Asher Investments Takes Advantage of Denver’s Tight Apartment Market
- Jan 15, 2015
Less than a year after the doors swung open to residents at Alta Harvest Station, an apartment community in Broomfield, Colo., Asher Investments has sapped up the 297-unit property from its developer, Wood Partners L.L.C.
Sited roughly 20 miles outside of Denver, Harvest Station is a gated, LEED Silver-certified property featuring 13 buildings spanning nearly 14 acres. Its occupancy level of 93 percent speaks volumes about the suburban Denver market.
“Denver is doing so well economically and [in the apartment sector ] it’s basically about supply and demand, and we’re scrambling to get supply online,” Nancy Burke, vice president of Government Affairs for Apartment Association of Metro Denver/Colorado Apartment Association, told Commercial Property Executive.
The apartment vacancy-rate forecast for metropolitan Denver in 2015 is just 4.3 percent, according to a report by Marcus & Millichap Real Estate Investment Services, but it was an altogether different story just a few years ago.
“Our industry was in a position where we were reaching out and doing tenant retention plans, offering free rent, deferring maintenance. It was really a hard time,” Burke said.
Now the apartment market is being buoyed by a bevy of factors, jobs chief among them.Sixty-thousand new jobs were created in Denver in 2014, she noted, and the same is expected for 2015. As a result, many millennials are landing in Denver and its neighboring submarkets like Broomfield, and they’re not looking for a mortgage.
“The American Dream has changed; instead of buying a single-family home, instead of the white picket fence, it’s more about flexibility,” Burke asserted. “People are getting out of college and they want that flexibility. They don’t want to be burdened, even if they’re making money. They’re renting furniture, they’re renting cars. They don’t want to be tied down. They don’t need the headache.”
Even for those who prefer to buy, conditions in the single-family market can be a deterrent. “Housing prices are at an all-time high right now, with the average home going for approximately $400,000 in the City of Denver, and they’re few and far between, so that’s also adding additional pressure to the apartment market.”
Asher investments, which calls Littleton, Colo., home, has a portfolio of approximately 3,000 units in Metropolitan Denver, and the collection continues to grow. However, for any buyer, acquiring Class A multi-family assets in the area is becoming more of a contest. According to the M&M report, tight vacancies and rising income streams will further boost NOIs in metro Denver, which will attract a broad range of investors from around the country and prompt a competitive bidding environment in 2015.