Colorado Real Estate Journal - February 18, 2015
Colorado Springs’ multifamily market is drawing attention nationwide, as evidenced by the number of offers seen in the $19.35 million sale of Sienna Place. Alta Community Investments of Westlake Village, California, purchased the 312-unit Sienna Place Apartment Homes from T.E. Miller Development Co., a deal representative of the growing interest in tertiary markets like Colorado Springs, according to the listing brokers of the community located at 850 E. Cheyenne Road. While Colorado real estate in general has experienced significant interest from national and international investors , Colorado Springs has been attracting more and more attention from buyers originally focused on the Denver metro statistical area, according to Colliers International. “With very compressed cap rates in the Denver MSA and new construction starts up significantly, Colorado Springs is a market that’s drawing attention from investment groups searching for multifamily property in Colorado with better initial yields than those available further north,” said Bill Morkes of Colliers International, who, with Craig Stack, also of Colliers, represented the seller in the transaction. “The sale of Sienna Place represents this increasing investor demand for apartments in secondary markets, we had a significant number of bidders that are first-time investors in Colorado Springs,” added Stack. The pair noted that there are approximately 1,500 new apartment units being built in the Springs compared with more than 20,000 units in the Denver metro area. The Colorado Springs apartment market also ended 2014 with annual rents rising 7.2 percent to an all-time high. As well, Morkes and Stack cited that transaction levels in Colorado Springs have increased steadily over the last several years. “Based on the properties available, strong investor demand and strengthening apartment market fundaments, 2015 should be another strong year for transaction volume in Colorado Springs,” added Morkes. Built in 1984 and purchased by Minnesota-based T.E. Miller in 1991 for $4.9 million, the seller captured the increase in value through the accretive repositioning and rebranding of the community, noted Stack. “We were very happy with the performance of Sienna Place and the Colorado Springs market, but we saw this sale as an opportunity to move our equity closer to home,” said T.E. Miller Development Vice President Mike Garvin. In addition to its office portfolio, the firm maintains an 1,800-plus-unit portfolio in the Minneapolis area. Alta, which added to its Colorado Springs portfolio with the purchase, plans to build a clubhouse on the property to improve existing community amenities. “We like the Colorado Springs market and think Sienna Place is a great opportunity to acquire a well-run and well-maintained property with the opportunity to increase value through additional physical improvements,” said Alta Community Investments President Todd Kaufman. At the time of sale, Sienna Place was 97 percent occupied. The community features a mix of one-, two- and three-bedroom units.