Page 8
— Multifamily Properties Quarterly — November 2017
www.crej.comMarket 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 areaTatiana 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