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Page 34 — Multifamily Properties Quarterly — November 2017
Two other Aurora submarkets
recorded the highest rent growth in
the area. The 7.3 percent in the Aurora-
central-southeast submarket and the
6.6 percent in Aurora-north make the
suburb the strongest for apartments in
the Denver area. Those two submarkets
have just 100 new apartments open-
ing in 2017 – all this quarter in Aurora
north.
The total influx of new supply in
the Denver metro would mean that in
order for rent growth to remain steady
in the near future, job growth must
step forecast that job growth
will increase over the next year, just
not to the level of 2015.
In the meantime, annual effective
rent growth is expected to average 3.6
percent in 2018, a slight increase from
the current 3.1 percent, while occu-
pancy should continue to hover around
95 percent.
Denver has been one of the nation’s
leading apartment markets since the
end of the Great Recession. It just hap-
pens to be in somewhat of a lull now.
But the attractiveness of the metro to
potential residents and growing busi-
ness opportunities should return Den-
ver to full strength in the next few
years.▲
Denton
cost and sales data on several proj-
ects in the Denver market to report
the level of profit actually achieved.
The chart shows where the average
sale price on a newly developed asset
goes. The average sale price reflects 8
percent paid for the land, 48 percent
of hard costs, 14 percent of soft costs
and a healthy 30 percent slice of the
sale price headed to the developer as
profit.When viewed as a return on the
lower “all-in” developer costs figure,
this indicates a 43 percent rate of profit
to the developer, well above the 15 to
25 percent return seen as typical in the
market.
This substantial profit slice of the
pie is reflective of a short-termmarket
imbalance and not a “normal profit.”
This atypical profit level has been the
carrot to lead developers to our plan-
ning departments to discuss their
project, with their eyes focused on the
pot of gold at the end of the rainbow.
However, additional cash flow pres-
sures will further impact pricing due
to increased rental concessions, higher
vacancy, additional competition on
rental rates, greater expense loads,
higher tax assessments, etc. As more
projects are brought to market under
higher cost burdens, this pot of gold
will shrink.
The moral to the overall story is that
our developer friend has been quite
well compensated for past work. The
question as to the return to current
projects will be answered with time.▲
Lodmill
were using about 51 gallons per per-
son, per day; after the renovations,
each person is using around 33 gal-
lons per day. Beyond the environmen-
tal impact of lowering water usage,
the multifamily community will con-
tinue to save on its mortgage, achieve
a rapid return on investment, and
increase property profitability and
property value through the resulting
increase in net operating income.
As utilities and lenders continue
to expand green-financing benefits,
there is no better time to take advan-
tage of green property investments
for your own financial benefit and the
environmental benefit of the Colorado
community.▲
Lamondin
accents and dark-stained wood now
is moving to a much more natural
state. Raw woods used for flooring
and trim bring a touch of nature to
these bright living spaces, and mix-
ing mediums such as wood and steel
creates a modern approach to clas-
sic finishes. This balance of dichot-
omy between materials is a trend
we are seeing across properties and
styles – playing off the balance of
light and dark mentioned earlier. If
a mix of wood and steel doesn’t do
it for you, consider mixing differing
metals and tones. One of our favor-
ite finishing details is antique brass,
which is a fantastic complementary
look for unfinished wood. Pair these
together for a crisp finish.
The trends of multifamily housing
will continue to change and we will
continue to adapt to current resi-
dents and their demands. However,
answering the call of creating beau-
tiful living spaces for families to call
home will always stay fresh and at
the forefront of development. Having
that “wow” factor for a multifam-
ily housing property ultimately will
distinguish it from competitors and
set the property apart. We love the
direction these trends are moving in
and cannot wait to continue working
with inspired, fresh ideas.▲
Terjesen