Colorado Real Estate Journal -
For a snapshot of the strength of the Denver area apartment market, consider a recent flurry of sales by the Unique Apartment Group team. In June, the eight members of the UAG team at Unique Properties sold 15 apartment buildings for $25 million. “While it was not an all-time record month, it is it up there. We are very proud of it,” said Marc Lippitt, a veteran commercial real estate developer and the principal/owner of UAG. Lippitt will be the first to admit that UAG doesn’t specialize in selling trophy properties coveted by institutional investors. Indeed, earlier this year, Commons Park West in Denver sold for $98.1 million, more than six times the amount of the 15 properties that UAG’s brokers sold in June. “We will sell the bigger properties from time to time, but our niche tends to be the smaller, older properties,” Lippitt said. For example, in June, the sales ranged from three-unit buildings to one in Aurora with 100 units. Sale prices ranged from $280,000 to $5 million for the 100-unit Aurora community. These are the bread-and-butter units that investors buy as a way to diversify their portfolios, mom-and-pop owners treasure for their cash flow and value-add buyers seek either to fix, flip or keep long-term for their cash flow. The business is booming in this slice of the market. “A lot of these apartments are good options for people who might want to live in neighborhoods like Capitol Hill or other downtown neighborhoods, but can’t afford the $2 or more per square foot the new buildings near Union Station and in Highland are charging,” Lippitt said. Most of the buildings they sell run between $1.30 and $1.70 per sf, he said. “They are very good values,” he said. Some of the recent sellers had previously unsuccessfully tried to sell their buildings with other brokerage firms, he said. In fact, there are far more people on the hunt for properties than there are sellers, he said. “It is true that some people, after surviving the Great Recession, now just want to sit back and enjoy their cash flow,” Lippitt said. With more than 30 years in the business and a crackerjack team that includes Scott Shwayder, Kevin Higgins, Ryan Floyd, Adam Riddle, Jason Koch, Josh Gertz and Michael Krebsbach, Lippitt said they have been able to find a steady stream of willing sellers. They also have lists of potential buyers, so they can match the two sides quickly. “I don’t want to sound like I’m boasting by quoting this guy, but I just called a guy who I have known for years and asked if he would be willing to sell his building. He said, ‘Marc, you are probably the sixth broker who has called me this month, but yours is the only one I’m taking.’ ” The owner is going to list his building with UAG. “He said he knew we would do right by him,” Lippitt said. “That is very rewarding when I hear that.” He also said that at UAG, all of the brokers work as a team. “We all participate in every deal,” Lippitt said. “I really think it is kind of revolutionary,” he continued. “One person might take the lead on any deal, but we truly work as a team. At a traditional brokerage, you often don’t want to share what you are doing with the other brokers. Often, your biggest competitoris another broker in your office. That is not the case here. We share everything. I might have the listing, but Scott (Shwayder) might have the perfect buyer, for example.” Asked if this is the best market he has ever experienced, Lippitt answered this way: “I would certainly think if not the best, it is as good as any I have seen.” The difference this time is he thinks the bull market for apartments has legs and won’t be as susceptible to the booms and busts of the past. “This one just feels better,” Lippitt said. “Someone recently told me that I have lived through five recessions. I haven’t been counting, but that sounds about right.” Even rising interest rates shouldn’t extinguish the demand from investors. “I have been around long enough to remember when a mortgage cost 18.5 percent,” Lippitt said. “These rates, even though they’re up a point and a half or so from their all-time low, are still ridiculously low. If anything, I think in the short-term rising rates might stimulate more activity, because investors will want to lock them in before they go even higher.”