Why Invest Now
Now is an exceptionally good time to act.
We believe apartment investing has been and will continue to be a source of safe, stable returns but right now we are presented with a perishable opportunity greater than anything we’ve since the early 1980s.
A number of powerful long-term demographic, economic, and political trends are converging to create the perfect opportunity for investors ready to act. Individuals investing in apartments are uniquely positioned to benefit from this new economic reality.
Demand for apartments is exploding and it will take Colorado several years to remove the real constraints preventing the creation of additional, centrally-located, apartments. In the interim, intense competition for the limited stock of apartments will drive up rents and building values significantly.
This dynamic is already playing out. We and our partners aren’t speculating about what might happen, we are investing in what is already happening.
It takes time and effort on your part to get your ducks in a row so that you can participate in one of these investment opportunities. The first step is meeting with a one of our representatives to determine whether investing in apartments is right for you.
Contact us today via email or call (970) 389-0419.
Excerpts from Marcus & Millichap’s 2011 National Apartment report
- Tech-heavy markets led advances in the 2011 NAI, with Austin (#9), Denver (#14) and Seattle (#15) all climbing seven spots
- Apartment completions will total 53,000 units this year, 46 percent fewer than delivered in 2010. New supply will again fall critically short of demand, which is expected to reach 158,000 units. U.S. apartment vacancy will decrease 110 basis points in 2011 to 5.8 percent as a result, matching the decline recorded in 2010.
- As vacancy in 2011 aligns closely to pre-recession levels, owners will regain pricing power. Asking rents will rise 3.5 percent to $1,067 per month, while effective rates will increase 4.5 percent to $1,002 per month.
Apartment Operators Regain Pricing Power as Vacancy Recedes to 10-Year Low
Denver
By year-end 2011, apartment vacancy in Denver will slip to the lowest
level in a decade, allowing owners to raise rents and scale back concessions. The local apartment market recovery began in 2010, fueled by pent-up renter demand for close-in units near employment hubs and light-rail stations. This year, however, accelerating job growth and reduced construction should begin to spread improvements throughout the metro.
Owners in the Denver-Downtown, Denver-Central, Denver-North and Lakewood-South submarkets, where vacancy already falls below 5 percent, will leverage tighter conditions by trimming concessions at an above-average pace. Operations in hard-hit areas like Aurora will also improve, with vacancy rates declining from the peak levels reached in late 2009.
A significant reduction in leasing incentives in these areas will not occur until the second half of 2011, though, when job creation intensifies in typically lower-paying sectors, including leisure and hospitality and trade, transportation and utilities. Investor demand for distressed listings remains strong, but the shortage of available supply is encouraging more investors to bid on performing assets in traditionally sturdy locations.
The limited number of distressed properties on the market will also curb price discounting as fierce competition for short sales and REO listings pushes values to well above initial list prices. Only a few newer, higher-quality distressed properties traded recently, and banks will wait for more significant improvement in occupancy and rents to dispose of these reclaimed assets.
As unsatisfied demand for these deals migrates to the traditional apartment investment market, cap rates for strong-performing properties, particularly those in close-in locations or proximate to public transportation, have begun to decline. The most sought after high-quality assets will close at cap rates in the 6 percent range early this year, considerably lower than the marketwide average of 7.5 percent.
Filed Under: Apartment Investing
