CREJ

Page 2 — Multifamily Properties Quarterly — May 2020 www.crej.com Letter from the Editor B efore we went to print, the Apartment Association of Metro Denver announced its first-quarter market statistics for the Denver metro area.The data was collected through March 11. Denver Mayor Michael Hancock issued his stay-at-home order March 24, with a statewide order following two days later. So the timing of the data col- lected for the second quarter will be right in step with the orders.We’ll be able to see the full economic impact when the second quarter numbers are released in mid-July. One of the few kernels of good news several of this issue’s authors address is that the multifamily market was on strong foot- ing before this black swan event.The association said the market was in balance at the end of the first quarter – there was approxi- mately 21,300 vacant apartments in the metro area and average rents had increased $33 from the prior quarter and 3.7% from a year ago. As the association reports, new con- struction will be interesting to watch. There were 2,240 new apartments added to the market in the first quar- ter, which reported a negative absorp- tion of 429 units.There are over 275 communities under construction now, totaling 22,700 new units – one-third of which still are scheduled to open this year. Additionally, it will be interesting to see if stay-at-home mandates have a lasting impact on renter preferences. As recently as the fourth quarter, articles touted younger renters’ desire for smaller footprints in exchange for more communal amenities – with co-living and adult dorm-style apart- ments opening around the city and micro units continuing to pop up. Now that we’re all confined to our homes and shared amenity spaces have been shuttered, will renters push back to find more space once this year’s leases are up? A study from RentCafé examined the average amount of space apartment renters have across the country based onYardi Matrix and Census data. In Denver, renters have an average of 553 square feet of living space (based on the average size of an apartment in the city, 842 sf, and the number of people living in a unit).This is larger than the average apartment space per resident nationally, which clocked in at 526 sf. Colorado Springs renters and Aurora renters find even less space for them- selves – 513 sf and 476 sf, respectively. For comparison, Santa Ana, California, residents have the least amount of space, 292 sf, and Louisville, Kentucky, residents enjoy the most space, 731 sf. There’s a lot more speculation on the many ways this pandemic will shape the future of multifamily within this issue, while some authors offer lessons from past downturns and others high- light silver linings. I look forward to future issues that don’t focus so heavily on the pandemic’s fallout, and, after reading what the experts have to say, I’m confident eventually we’ll get there. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104 Quarterly comparisons Contents 4 6 8 10 12 14 16 18 20 21 22 23 24 25 26 32-35 Investor sentiment remains strong despite hurdles Greg Parker Buyer appetite endures, but deals take longer Adam Riddle Northern Colorado’s Class A market remains strong Jake Hallauer Rental housing industry works with residents Terry Simone COVID-19 and CRE: 2020 vs. the Great Recession Charlie Williams Is FHA the stalwart multifamily financing needs? Scott Graber Rent moratoriums could lead to a catastrophe Kim Duty How coronavirus is reshaping our entire industry Courtney Crowder Finding ‘the light’ in the face of the pandemic Lesley Deutch and Ken Perlman A few months in: The silver linings playbook Rick Haughey and Sarah Yaussi How the CARES Act impacts multifamily real estate Hirsch L. Neustein, Rick D. Thomas and Ashley B. Wingfield Inclusionary zoning hurts middle-class renters Drew Hamrick Soaring unemployment can help staff management Christin Daniels Denver ranks second-best city for active renters Sanziana Bona The benefits of competition in internet providers Alex Moulle-Berteaux Affordable housing spotlight