CREJ - Multifamily Properties Quarterly - November 2016
Northern Colorado continues to benefit from a favorable environment for apartment development. Rents continue to increase, although not at the same pace that the market experienced from 2013 to 2015, when rents for Class A, institutional-quality/size communities increased nearly 30 percent, or 10 percent annually. The rental rate increase has slowed to closer to 5 percent annually, from 2015 to 2016, which still is a strong rental rate growth. Demand appears to remain strong for Class A communities, with an occupancy rate of nearly 95 percent for stabilized properties in Fort Collins and Loveland. The occupancy rate remains strong and rental rates continue to grow, despite three market-rate, institutional communities in the lease-up phase or recently reaching stabilization. Those communities include: • Gateway Apartments. The apartments includes 254 luxury apartments located within the town of Johnstown. The community was constructed on a 10.5-acre site within Twenty-Five Thirty-Four, a 542-acre mixed-use, master planned community at the southeast corner of Interstate 25 and U.S. 34. As of October, Gateway is approximately 92.5 percent occupied. The amenity package includes a pool, clubhouse, bocce ball courtyard, hammock garden and barbeque area. Additionally, the community will benefit from the close proximity to Johnstown Plaza, a major retail center where Scheels is under construction on a 250,000-plus square-foot store, which is projected to open in September. Chrisland brokered the land transaction for this community. • Crowne at Timberline Apartments. Construction continues on this community, located on a 16.9-acre site, just over 1 mile south of Harmony Road, with frontage on Timberline Road in Fort Collins. The complex includes a total of 285 standard apartment units within six buildings, and 25 townhome-style apartments in seven buildings. The community is unique in that it is the first market-rate community in Northern Colorado, outside of a downtown area, to have elevator served apartment buildings. Leasing started in May, with move-ins starting in June. As of October, the community is approximately 16 percent occupied. Chrisland brokered the land sale for this community. • Bristol Pointe Apartments. Situated on a 12-acre site at the southwest corner of South Taft Avenue and 16th Street in Loveland, the community includes 220 units, within 11 buildings, with square footages ranging from 515 to 1,300 sf per unit. As of October, the apartment is approximately 95.5 percent occupied. The amenity package includes a clubhouse, child wading and lap lane pool, fitness center, media room and conference center. In addition to the communities that are in or completing the lease-up phase, there are multiple new communities under construction. A summary of several of those communities follows. • Cycle Apartments. Loveland-based McWhinney is developing a 405-unit apartment community, located adjacent to the newly redeveloped Foothills Mall in midtown Fort Collins. Construction commenced in July. Cycle will consist of 18 three- and four-story buildings. The amenities serving the community will include a clubhouse, fitness center, game room, demonstration kitchen, social lounge, golf simulator, bike and ski repair area, swimming pool and collaborative office. The unit mix will consist of approximately 20 percent studio units, 60 percent one-bedroom units and 20 percent two-bedroom units. The first units are projected to be delivered mid-2017. Projected rents range from $1,200 to $1,600 per month. McWhinney is targeting the urban professional and baby boomer demographics, according to reports. • Uncommon. Located at the southeast corner of College Avenue and Olive Street, Uncommon is a mixed-use community consisting of 120 apartment units with ground-floor retail in a six-story building with subterranean and surface-level parking. The project broke ground in April and is projected to be delivered mid-2017. The developer is CA Ventures of Chicago. The subterranean parking structure is a unique feature in Northern Colorado, as other urban apartment communities have been podium or surface parked to date. While there are a significant number of additional projects in the pipeline in Northern Colorado, there are only a few that I expect to break ground in 2016 or early 2017. Lengthy entitlement processes, continually rising construction costs and development impact fees, and slower construction timelines due to lack of labor availability likely will contribute to a more steady pipeline of new construction, rather than the glut of new units that many are concerned about. With that said, I expect a steady supply of new units to the market, sustained high occupancy rates and reasonably strong rental rate growth in the next 12 to 18 months.