Page 6 — Multifamily Properties Quarterly — August 2021 Market Update S ixteen months ago, the world was turned upside down. In what seemed to be an over- night change, suddenly trans- actions on a smooth path to closing terminated, lenders retracted loan commitments, landlords hun- kered down, waiting for any sign of light, and millions of people lost their jobs. There are many aspects of life currently out of “norm,” but what real- ly is the new “norm”? With so many Coloradans currently out of work, it is contradictory in nature to also see records being bro- ken (in a positive way) – and we are experiencing this in the Denver metro multifamily market. According to Cary Bruteig’s Apartment Insights second- quarter report, this past quarter saw new records simultaneously set in terms of vacancy rate, absorption, rental rates and sales pricing (per unit) for 50-plus-unit apartment communi- ties. Using 2020 as the barometer for 2021 stats would not be an appropriate gauge of the market.With nearly every metric of market health fluctuating so much last year, one would obviously expect 2021 stats to be an improve- ment. However, what we currently are a party to is shattering records from some of the best years of multi- family (2014 and 2015) in the Denver metro following the Great Recession. For example, the vacancy rate for stabilized properties throughout the metro dropped to 4.87% last quarter, which beat the record previously set in 2015. In 2014, the record for greatest increase in rental rate was set at $57, but this was shattered in the second quarter when there was a $93 increase in average rental rate. The effective rental rate in the second quarter sat at $1,606, which sur- passes the previous record of $1,513 set during 2019. Halfway through 2021, we are see- ing a tremendous recovery in many real estate sectors, with arguably the most important being housing, yet there are still “help wanted” signs plastered all over Colo- rado from the retailers in the central business district to the restaurants hosting guests in mountain towns.We appear to be in some juxtaposed world of record-high rental rates paired with a labor shortage. The Colorado Department of Labor and Employment currently reports over 100,000 jobs listed on, an employment database aimed at help- ing Coloradans find new employment opportunities.What does not seem to add up is how the labor shortage can be so severe it handcuffs restaurants from opening at full capacity, but there are significant state and federal-level unemployment incentives still avail- able. On the CDLE website there is information on the Colorado Jump- start program, which pays eligible Col- oradans who return to work between May 30 and June 26 a $1,200 incentive bonus if they register for the program. According to the Small Business Administration, the small-business fil- ing rate in Colorado increased in 2020. Improving 3.73% over 2019, there were a total of 653,639 small businesses registered in the state of Colorado in 2020. How is it possible to have such a high rate of unemployment that it jus- tifies stimulus payments be made to incentivize people to jump back into the workforce while also having small- business filings at record numbers? In addition to the available unem- ployment stimulus programs, there also are programs in place to assist landlords who may be having rental income shortages related to tenants experiencing hardship. The two most well-known programs in Colorado are the Emergency Rental Assistance Program and the Property Owner Pres- ervation program. According to the U.S. Treasury, the ERAP is a federal pro- gram established by the Consolidated Appropriations Act of 2021. At this time, tenants are responsible for reg- istering for the program while the POP program (created at the state level and born from funds earmarked in House Bill 20-1410) places the responsibility on the landlord to register and main- tain records. Both programs have been popular and unbelievably valuable to many apartment investors throughout the Denver metro area. There is a lot of speculation as to what the long-term effects of the tril- lions of stimulus dollars pumped into the system will have on our economy. We are experiencing record-breaking rent levels, incredibly low vacancy, higher-than-usual unemployment and stimulus money being thrown out left and right. These phrases generally would not go together in a cohesive sentence, but this is the market we are in. Historically low interest rates and ample, but stringent, lending have helped fuel the multifamily market to a level many of us thought was a full market cycle away. Local investors always have been bullish on Colorado, but more coastal investors have eyed our state and are chomping at the bit to acquire something along the Front Range. They ask, “How is the market in Colorado?” and the typical reply is, “The market is hotter than a goat’s butt in a pepper patch!” ▲ A strong recovery in spite of labor challenges Andrew Monette Senior adviser, Pinnacle Real Estate Advisors We are experiencing record-breaking rent levels, incredibly low vacancy, higher-than- usual unemployment and stimulus money being thrown out left and right. These phrases generally would not go together in a cohesive sentence, but this is the market we are in.