Page 8
— Multifamily Properties Quarterly — July 2015
Civil site services are often written off as a sim-
ple, commodity based component of a construc-
tion project. In contrast, these services literally
serve as the foundation to your project and de-
serve extensive attention. Fiore combines 5 de-
cades of experience with well-coordinated, high
quality, efficient, timely, and environmentally
conscious civil services to ensure that your proj-
ect is built on a rock solid base.
Our INNOVATIVE SOLUTIONS, STRATEGIC
PROBLEM SOLVING, and WIDE SCOPE OF SER-
VICES can be delivered fully managed, as a com-
bined package or stand alone to meet the needs
of the client and always come with our partner-
ship commitment to deliver more than what you
paid for.
Don’t build your next project on the cheapest dirt
and infrastructure you can buy - your entire proj-
ect literally depends on it!
Single services to full site
work packages
Site Management - Demolition
Earthwork - Site Utilities
Environmental - Land Development
Commercial - Landfill - Recycling
Now offering Complete Civil
Contracting Services
Together We Can Move Mountains
P
erhaps the biggest question
multifamily investors are
asking themselves as they
consider investment in the
Denver metro market is: Can
the multifamily market continue to
improve? After studying the funda-
mental supply-and-demand charac-
teristics of today’s market, we think
the answer is yes.
How can this be after we have seen
unprecedented rent growth, as well
as incredible levels of construction
of new multifamily properties over
the last half-decade? Our conclusion
is that the market will continue to
improve because there simply is not
enough housing to meet the metro
area’s pent-up, as well as continually
growing, demand.
The chart provides a great visual
representation of the mysterious
“pent-up demand” we have been
hearing about over the last few years.
Focus first on the period from 1995 to
2006. During that time, the Denver
metro population grew from 2.1 mil-
lion residents to about 2.65 million
– a gain of 550,000 residents in 12
years. That equates to a population
increase of roughly 46,000 residents
per year.
During that same time period,
single-family developers and contrac-
tors delivered approximately 175,000
new homes to the market, and mul-
tifamily developers and contractors
delivered approximately 55,000 new
apartment units to the market. Total
housing deliveries combined (exclud-
ing condominium and townhome
deliveries as we were not able to
find reliable data on those markets)
equaled 230,000 units, or two-fifths
of a unit for every new person added
to the market. The
average number of
units delivered each
year during that
time period was
about 19,000.
Next, focus on the
period from 2007 to
2014. During that
time, population
grew from 2.65 mil-
lion to roughly 3
million – a gain of
350,000 residents
in eight years. That
growth breaks
down to a popula-
tion increase of
roughly 44,000 per
year – just 2,000
fewer residents per
year than Denver
had from 1995 to
2006.
Throughout that
same period, single-
family contrac-
tors only delivered
41,000 new homes
and multifamily
contractors deliv-
ered just 33,500
new apartment
units. At a total of 74,500 units (again
excluding condos and townhomes),
only one-fifth of a unit was delivered
for every new member of the popula-
tion added to our area. The average
number of units delivered each year
declined to just over 9,300 compared
to 19,000 in the previous period
reviewed.
This represents an annual shortage
of 9,700 units; multiply that out by
eight years and we could be looking
at a current shortage of 77,600 units
and growing. Add to that the fact
that the construction defect litiga-
tion environment has largely con-
strained for-sale condominium and
townhome development from 2007
to 2014, and the housing shortage
is likely much greater than demon-
strated.
When you consider that the fun-
damental driver of rental rates and
home prices is supply and demand, it
is no wonder rental rates and home
prices have reached historic highs
and are continuing to climb. As popu-
lation increases, so does demand, but
supply has failed to keep up with the
growing demand over the last eight
years. Even as construction deliver-
ies are reaching historic norms (2014
was close with over 17,000 combined
units delivered), it will take several
years above the historic norm of
19,000 units, and a significant uptick
in the condominium and townhome
construction market, to make a dent
in the current shortage of likely some
80,000 units.
So, what will stop the growth?
When do we see the downside of
this cycle? We see several factors that
could slow down the market.
Chris Geer
CEO, Haven
Property Managers
& Advisors,
Superior
Craig Stack
Vice president,
multifamily
investments,
Colliers
International,
Denver
Investment Market
Courtesy: Colliers International
