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Page 12 — Multifamily Properties Quarterly — November 2021 www.crej.com Market Update Commercial real estate made seamless. • Access streamlined & efficient processes • Receive personalized service backed by digital platforms • Succeed with a complete suite of real estate solutions Call your local client manager or visit us at chase.com/ctl-denver to get started. © 2021 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Changes Interbank Offered Rates (IBORs) and other benchmark rates, such as the London Interbank Offered Rate (LIBOR) are, or may in the future become, subject to ongoing international, national and other regulatory guidance, reform and proposals for reform. For more information, please consult www.jpmorgan.com/IBOR. Visit jpmorgan.com/cb- disclaimer for full disclosures and disclaimers related to this content. Catherine Murphy Client Manager (303) 512-1283 catherine.murphy@chase.com Josh Tidwell Client Manager (303) 244-3403 joshua.m.tidwell@chase.com T here is no doubt about it, multifamily in Denver is red- hot right now. Demand is up, supply is down and cap rates continue their compression trends as prices rise. The question investors and the market are asking now is, “How long will it last?” To answer that, let’s look at what is pushing up demand, impacting supply and contributing to the over- all mile-high multifamily rush. n Denver demand drivers. Colorado’s population is booming. Almost 800,000 new residents made Colo- rado their home between 2010 and 2020. The 14.8% increase is among the highest rates in the country, with only Idaho, Nevada, Texas and Utah coming ahead. Denver alone added over 115,000 new residents, growing approxi- mately 20%, making it one of just 14 cities in the U.S. that added more than 100,000 new residents during the same period. This growth has made Denver the state’s largest city in Colorado and the 19th largest in the U.S. More people living here means a greater need for housing. When combined with the pandemic’s massive relocation trend, things get even more interesting. For every one person who left Denver, approximately 1.34 people made the city their new home. According to LinkedIn, Denver ranked No. 8 in the nation as the most moved-to city in the U.S. between April 2020 and October 2020. During the 12 months after the start of the pandemic, the high number of people moving to Colorado saw single-family home listings drop by about 75%, push- ing sales prices up by approximately 24%, according to a local news report. This increase in prices for single- family residences made homes less affordable, push- ing many residents to rent instead of own. As a result, Denver experienced an increase of 11% more rental applications in 2020 than it did in 2019. According to a report from RentCafé, only three other cities had higher year-over-year gains in rental applications: Detroit, up 23%; New York, up 15%; and Charlotte, North Carolina, up 13%. Columbus, Ohio, and Fort Worth, Texas, tied Denver for fourth place. During June, July and August, Denver saw occupancy rates over 95.5%. Occu- pancy in December 2019 was at a 12-month low at 94.3%, bottoming out in April 2020 with 94.2%, just after the World Health Organization declared COVID-19 a pandemic. The market has been in a steady recovery since as demand has con- tinued to rise. n Supply side constraints. On the supply side, Denver completions were up year over year in compari- son with 2019. The Denver-Aurora area was only one of three of the top 2020 metropolitan statistical areas to experience an increase in construction starts. However, there were other factors constraining supply. The population growth over the last year coupled with the fewer than expected evictions and fore- closures kept supply tight. On top of that, work on construction sites across the entire country was put on hold for almost a month at the onset of the pandemic. This was followed by severe sup- ply chain bottlenecks exacerbated by skyrocketing demand as well as lack of supply, labor and logistical sup- port. Borders were closed, sites were shut down and builders waited for weeks for raw materials. As a result, project deadlines were pushed and timelines were extended. Despite the delays, developments were completed. According to the Yardi Denver Multifamily Summer 2021 report, completions were up year over year in 2020. However, they still were down from the peak of 16,850 units delivered in 2018. Denver had 21,185 units under construction as of April of this year. About 68% of those are expected to be delivered this year. The rest are projected to hit the market over the next 24 months. In addition, as of April, the Mile High City had 89,900 new units in the planning and per- mitting stages. Meanwhile, per the Colorado Apartment Association, eviction fil- ings did not flood the market as was expected. Surprisingly, Colorado's monthly evictions after COVID-19 hit were below those reported for Mile High City apartment metrics reach new heights Adam Riddle Partner, Capstone Eviction cases in Colorado before and since COVID-19 hit, per the second-quarter Capstone Colorado market report Please see Riddle, Page 32