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Page 2 — Multifamily Properties Quarterly — November 2017
Letter from the Editor
D uring the Colorado Real
Estate Journal’s multifamily
fall conference, an interest-
ing pattern emerged from
speakers on the develop-
ment and investment panels – the
multifamily market in Denver is too
competitive. Several said they are
choosing to sit and be patient, rather
than try to commit to something new
right now. There was even discussion
among panelist on whether value-add
properties were worth the cost – with
some saying they
could justify new
builds over value-
add projects in the
current climate.
This reaction
seems reasonable
when you consider
that some value-
add properties are
getting as many as
17 bids, making these older vintage
sales prices escalate quickly. Accord-
ing to Cary Bruteig, 1970s product is
now four times more expensive per
square foot than it was in 2010, and
it’s still going up – 1970s and 1980s
buildings now average about $200 per
sf.
The good news about all this com-
petition is we continue to see record-
breaking sales in the Denver metro,
and 2017 may be one of the best
years yet.While there always will
be demand for the downtown area,
especially among out-of-town inves-
tors, many conference panelists and
authors within this issue say the real
opportunities now are outside of the
downtown core.
For example, Castle Rock has seen
vacancy dip below 2 percent in five
quarters since 2013, including this
year’s second quarter. Likewise,
Aurora North saw the largest increase
in occupancy from 2006 to 2016 – it
increased from 87.5 percent to 98 per-
cent, according to ARA’s Jeff Hawks’
conference presentation. Meanwhile,
Colorado Springs’ slower recovery
from the Great Recession may have
insulated the area from overcompeti-
tion and overbuilding fears that we’re
seeing in Denver, the article on Page 8
argues.
Some investment panelists antici-
pate seeing increased demand in the
suburbs of Denver. These properties
ideally would feature larger units
located within strong school districts.
This prediction seems logical when
you consider the facts about millen-
nials in Denver: There are more than
850,000 millennials living in the metro
area, they comprise more than 50 per-
cent of our in-migration and the older
millennials are coming into their mid-
30s. Homeownership remains elusive
for many – with the average price for
a single-family home being close to
$500,000.While some of these young
families can support the mortgage,
the original down payment leaves
many in the lurch. All told, this pre-
diction about a new kind of multifam-
ily demand seems like safe bet in our
hyperactive market.
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