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— Multifamily Properties Quarterly — July 2015
Prudential Mortgage Capital Company combines one of the
industry’s most experienced teams with extensive lending
capabilities and consistent performance in the Colorado market.
We originated $7 billion* in multifamily loans in 2014 and
focused on a variety of specialized property types including:
market rate housing, affordable housing, student housing, senior
housing and health care senior living. Once again, the numbers
prove it: We have the talent and resources to get your deal done.
PRUDENTIAL MORTGAGE CAPITAL COMPANY
WE GET IT.
DONE.
Prudential Mortgage Capital Company’s
loan programs include:
Fannie Mae DUS
TM
loans
Freddie Mac Program Plus
®
Specialized affordable housing programs
FHA
Conduit
Prudential’s life company portfolio and
proprietary balance sheet program
25”
T:7.25”
A
partment operators in Den-
ver will enjoy tight vacancy
and substantial rent growth
this year, despite an expand-
ing construction pipeline,
making the metro one of the stron-
gest apartment markets in the coun-
try. Development, poised to reach
the highest pace in more than 15
years, will pose potential headwinds,
especially for operators of Class A
apartments in the urban core where
many residents are looking for a
live-work-play environment. Several-
thousand rentals are slated to come
on line by the end of this year, and
some periodic increases in vacancy
will continue to ebb and flow as new
properties lease up. Overall, Denver’s
thriving economy will continue to
be a draw for young, educated work-
ers, providing an additional lift to
the apartment market. This year,
Denver’s 20- to 34-year-old cohort
will expand 1.6 percent, outpacing
the national average fourfold. Also,
single-family housing remains unaf-
fordable to many, which will extend
the tenure of rental households.
Rising apartment demand will push
rental rates to grow at one of the
fastest paces in the nation.
The strengthening economy and
rising revenue streams are driving
up property incomes and increas-
ing apartment demand as a wide
array of investors compete for lim-
ited for-sale inventory. Buyers from
coastal markets, who are less price
sensitive, are searching for assets in
central Denver, pushing up prices
in the submarket. Elevated investor
demand in the northwest corridor
also caused a sharp rise in property
values. Higher prices in central Den-
ver and closer-in
submarkets are
driving many local
buyers from core
areas in central
Denver farther out
into the suburbs.
In the north Aurora
submarket, cap
rates for pre-1990s-
built apartments
can average in
the low-6 to low-7
percent range. By
contrast, similar
properties in cen-
tral Denver average
roughly 100 basis
points lower. Local
buyers who pre-
fer high first-year
returns are search-
ing in secondary
and tertiary cities
in Colorado and
burgeoning major
markets in other
states. Nonetheless,
real estate invest-
ment trusts and
institutional buyers
remain active, tar-
geting newer upper-tier properties in
central Denver and near the Denver
Tech Center, where cap rates can dip
below 5 percent.
Sales velocity accelerated 23 per-
cent for the past 12 months, ending
in the first quarter, as additional
capital flowed throughout the metro,
nearly doubling transaction volume.
The overwhelming majority of trans-
Greg Price
Vice president
investments,
director, National
Multi Housing
Group, Marcus &
Millichap, Denver
JD Lemon
Associate, Marcus
& Millichap,
Denver
Investment Market
