CREJ

Page 2 — Multifamily Properties Quarterly — August 2021 www.crej.com Letter from the Editor W hile it’s no secret that apart- ment communities have continued to outperform many commercial real estate property types in the past 18 months, the successes reported in the second quarter shocked even the most seasoned veterans. The second quarter recorded the most “extraordinary performance in the 68 quarters” that Cary Bruteig’s Apartment Apprais- ers & Consultants has been putting together its Apart- ment Insights report, Bruteig writes. Across Colorado, multifamily prop- erties shattered records. In Denver, new records were set for quarterly vacancy decrease, quarterly and annual absorp- tion, quarterly rent increase and quar- terly net rent increase. All of these new records didn’t just narrowly surpass old records – they crushed them, improv- ing 21% to 83% from the previous records. “Vacancy in stabilized properties in the Denver metro area decreased a record 117 basis points from last quar- ter’s 6.03% to 4.87%,”which is the low- est it has been since the end of 2015, the report states.The areas with the most vacancy still are mainly down- town after taking major hits during the pandemic. But perhaps in a sign of what’s to come, many of those areas posted strong absorption, with the central business district reporting the biggest increase. According to several renter trend articles within this issue, beginning on Page 20, the tide is shift- ing and renters want to be back near the action downtown. A similar record-setting story was seen in Colorado Springs for the sec- ond quarter, per Apartment Insights. New records were set for quarterly and annual absorption, quarterly rent increase, annual rent growth rate, quarterly net rent increase, annual net rent growth rate and the lowest level of concessions. Again, records were shat- tered. For example, the previous record for quarterly rent increase was $41; it’s now $109, a 166% improvement. An article on Page 8 explores what’s keep- ing the momentum going in Colorado Springs. Not to be outdone, Northern Colorado also set new records across the board. Vacancy and overall vacancy (includ- ing stabilized assets and properties in lease-up) saw the largest decreases in its history.The area also set new records for quarterly absorption, quar- terly rent increase and quarterly net rent increase. All this positive news comes in spite of continued unsettling employment news. Colorado’s June unemployment rate remained unchanged at 6.2%, per the Colorado Department of Labor and Employment. An article on Page 6 tries to make sense of how such strange bedfellows are shaping our market, while an article on Page 14 shines a light on a challenge managers and property owners will see more of in the future – how to vet future residents when a prospective tenant comes with bad credit or too much debt. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104 The shattering of records Contents 4 6 8 10 12 14 16 18 20 24 26 28 39-43 Leasing, economics provide strong foundation Pamela Koster A strong recovery in spite of labor challenges Andrew Monette What is keeping Colorado Springs’ market hot? Pat Knowlton Assessing Denver’s competitive climate for capital Brennen Degner Understand privacy obligations for smart homes Elizabeth Harding Beware: Debt concerns pose trouble for landlords Jacob Channel Inclusionary housing requires multiple approaches Erik Okland Amenity deck landscape design considerations Gary Worthley New lifestyles put health & wellness center stage Dominic Rechichi Residents are ready to move back to the city Dee Chirafisi Self-guided tours score big with future renters Georgianna W. Oliver How to minimize the cost of an apartment turn Steve Davis and Michael Peralli Affordable housing spotlight