2022 Multifamily Market Trends in Denver, Colorado
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The Mile High City isn’t just for visitors: plenty of people are flocking to the city for its high-tech corridor, its near-endless parade of craft breweries, and an overall spirit of innovation, entrepreneurship, community, and outdoorsy style.
Far too often in commercial real estate circles, the focus is only on the largest cities around. Sure, Vegas is great. Sure, NYC is great. Yes, you could take a proper gander over to Los Angeles and San Francisco.
But tracking trends in a smaller city is pretty powerful. The more time you take to really study deals, the better you get at finding profitable deals. It’s just like riding a bike, cooking the perfect pan of scrambled eggs, or anything else you expect to do over and over again.
Let’s take a look at how the multifamily sector in Denver is doing, what’s been going on, and where the market’s going.
Big, Splashy Acquisitions Still Reign Supreme in Denver, With a Twist
One of the first multifamily housing developments of 2022 in Denver is the arrival of Charity’s House Place. It’s a $6.5 million project focused on individuals with disabilities, as well as those that are struggling with homelessness.
It isn’t the type of deal that folks are used to seeing in the commercial real estate space, but it is one that will have a long-reaching impact on the community at large.
Here’s a more traditional purchase: MG Properties picked up 3300 Tamarac Apartments for $141 million. It’s a 564-unit acquisition designed to make the most out of the walkability of Denver, as there are multiple parks and shops around the apartment complex.
Both new development and the acquisition signal that there are plenty of ongoing interests in Denver, making it well worth anyone’s time to examine the landscape for profitable deals of their own.
The Push for Affordable Housing
What is affordable housing? These days, it feels like any small price break on multifamily units is being touted as sustainable, healthy, and affordable housing.
The truth is that affordable housing is defined by the Department of Housing and Urban Development (HUD) as being a space acquired by someone on only 30% of their income.
Does this mean that Denver is actively working towards truly affordable housing? Perhaps. Investors, speculators, and others in the CRE world should pay close attention to affordable housing.
Denver’s Stance on Affordable Housing
The city of Denver has had a long-time shortage of affordable housing options, and the city has recently updated a proposal to address it. According to the proposal page, one in three households in Denver struggles to afford housing costs.
While existing apartment buildings for sale in Denver would not have the affordable housing rule, joining the local discussion on affordable housing is still important.
Buyers need to understand that even people who can comfortably afford rent are understandably concerned about housing stability for the most vulnerable members of the community.
Good stewardship is more than just providing a great place to live; it’s also about caring about the growth of the community.
The very people that need affordable housing are the ones that are working in the restaurant, retail, hospitality, and other critical sectors. Catering only to affluent professionals does not keep a city functioning for very long.
The Bottom Line on the Affordable Housing Proposal
The summary document is still a little long, but those that really want to dig into the issue should take the time to read all of the connected documents around the affordable housing initiative. Here are the most important considerations from the proposal:
- New residential projects have to have at least 8% of the available condos or apartments as income-restricted housing for 99 years.
- The set-aside for affordable units could go up to 15%, depending on location.
- Area median income is being used as the metric for affordability: rents would need to be accessible to people making 60% of the area median income.
The area median income is currently $84,000 for a two-person household according to city officials. Decreased permit fees and lower parking space requirements are being used to encourage embracing the new affordable housing guidelines.
However, the proposal is still pending a vote, and there is no official timeline for the vote currently.
Other Considerations for Apartment Buildings for Sale in Denver
Right now affordable housing is the biggest topic going in Denver right now, with good reason: it’s a problem that the city has been trying to solve for a long time. However, that doesn’t mean that it’s the only concern to think about for picking up apartment buildings in Denver.
It’s also important to make sure that you take the time to examine the listings carefully. Location is still going to make a big difference.
We saw in the new development of Charity’s House Place that the area around the development is considered just as important as the actual property. This is the same case for the acquisition of Tamarac Apartments.
Simply put, people want to be in spaces that support their lives and make them feel part of the community. The days of being isolated away from amenities are drawing to a close.
If rents are going to go up, then tenants are looking for value to follow suit.
Don’t Overlook the Lesser-Known Property Types
Look, multifamily isn’t the only game in town when it comes to Denver. However, highlighting the rise of multifamily makes it easier to spot other trends. Keep in mind that, technically, senior housing is also a multifamily product, and so is student housing.
Get creative with your upcoming multifamily deals. Apartment buildings for sale in Denver run the entire spectrum and come in all sizes.
Examining the field you have to work with helps you make better offers, get a better commercial property for your portfolio, and helps others in your real estate network move ahead with their goals.
Whether you want to pick up a building this year or help someone else do so (for a nice fee, even), it’s time to look at multifamily market trends closely.
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