managing
member of MREP. “We’ve seen
the pricing in Colorado Springs
increase in recent years, but
not as drastically as in Den-
ver. This acquisition provides
us the opportunity to increase
value through rebranding and
additional physical improve-
ments, while limiting our risk
given the low cost per unit.”
“This property was actually
foreclosed on by Citigroup back
in May of 2011. Subsequently it
traded in March of 2014 for
$2.01 million, in July of 2015
for $2.2 million and then again
this month. That’s a 34 percent
increase in property value over
the last two years, but we’re
confident there is still signifi-
cant growth potential in this
property and across this MSA,”
said
Colliers International
Vice
President
Bill Morkes.
“Finding workforce hous-
ing at such an attractive basis
is becoming very difficult,”
added Colliers International
Senior Vice President
Craig
Stack.
“The sales price of $2.7
million equates to $46,550 per
unit or $92 per square foot,
probably half the price of a
similar property in Denver and
maybe one fourth of the cost of
new construction.”
Colliers International repre-
sented the buyers in the trans-
action.
Paul Howard
of
Keller
Williams Commercial
repre-
sented the seller.
n
Sierra Madre Inves-
tors LLC
recently acquired a
40,488-sf, single-tenant indus-
trial warehouse in Colorado
Springs.
The buyers paid $2.39 million
for the property at 704-706 S.
Sierra Madre St. The property
is 100 percent occupied by ABC
Supply with about 10 years
remaining on its lease. It was
built in 1921 and sits on 2.69
acres.
Sam Leger
and
Tim Finholm
of
Unique Properties LLC
rep-
resented the buyer. Seller
Hen-
dricks Commercial Properties
LLC
was represented by
Mar-
cus & Millichap.
n
Quantum Commercial
Group
recently closed sev-
eral Colorado Springs deals,
including the sale of an office
property at 601 N. Nevada Ave.
The 7,469-sf building sold for
$1 million.
State Bank of Bartley
sold
the office property to
601 N.
Nevada LLC. Taylor Stamp
of
Quantum Commercial Group
Inc.
represented the buyer.
The firm also worked on the
sale of a retail and office prop-
erty at 118, 120 and 122 E.
Kiowa St. in Colorado Springs.
The 9,381-sf property, which
traded for $975,000, was pur-
chased by
Spaces Ltd., a Colo-
rado LLC.
Stamp listed the property
for
DRS Commercial Manage-
ment Group LLC. Andrew
Oyler,
also of
Quantum Com-
mercial Group,
represented
the buyer.
Additionally, Quantum listed
the office building at 321 and
325 S. Tejon St. The 7,648-sf
building sold for $850,000.
Tay-
lor Stamp
and
Dale Stamp
of Quantum Commercial listed
the property for seller
Tejon
Street Partnership.
Gary Feffer
of
Fountain Col-
ony LLC
represented the buyer,
BBAM LLC.
s
