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— Multifamily Properties Quarterly — May 2016
Gaylord Rockies Resort and Conven-
tion Center in Aurora will keep pro-
ducing economic development and
jobs and the area’s natural assets
and lifestyle will draw young people
and wealthy retirees.
Rent growth, however, will con-
tinue to be constrained by new
supply. Our database counts more
than 22,000 units currently under
construction and 25,000 more units
in the planning stage in Denver, so
the increase in supply is not going
to abate for several years. Conse-
quently, the rates of rent increases
are likely to drop to a more sustain-
able level. Our forecast for 2015 is
6.3 percent rent growth, which is
still above the 4.4 percent increase
nationally.
One option for those priced out of
Denver is Colorado Springs, where
the average rent is $904, according
to Yardi Matrix. Colorado Springs
hasn’t seen the type of increases
as Denver (up 32 percent between
January 2011 and March 2016), but
recent growth has been strong (up
8.6 percent year-over-year as of
March).
Like Denver, Colorado Springs has
been growing steadily, an average
1.5 percent annually since the end
of the recession, or double the 0.75
percent national average. Unlike
Denver, though, apartment supply
is not keeping pace. Our research
shows the metro area has seen
only 2,000 units completed over the
last five years combined, and the
476 units that came on line in 2015
added just 1.3 percent to total stock.
And not much is in the offing, as
just 2,000 units are under construc-
tion and 2,500 in the planning stage.
Both Denver and Colorado Springs
have grown in popularity with
investors in recent years. A record
$4.2 billion of apartments changed
hands in Denver in 2015, split
evenly between lifestyle and RBN
properties. Colorado Springs saw
$423 million of transactions, which
is impressive given its size.
In recent years, Denver has grown
in status to become one of the
top secondary markets in the U.S.,
which is attracting a large number
of institutional investors who for-
merly would have concentrated on
core markets. The major institutions
have crowded out some local inves-
tors who then make their way down
the highway to Colorado Springs.
s
Lifestyle
