Page 2 — Multifamily Properties Quarterly — March 2019 Letter from the Editor T he most popular investment asset this year may be 1970s apartments, the multifam- ily panelists at the Colorado Real Estate Journal Invest- ment and Development Forecast told the audience. One reason for the anticipated jump in activity is because many owners have held on to 1970s assets in order to do some value-add work and are now ready to transact. Another reason is because this product class often meets the crite- ria for “workforce housing,” which is on many investors’ list of demands. The term “work- force housing” is dependent on the particular submar- ket location of the apartment. Investors are primarily concerned about that area’s rent-to- income ratio. If an apartment rent comes in at 15 to 20 percent of the median area income, investors get excited, a panelist said. Straight core assets are antici- pated to receive the least amount of bids and attention from investors this year, when compared to value- add and core-plus – however, the bottom isn’t dropping out, thanks in large part to real estate investment trusts, which are stabilizing the asset class, panelists said. When asked how rising interest rates are impacting investor appe- tite and pricing, the answer seemed unique – rising interest rates haven’t played as large of a role in investor activity for multifamily as compared to the responses from the office and retail panels. Cap rates are not dependent on inter- est rates; they’re dependent on the availability of capital and capital is still available, they said. The CREJ conference followed on the heels of the National Multifam- ily Housing Council’s weeklong conference, which all of the panel- ists attended. Nationally, value-add space is still oversubscribed and there is too much liquidity chasing too few deals, they said. Capital is attracted to Denver. Many of the panelists agreed that everyone they met with had Colorado on their list for some asset class or another. But there was a prediction that the market would see a 10 percent reduction across all product types this year. Anna Stevens with HFF dives deeper into some of the NMHC messages and how they relate to the Colorado market in her article on Page 4. This will be another big year of deliveries, but as many of the recent value-add deals begin to “season,” active investors are begin- ning to accept lower returns as rent growth becomes more moderate, the investment panelists said. They predict there probably will be fewer trades in 2019 as many of the cur- rent owners are preparing to hold product longer. Michelle Z. Askeland 303-623-1148, Ext. 104 Will 1970s product reign? Contents 4 6 8 10 12 14 16 18 20 22 24 25 26 31-38 Strong metrics keep sentiment cautiously optimistic Anna Stevens Denver, Colorado Springs enjoyed healthy 2018 Jordan Brooks Market analysis: Gauging where we are in the cycle Adam Riddle and Austin Smith Multifamily investors celebrate active past year Kevin Calame and Matt Lewallen Multifamily strategies are key to housing inclusivity Britta Fisher Right of first refusal ordinance brings complexities Craig Stack How it all relates: Student debt, rents and mortgages Travis Hodge and Brian Mooney Today’s market requires creativity and partnerships Kevin Brinkman RiNo’s rezoning is the right template for the future Ted Featherstone Revise zoning codes to address missing middle Todd Decker More jobs and wages bring promises of more rent Michael R. J. McKenzie Labor shortage, wage inflation cause staffing woes Max Siler Online marketing trends you can’t ignore this year Heather Campbell Affordable Housing Spotlight