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Page 8 — Multifamily Properties Quarterly — August 2019 www.crej.com ARCHER TOWER* Denver, CO Multi-housing 316 units Sale CLOSED: JULY 2019 TALAVERA APARTMENTS* Denver, CO Multi-housing 240 units Financing CLOSED: JUNE 2019 VINTAGE AT HYLAND HILLS* Westminster, CO Multi-housing 472 units Sale CLOSED: AUGUST 2019 LEGACY ON THE PROMENADE Westminster, CO Multi-housing 300 units Sale UNDER CONTRACT IMT ALAMEDA STATION* Denver, CO Multi-housing 338 units Sale CLOSED: MAY 2019 FARMHAUS APARTMENTS* Longmont, CO Multi-housing 280 units Financing CLOSED: JULY 2019 LIBERTY CREEK* Aurora, CO Multi-housing 584 units Sale CLOSED: JULY 2019 1000 SOUTH BROADWAY Denver, CO Multi-housing 260 units Sale MARKETING in 747 U.S. multi-housing transactions during the first half of 2019.** How do we do it? Our more than 550 U.S. multi-housing advisors, specializing in investment advisory, debt placement, equity placement and loan sales, are the most strategic, creative and connected, with access to the global capital markets, on-the-ground experience and world-class research and data. Achieve your investment ambitions by partnering with us. us.jll.com/multihousing *Deal secured by Holliday Fenoglio Fowler LP or Holliday GP LP (“HFF”) prior to being acquired by JLL on July 1, 2019. HFF is now part of JLL. JJones Lang LaSalle Americas, Inc. (“JLL”), a licensed real estate broker. **Based on U.S. JLL and HFF combined Capital Markets transaction volume in H1 2019. $25B over ©2019JonesLangLaSalle IP, Inc.All rights reserved. Results that build lasting relationships. ™ (303) 657-9700 BrinkmannConstructors.com T he record-breaking amount of new apartment construction in the last several years has yield- ed exactly what economists would predict: Rent growth has fallen from double-digit highs earlier this decade to below the rate of infla- tion over the last 12 months.You read that right, average rents are more affordable today than they were a year ago. According to the most recent Denver Metro Area Apartment Vacancy and Rent Report published by the Apart- ment Association of Metro Denver and conducted by the University of Denver, rents have risen 2.4% from a year ago while overall inflation rose 2.7%. Better still for prospective renters, concessions and discounts in rent – such as one month free for a 12-month lease – also increased from 5.4% in the first quarter of the year to 5.7% this past quarter, saving renters an addi- tional $87 per month on average.This is all welcome news for renters who have felt the squeeze from Denver’s lack of housing supply. While these numbers are encourag- ing, vacancy remains low across the metro area.This means Denver has few empty apartments for the 42,000 current Denver metro residents that the Colorado State Demography Office estimates will turn 18 years old in the next year.These high school graduates will be joined by the steady stream of college graduates as well as people moving here from other cities – all of whomwill need housing. Denver is building homes for those groups and many others, but not fast enough. In the first half of this decade, as the economy struggled out of the Great Recession, Denver built only 16,817 new apart- ments; so far in the second half of the decade we’ve already built 47,589 new apartments, increasing our apartment inven- tory by an average of 3.2% per year. In addition to strengthening Den- ver’s economy by providing high-pay- ing jobs, the construction of so much new housing has put downward pres- sure on rents and kept average rent increases over the last year below the rate of inflation. Unfortunately, growing frustration with traffic and the pace of devel- opment has led some cities – most recently Lakewood – to place an arbi- trary cap on new home construction. These polices threaten the progress Denver has made in affordable hous- ing. Capping residential construction significantly hinders a city’s ability to bring sufficient housing supply into communities where demand is already high. Last year alone, Jefferson County’s housing needs yielded a 6.5% increase in the number of new apart- ments. A 1% cap will therefore almost certainly result in the construction fewer new homes than would have been built without the cap. As we saw in the first half of this decade in both the rental and for sale markets, lack of new supply in the face of increasing demand drives housing prices up. And, with or without caps on new home construction, demand for housing is increasing. State Demographer Elizabeth Garner estimates that Colorado’s robust job market will draw an additional 2.4 mil- lion residents to the state by 2050. How the population growth will affect hous- ing costs depends on howmuch new supply Denver builds. If Denver fails to build enough hous- ing, Denver residents once again will find themselves in frenzied bidding wars against newcomers to the city as well as succeeding waves of native high school and college graduates vying for the limited supply of homes. And those bidding wars will push housing prices up. A damaging ballot initiative recently was introduced that would cap new home construction at 1% of the exist- ing housing stock in the 11 Front Range counties: Broomfield, Denver, Adams, Arapahoe, Boulder, Douglas, Elbert, El Paso, Jefferson, Larimer and Weld.The new home construction cap would be fixed at 1% for 2021 and 2022 and could only be modified thereafter by another vote. To be clear, this ballot initiative does not limit the number of people being born, turning 18 or moving to the state; it only limits the number of homes for which everyone in the housing market must compete. If this policy drives housing prices up as economists predict it will, revers- ing it will nonetheless be a long and expensive process involving a second referendum – and all the while Denver residents will have to endure an excru- ciating housing shortage. It’s not too late to avoid this outcome. As Denver’s residential construction industry continues to pour new supply into the market, renters will continue to see more rental housing options at every income level. It is imperative that our state allow the market to work and avoid making decisions that will negatively distort the rental housing market. There is a great need for more hous- ing for every income level in Denver. Communities must work together to ensure that Denver residents – current and future – have an abundance of housing options. ▲ Limited new homes will reverse affordable progress Market Trends Teo Nicolais President, Nicolais LLC It is imperative that our state allow the market to work and avoid making decisions that will negatively distort the rental housing market.