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Page 18 — Multifamily Properties Quarterly — August 2019 www.crej.com Lending A STEP UP IN PROPERTY MANAGEMENT At Silva-Markham, we provide a seamless experience with proven excellence in Residential Property Management. TRUST Our clients are owners/developers who are in the business of development, construction, sale and purchase of assets. They have put their trust in us to maintain and add value to their assets, and we continue to exceed performance expectation. OPERATIONS We provide detailed weekly, monthly, quarterly, and annual reports specific to owner/lender requirements. Our outstanding compliance and accounting team provide high quality standards for inspections and financial audits that allow our clientele to dream big and build bigger! EXPERIENCE Experience does matter. Our team has diversified and well-rounded experience repositioning distressed communities, luxury lease-ups, rehabs, conventional, section 8 and Tax Credit management. Silva-Markham.com 1325 S. Colorado Blvd., Ste B601 Denver, CO 80222 lnfo@Silva-Markham.com T here has been no shortage of headlines that highlight the economic and demographic expansion of the Denver metro area over the past decade. The “boom” in Denver has continued to produce national-lead- ing gross domestic product expan- sion figures, best-places-to-live awards and the continued growth of industries previously without much presence in the area. The technol- ogy sector has been one of the fast- est growing, seeing an employment boost of 7.2% just in the past year, compared to 2% in all other sectors, according to the Bureau of Labor and Statistic. Denver has the 20th- best expansion of the 100 largest economies and a 22% increase in jobs since the recession, according to the BLS in 2018. Colorado ranks second as a state only behind Mas- sachusetts with a population age 25 and over with a bachelor’s degree or higher, according to the U.S. Census Bureau. According to Yardi Matrix, Den- ver gained 37,500 jobs in the 12 months ending in March, which is a 2% annual gain. This outpaced the national average of 1.6% and, coupled with a low unemployment rate of 2.9% in March, metro Denver continued to better the state of Col- orado (3.5%) and the nation (3.8%). Along with economic expansions come new jobs, and along with new jobs comes the need for more hous- ing, and the Denver metro area’s need for multifamily has been abundant. As median home prices in Denver continue to climb (the 2018 average of $387,232 was 8.1% greater than 2017 and nearly 80% higher than the 2009 level), affordability con- tinues to decline in terms of home price appreciation outpacing income growth (per Yardi). This has continued to fuel an increase in the renter base and, together with a population that is estimated to con- tinue to grow at twice the national average through 2019, demand will remain strong. Just walk around downtown, LoDo, LoHi, RiNo, Capi- tol Hill and out to the surrounding suburbs toward Stapleton and the Tech Center, and cranes fill the sky- line. With so much new supply hitting the market, vacancy naturally will show a slight rise, which Denver has seen. According to Apartment Insights, as of first-quarter 2019, vacancy hit 6.03% for stabilized properties, which is up 16 basis points from the end of 2018. While this was the first time since first- quarter 2017 that we have seen this statistic move above 6%, the overall rate (stabilized and properties in lease-up) fell below 10%, a positive trend from the high of 11% in early 2018. Rents have continued to increase and as of the end of the first quar- ter had reached $1,468 ($1.70 per square foot) according to Apartment Insights. This is 4.5% greater than a year prior, which is the highest in six quarters. The average rent in North Boulder at $1,869 is the high- est in the metro, with the central business district area close behind at $1,854. Previously, rent growth had been dropping into the 3% range, but the 4% and 5% annual growth rates for gross rents and effective rents, respectively, show that Denver renters are not seeing much of any cool down in rents so far in 2019. (Apartment Insights) According to Yardi Matrix, there were 15,984 units that came online in 2018. Still, there are roughly 27,000 apartment units still under construction, and more than 27,000 units in the pipeline. These figures continue to showcase the massive amount of confidence in Denver’s ever-growing economy and strong demographic trends. From a lender’s perspective, multifamily in Denver continues to remain one of the most sought- after markets; however, areas such as the central business district, where rents are generally consid- ered to be near top of the cycle, is seen as less bullish than RiNo, Stapleton and even the Denver Tech Center. Fannie Mae and Freddie Mac, which are generally regarded as the go-to lending source for sta- bilized assets seeking maximum leverage, have seen shifts in 2019 that have added to the growing nonagency lending realm of the multifamily world. Both agencies maintained low spreads in the first quarter of 2019, which helped fuel their starts toward their goal. In fact, Fannie Mae’s total production Multifamily trends remain bullish in Denver Brad Segall Vice president, Essex Financial Group Please see Segall, Page 35