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Page 4 — Multifamily Properties Quarterly — February 2018 www.crej.com Market Update GRIFFIS BLESSING Full Service Property Management Construction Services Due Diligence Receivership Financial Services www.GriffisBlessing.com 102 N. Cascade Ave. Ste 550, Colorado Springs, CO 80903 (719) 520-1234 Find out what sets Griffis/Blessing apart from other management companies 5600 S. Quebec St, Ste B141, Greenwood Village, CO 80111 (303) 771-0800 L ast year marked the third- consecutive year that was dominated by large, notable multifamily sales throughout metro Denver. As we look back at 2017, the trend of continued growth in the metro Denver market is appar- ent through buyers’ persistent desire to be in the Denver market and the sheer number of large-scale transactions that punctuated the year. The total dollar volume for multifam- ily transactions in the seven-county metro Denver area reached its highest level ever, topping out at $6.03 billion for the market (based on properties that are 50 units or larger), representing the sale of over 28,000 units.This com- pares to $3.9 billion in 2015 and $5.1 bil- lion in 2016 (excluding Starwood’s $5.4 billion national portfolio, which had 18 properties in Colorado with an esti- mated value of $1.37 billion), according to Real Capital Analytics. The record volume of sales was a particularly notable feat for 2017 because the first quarter of the year was starkly quiet. It seemed like the national investment community was holding its breath to see how the econ- omy would respond to the nation’s new administration. It was not until the second quarter that listings came rush- ing back on the market to help make up for the quiet first quarter. Only 19 assets closed in first-quarter 2017 (six of which closed in January, which were likely rollover business from the previ- ous year), but this ramped up quickly. The second quarter saw 23 closings; third quarter witnessed 35 closings; and the year finished strong with 40 closing in the fourth quarter, according to Real Capital Analytics. Another significant trend in 2017 was the increase in aver- age price per unit across the board. For the market total, the average price per unit for sales of properties with more than 50 units was $232,299, com- pared to $207,444 in 2016 and $161,834 in 2015, representing a 43.5 percent increase in just 24 months. Among the $1.7 billion transacted by our Denver team in 2017, that number was even more staggering, coming in at an average of $266,675 per unit. Directly related to the growing price per unit is the statistic that 2017 wit- nessed the highest number of more than $100 million sales ever seen in the metro Denver multifamily space. In total, there were 13 transactions that tipped the scale past the $100 million mark, including eight sales and five recapitalizations.This is compared to 2016’s eight transactions (exclud- ing the Starwood portfolio) and 2015’s three transactions over the nine-digit price tag. Interestingly, prior to 2015, metro Denver only had four multi- family trades ever surpass the $100 million mark.The growing number of large-price-tag transactions is a strong indicator that metro Denver is officially considered a primary investment mar- ket on the national scale. New construction helped define the 2017 multifamily landscape in metro Denver with an increasing number of sales of properties that are less than or equal to five years old. In 2017, there were 33 trades of assets under the five-year mark, compared to 13 in 2016 and nine in 2015. The trend of newer asset sales direct- ly correlates to the construction pipe- line that continues to serve the metro Denver area. In 2017, more than 10,200 new units hit the market. Interest- ingly, the 2017 pipeline originally was forecast to see closer to 15,000 units hit the market, but construction timeline delays greatly affected by the inabil- ity to find construction labor, among other reasons, caused nearly one-third of that original forecast to roll over to 2018, according to Apartment Insights. The more impressive piece of the equation is that absorption, for the most part, is keeping pace with deliver- ies. 2017 absorption was 6,911 units, a 12.8 percent increase over 2016’s absorption of 6,129 units. Looking at the whole picture, vacancy of stabilized product in metro Denver in 2017 aver- aged 5.59 percent.This is compared to an average of 5.16 percent in 2016 and 4.38 percent in 2015. Despite the delivery of more than 18,200 units over the last 24 months, vacancy has only moved 1.21 points. Rent in metro Denver continues to climb.Year-over-year annual rent growth for metro Denver was 3.9 percent, a comparatively strong rent growth when looking at similarly pro- filed cities such as Portland, Oregon, which came in at 1.9 percent for the year, and Austin,Texas, which actually had -0.4 percent rent growth, according to RealPage. Residents of metro Denver still are faced with a perfect storm of factors that strongly promote renting versus owning.The average single-family home sale price in 2017 (including attached and detached housing) reached $494,147, which is up from 2016’s average of $454,174 and 2015’s $417,175.That delta represents an 18.5 percent increase in purchase price in Robust activity supports positive 2018 outlook Anna Stevens Director, HFF, Denver Please see Stevens, Page 30 HFF