Colorado Real Estate Journal - February 21, 2018
A local nonprofit purchased a pair of affordable apartment properties in Fountain at a price of $7.05 million. The buyer purchased the Fountain Ridge Apartments, a 36-unit community, and Fountain Ridge South Apartments, a 75-unit community. Both properties were built under the Section 42 Low Income Housing Tax Credit program and will be maintained as affordable. The buyer will adhere to the extended-use agreements on the properties, noted Greg Price, senior director of the National Multi Housing Group in Marcus & Millichap’s Denver office, who listed the properties and secured the buyer. Located at 410 Comanche Village Drive, Fountain Ridge Apartments was completed in 1999. The community has a mix of 23 two-bedroom, two-bath units and 13 three-bedroom, two-bathroom apartments. The new owner is planning on making Americans with Disabilities Act-compliant upgrades to the property. Fountain Ridge South Apartments, located at 6850 Red Deer Point, was built in 2004. It comprises a mix of 20 one-bedroom, one-bath; 16 two-bedroom, one-bath; 20 two-bedroom, 1 ½-bath; seven two-bedroom, two-bath; and 12 three-bedroom, two-bath units. The properties had around a 5 percent vacancy at the time of sale. Other News Greystone Unique Apartment Group, the multifamily division of Unique Properties Inc., recently brokered the sale of the Michigan Villa Apartments in Colorado Springs. The 14-unit building at 3635 Michigan Ave. sold for $1.01 million, or $72,000 per unit. Apex Invest LLC was the buyer and Michigan Villa LLC sold the community, built in 1969, according to public records. The firm’s Zach Hansen represented the seller and Niklas MacCarter represented the buyer. The property comprises two one-bedroom units, 12 two-bedroom units and nine oversized garages that provide additional income. Located near the intersection of Airport Road and South Academy Boulevard, the property is within minutes of restaurants, shops and other amenities. The buyer, Greystone noted, was attracted to the value-add opportunity Michigan Villa represented. The buyer plans to renovate the property, raise rents to market value and hold the asset for future cash flow. Haute Route, event organizers for multiday event series for amateur cyclists, established its North American headquarters in Colorado Springs. Located on the west side of downtown Colorado Springs, the office is led by Haute Route’s head of operations for North America, Micah Rice. “We chose Colorado Springs because the city is home to several national and international sports organizations, the United States Olympic Committee and USA Cycling, not to mention countless sports-minded young professionals who could be great additions to Haute Route in the future,” said Rice. In partnership with the Colorado Springs Sports Corp.and the Colorado Springs Convention and Visitors Bureau, the Colorado Springs Chamber & EDC worked with Haute Route on talent recruitment to help secure the headquarters. “Haute Route’s announcement of its North American headquarters in Colorado Springs further solidifies Colorado Springs as a top market for amateur sports in the United States,” said Tammy Fields, chief economic development officer for the Chamber & EDC. Colorado Springs will host the final stage of the Mavic Haute Route Rockies June 29, which features a climb more than 14,000 feet to the summit of Pikes Peak. The climb will bring riders to the highest point ever reached by the Haute Route. Haute Route’s European headquarters are in Switzerland. Colorado Springs’ apartment market, barring an economic recession in the next couple of years, is expected to remain balanced in the near future, according to a recent report on the market. Apartment Insights’ Statistics/Trends Summary noted that vacancy in stabilized properties increased by 47 basis points in the fourth quarter of 2017 to 4.89 percent. While a seasonal increase is expected in the fourth quarter, the vacancy figure is 59 basis points higher than last year’s rate and the trailing four-quarter average has increased for five quarters in a row. The report also noted that the overall vacancy rate, including properties in lease-up, increased again this quarter, moving up 63 bps to 7.59 percent. This is its highest level in four years. The rising vacancy has been accompanied by slowing rent growth, according to Apartment Insights. It is now just over 5 percent, with effective rent growth less than 5 percent. New product is being added faster than it is being absorbed, yet with the stabilized vacancy rate below 5 percent and rent growth in the 5 percent rating, and the construction pipeline contains a “reasonable” number of units, the market is expected to remain fairly balanced in the near future, the report emphasizes. During the fourth quarter, nine apartment properties sold – well above average – yet 2017 overall saw fewer sales than during 2016. However, Apartment Insights anticipates sales momentum to continue into 2018. The fourth-quarter report also noted that annual absorption slowed from a peak of 914 units in the first quarter of 2016 to 44 units in fourth-quarter 2017, with an annual gain of 181 units. The lull in absorption, AI noted, occurred while a large number of new units were delivered to the market. Additionally, the average rent for the Colorado Springs metro area decreased by $5.01 during the quarter to $1,014 per month and $1.24 per sf. However, these figures are the second-highest figures ever posted, only slightly below last quarter’s record highs. The annual gain fell to $54, the smallest in eight quarters. The annual growth rate slowed to 5.6 percent. Annual rent growth was generally higher for older properties, and slower for the newest age groups. Properties built since 2010 had rents increase by 4.2 percent over the past 12 months, while those built during the 1970s showed a 6.6 percent increase. Commonwealth recently released its 2017 year-end sales report for Colorado Springs’ multifamily market, in which it noted the year ended with a total sales volume of $456.04 million. During the year, the Estates at Woodmen (Encore at Woodmen Ridge) community sold for $230,769 per unit – the highest price per door ever paid for a Colorado Springs apartment community. The market also saw the Commons at Briargate sell for $229,381 per unit and Greenleaf at Rockrimmon (Encore at Rockrimmon) sell for $227,885 per unit. The three sales mentioned were the only Class A properties to trade in 2017, according to Commonwealth. The total sales volume was $163.75 million at an average price per sf of $209. Colorado Springs’ Class B market saw five sales of 857 units with a total sales volume of $137,900. The price per unit averaged $160,910 and $192 per sf. The highest price per unit was paid for the Preserve at Hidden Creek at $195,833 per unit and $213 per sf. There were two Class C sales during 2017 totaling 440 units with a total sales volume of $61.5 million. The average price per unit was $139,773 and average price per sf was $171. Class D complexes were the most popular among buyers in 2017, noted Commonwealth, as the class had 14 sales totaling $92.89 million. The value-add opportunity Class D properties offered drew the interest in the class, the report added. The average price paid per apartment was $73,316 and $101 per sf – a considerable rise from prices of $35,000 per unit and $44 per sf in 2011. The highest price per sf was paid for the 34-unit Aspen Creek ($146) while Fairway View (South Circle Arms) traded at the highest price per unit of $97,321 per unit.