Easy Like Sunday Morning
Over Here, Over There
Courtesy of youthab
One of the local multi-family "experts" is James Real Estate Services, Inc. Their
2nd Quarter Report (pdf) is quite interesting and comprehensive. Worth a read but here's a few bullet points:
Quote:
- For purposes of vacancy rates, net absorption and rental rates we use data supplied quarterly by the Apartment Association of Metro Denver. We have concerns about some of the methodology used in the report, so it is best for readers to consider trends instead of the AAMD report’s actual numbers.
- For development activity, however, construction starts and completions are based on actual quarterly visits by James Real Estate Services, Inc. staff to the locations of every apartment community of fifty units or more under construction or proposed in metro Denver.
- In reality, we believe that the metro Denver vacancy rate is more accurately in the 6% to 7% range rather than the AAMD estimated 4.9%. Our estimate, however, is still in what is normally considered a “balanced” market range of 5% to 7%, although trending upward.
|
This one is especially noteworthy.
Quote:
The potential exists for a softening market in 2015 and 2016 when many of the projects currently under construction come onto the market. During 2014 developers completed construction on projects adding 8,236 units to the market. With 19,917 apartment units under construction in metro Denver at the end of the 2md quarter of 2015 and another 20,617 proposed, we see a strong possibility for deteriorating market conditions during 2015 and 2016.
Furthermore, if employment growth is actually slowing, as reported above, apartment market conditions could deteriorate rather quickly. Demand has been strong in metro Denver. If the metro area’s economy is actually expanding at a slower rate that situation could combine with overbuilding to soften the market, especially in 2016
|
On page
14 of the pdf JRES has a long list of the projects currently under construction. On page 20 starts a long list of projects that are proposed.
It's worth pointing out that early in 2014 JRES was certain Denver would be awash in apartment vacancy by the end of that year. Oops
It does seem that many developers are now focusing on suburban locations. Many, I assume, figure they're too late to the downtown party and/or are on the outside looking in for any number of reasons. The over 20,000 apartments proposed don't even include the recent announcement of over 800 units in Aurora.
Many of the proposed suburban projects are transit motivated and I suspect there are many more in planning that aren't yet disclosed. I would think that in most cases lenders would be attracted to suburban projects given the overall tightness of the metro market and the high cost of living downtown.
Threaded Mode