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— Multifamily Properties Quarterly — November 2017

www.crej.com

Market Update

T

hese are rare circumstances

we’re experiencing in Colo-

rado Springs – accelerating job

growth, 7 percent apartment

rent growth, 4 percent market

vacancy and restrained apartment

development. Colorado Springs apart-

ments continue to attract acquisitions

from large market investors.West

Coast and Denver apartment investors

see Colorado Springs as an “upswing”

market, with still much potential.

This market also is a safe haven from

the risks in overbuilt apartment mar-

kets and overheated stock markets.

Further, Colorado Spring’s strong job

growth across vari-

ous sectors is driv-

ing strong popula-

tion growth. These

dynamics bode well

for local multifamily

investment.

Forecast.

With

increasing job

growth, our apart-

ments will respond

with high occupan-

cy rates and signifi-

cant growth in rent-

al rates in the short

term, at the very

least. Investor inter-

est will focus more

on Colorado Springs

due to weakening

rental markets in

Denver, Fort Col-

lins, Loveland and

Greeley. Rent growth

has slowed in Den-

ver, yet Colorado

Spring’s rental rates

remain affordable

by comparison and

still have room to

move higher. Addi-

tionally, average

rent compared to

median income is still reasonable in

Colorado Springs compared to Denver.

This has lured many people to reside

in northern Colorado Springs, while

commuting to Denver where salaries

are significantly higher.

Population and job growth.

El Paso

County, which holds the clear major-

ity of the population for the Colorado

Springs metropolitan statistical area,

has had population growth of almost

2 percent every year since the early

2000s. This is roughly double the

population growth rate of the U.S.

The past growth will be eclipsed by

future growth. El Paso County is one of

four counties in the state projected to

have a population increase of at least

300,000 people between 2010 and 2040,

according to the State Demographer’s

Office. At the current pace of growth

and with the given age composition,

El Paso County needs approximately

5,400 new jobs to be created per

year. Since 2013, the region met and

exceeded this threshold. This positive

trend continues with 7,083 new jobs

from first-quarter

2016 to first-quarter

2017.

These new jobs

are primarily con-

centrated in higher-

paying sectors,

including health

and education ser-

vices, and profes-

sional and technical

services, specifically

information tech-

nology. Registered

nurse and software

engineer have been

the two occupations

with the highest

number of job postings for the last

two years. This trend should continue,

as the Colorado Department of Labor

projects the high rates of employment

growth to be in the health care and

professional/technical sectors from

2015 to 2025. Furthermore, the median

salary in Colorado Springs for job post-

ings from September is higher than

the Colorado median – $72,050 vs.

$65,575. The current regional median

is an impressive 30 percent higher

than it was in April 2015, according to

Talent Neuron. The healthy job growth

and salary increases have large impli-

cations for all residential real estate,

especially multifamily.

Fort Carson.

This region has five

military installations with a combined

employment contribution in 2017 of

approximately 55,000 workers (includ-

ing active duty and contractual work-

ers), and this still only represents 17

Springs enjoys highest-rent growth in area

Tatiana Bailey,

PhD

Director, University

of Colorado

Colorado Springs,

Economic Forum

Doug Carter

Managing director,

Sperry Van Ness

| Apartment

Insights, Colorado

Springs

Cary Bruteig,

MAI

Principal,

Apartment

Appraisers &

Consultants

| Apartment

Insights, Denver

SVN, Apartment Insights

The average apartment rents in Denver have increased $700 per month – or doubled – since

2004. Colorado Springs average rents are up only $400 per month during the same period and

still have room to rise.

Please see Bailey, Page 32