DENVER | Main Development Thread #6

seventwenty · #9 Posted **Feb 28, 2015, 5:45 PM**

Quote:

Originally Posted by TakeFive

Just a guess as I can't really know.

How many of you pay retail for anything? At least for the great majority of humanity nobody pays "sticker;" everything is marked off to some degree. I'll assume that the advertised or internet price is the sticker price.

Likely when prospective tenants stop by they are offered one special or another, a move-in or "Look and Lease" special for example. Perhaps for a few who are transferring in with a good job they may want to secure their living space ahead of time, sight unseen and may pay retail.

My sense is that landlord strategies whether leasing an apartment or a full floor of office space is to maintain "high" street or retail asking rates and then make it easy and tempting for tenants to make a decision through various discounts upfront. Nothing radical here but it all has become more sophisticated or software driven just like the internet in general where prices can change constantly.

I still sense that the market has peaked or is peaking. Some projects are starting to show some wear and tear already. Hard to predict accurately the future but one question is how much will Cherry Creek inventory compete with downtown inventory? How much will Lower Highlands compete as it continues to become an attractive alternative?

The good news is that the market appears to remain strong enough that the pipeline should remain active, at least for awhile.

Zillow's quote also the highest rate I've seen for Denver rent, and it would be a massive jump from 2014. I think their quote is down to their methodology of including everything for rent. Renting a 4 bedroom house in Denver's going to cost a pretty penny–– several are listed between $3,000 and $4,000–– but break it down by bedroom and the rent's no where near that price. Zillow, from my understanding would list the full house price and not the bedroom price.

Here's another rent metric that places rental rates for 1 & 2 bedroom apartments closer to $1,300, which includes a near doubling of 1 br rent since 2009.