CREJ

Page 2 — Multifamily Properties Quarterly — August 2018 www.crej.com Letter from the Editor A verage rents in the Denver metro area grew by $64 in the second quarter, after a year in which we saw average rents increase by less than $1, according to a July report from the Apartment Association of Metro Den- ver. “Average rents were $1,419.74 in March 2017, $1,420.30 in March 2018, and ended at $1,484.02 in June 2018,” the AAMD report states. For compari- son, in July average rents across the United States rose as well – albeit by just $3 – bringing the national aver- age rent to an all- time high of $1,409, according to the Yardi Matrix’s July report. Downtown Den- ver, the University of Colorado area in Boulder and North- west Denver, including the Highlands and Berkeley neighborhoods, com- manded the highest average rents in the second quarter, clocking in at $2,011, $1,848 and $1,846, respectively. Meanwhile, on a county basis, Boul- der/Broomfield County has the high- est average rent at $1,652, according to AAMD. (On Page 4, Craig Stack and Bill Morkes highlight three Denver submarkets on the opposite end of the spectrum, which they say are poised from rent growth.) Despite this quarter’s rent increase, there were a few signs that things may be slowing. First, concessions appear to be increasing. Concessions averaged $81 over the prior 12 months, but increased to $116 in the second quarter. Next, the second quarter marked the third consecutive quar- ter of vacancy at or above 6 percent, which means we may be entering into a normalized rental market, the AAMD report states. It also means there is less upward pressure on rents. And finally, 3,435 new apartment units were built in the second quarter, which is a 59 percent increase over the number of units completed in the same period last year (2,152 units). A slowdown to rent growth would be welcomed by renters, as affordabil- ity seems to be negatively impacting renter satisfaction. According to Apart- ment List’s annual renter satisfaction survey, Denver renters gave the city a B+ rating, which ranked the city No. 11 out of 50 cities. Renters gave Denver’s recreational activities and social life categories A grades, and the majority of other ratable factors ranged from A-minus to B grades. However, on affordability, renters gave the city a D. On the same survey, Fort Collins received an overall renter satisfaction of A (but a D on affordability), Colorado Springs received a B+ (with a C+ on affordability) and Aurora received a C grade (with a D on affordability). Inter- estingly, Boulder received an A+ rating, despite receiving an F on affordability. Anomalies aside, Colorado residents are voicing concerns regarding our state’s affordability issues, according to our affordability section that begins on Page 30. In this section, we high- light a variety of local advocacy groups and the work they’re doing to address this challenge. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104 Renter satisfaction survey Contents 4 6 8 10 12 14 16 18 20 22 24 30 30 32 33 34 35 36 3 suburban submarkets poised for rent growth Craig Stack and Bill Morkes Will rising interest rates slow down the market? Mike McKenzie Questions remain for opportunity zone investments Dominick Sekich Shaping communities through systems thinking Clark Atkinson Amenities war: Smart picks to attract tenants Nicholas Mraz How to create vibrant amenities for your residents Angela Harris Thoughtful renovations can lead to increased profits Kiley Baham Union Station asset capitalizes on condo demand Amy Cara How to mitigate insurance risks from wind and hail Devon Schad Budget considerations for capital improvements Andrea Lyle Maintenance and code compliance for elevators Ashley Foy Spreading the word on affordable advancement Rodger Hara All In Denver shares results from city housing poll Brad Segal CHFA: Providing training, advocacy and outreach Cris White Housing Colorado: Voice and action for affordability Emily Nilsen ULI shares information to help address challenges Michael Leccese Mothers are advocating for affordable housing Sarah Cullen Regional association helps owners and managers Kim O’Shea