CREJ

Page 2 — Multifamily Properties Quarterly — February 2021 www.crej.com Letter from the Editor C olorado’s multifamily market appears to be relatively stable. In spite of the pandemic, the Denver metro area reported the third-strongest annual absorp- tion numbers to date, according to information fromApartment Insights. “I did not see that coming,” said Cary Bruteig, principal at Apartment Appraisers & Consultants. One factor for strong absorption also aided in continued rent collection. Fed- eral and state unem- ployment aid, in addition to eviction moratoriums, helped keep many people who were struggling financially in their homes this past year. Rent collections for December was around 94%, accord- ing to the Colorado Apartment Associa- tion, which wasn’t too far off from the almost 97% paid in December 2019. In general, Colorado Springs had a “phenomenal performance” in 2020, the best along the Front Range, accord- ing to Bruteig.Within the last three quarters, vacancy went from above 6% to the mid-4% range. Additionally, unlike the rest of Colorado’s flat or declining rent growth, rents continue to grow rapidly, in excess of 5% annu- ally, in the Springs, Apartment Insights reports. Several of the market updates, beginning on Page 4, examine this mar- ket more closely. Meanwhile, the Northern Colorado multifamily market continues to hum along.The fourth quarter saw vacancies increase to 4.6% while rents remained relatively flat and absorption was strong over the course of the year. As the Apartment Insights summary puts it, while the fourth quarter was a mixed quarter, “given the negative economic effects of the pandemic, the rental market has held up remarkably well.” However, the devil is in the details. Within this issue, authors take a deep dive into the Colorado markets as well as exploring each area’s submarkets. Because, while location always has been a key ingredient for any thriving community, vacancy numbers reveal that even a fewmiles can make a profound difference today as renter demands shift in response to many finding themselves homebound. This is especially true in Denver. Apartment communities in Capitol Hill, located in the unfortunate heart of civil unrest throughout 2020, in addi- tion to the pandemic challenges, saw vacancy numbers soar. It finished 2020 as the only submarket with a vacancy rate above 10%, per Apartment Insights. Further, of the 19 Denver submarkets that saw vacancies increase in the fourth quarter, the highest vacancies typically were the ones in central, urban neighborhoods. Meanwhile, seven suburban areas posted vacancy below 5% for the quarter, per Apart- ment Insights. The cover story highlights these col- lective shifts in renter preferences in greater detail. Renters, desiring larger floor plans in more spacious locations, are having a profound impact on mar- ket demand and pricing shifts.Time will tell if renter demands shift back once COVID-19 fears begin to subside. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104 Multifamily complexities Contents 4 6 8 10 12 14 16 18 20 24 26 27 28 35-39 Taking stock of a rocky 2020 across the Front Range Jordan Brooks Colorado Springs enjoys a strengthening market Kenny Clarke Pandemic hits Denver, Colorado Springs differently Madeline Harper Capital markets take a turn to fill lending gap Fisher Wells Markets adjust as small-balance lenders retreat Steve Felt Finding the bright spots from the past year’s tests Martin Gibeau New high-wage jobs lower post-pandemic hurdles Greg Price What vaccines mean for apartment revenue streams Donald Davidoff Age-qualified rentals offer promising future options Manny Gonzalez Trust & proactivity are key to lumber procurement Jason Vaughn Water-efficiency rollbacks will impact multifamily Richard Lamondin How to effectively operate when short-staffed Christin Daniels Maintenance considerations for fireplace safety Rick Anewalt Affordable housing spotlight