WESTERN SNAPSHOT, JUNE 2010
Northern Colorado Front Range Apartments
New apartment development along the Front Range of Colorado has come to a near stand-still with only 173 units added during first quarter 2010. This is coming off a 2009 that only saw 438 total permits pulled in the Denver metro, representing 0.15 percent of the total multifamily base.
However, the one area that has seen some new development activity is the Highway 36 corridor that runs between Denver and Boulder in the northwest metro area. This corridor has seen an up-tick in activity after Conoco Phillips purchased the 432-acre Storage Tek campus, which is scheduled to be home to more than 10,000 jobs at completion in 2012. The Highway 36 corridor has two communities partially delivered and nearing completion:
• Located in Broomfield, Catania is a 297-unit property developed by AG Spanos Company that is still under construction after delays pushed back the original completion date of mid-year 2009. A few of the buildings have been delivered and leased, and the remaining will be delivered in 2010 and 2011.
• Also located in Broomfield, Catalina Development Company’s Terracina Village is a 379-unit property that delivered 167 units in 2009, with the remaining 212 units set for completion in 2010.
Additional communities currently under construction in the northern Front Range are Prana, Milestone Apartment Development’s 254-unit property in Broomfield, and Lake Vista, a 303-unit property being developed by Loveland, Colorado-based McWhinney Property Group. Also, Forum Real Estate Group, another local developer, has just broken ground on the Residence at 29th Street, a 240-unit property in the heart of Boulder that is scheduled for a late 2011 delivery. All three of these latest developments are utilizing the 221(d)4 program as a source of financing.
During the first quarter 2010, metro Denver absorbed 3,600 units making this the strongest first quarter absorption in Denver’s history. Northern Colorado communities from Fort Collins to Boulder have followed Denver in strong absorption and decreasing vacancy. Boulder, around Colorado University, has the lowest vacancy rate in the state at 1.5 percent while the rest of the city is at 4.9 percent; Loveland has the second lowest vacancy rate with 3.8 percent; and Fort Collins is at 5.1 percent. However, rental rates and concessions have stayed relatively flat, and effective rental rates are still below what is needed to justify new construction. This lack of rent growth combined with the inability to secure conventional construction debt will continue to keep supply in check for the next 3 years.
Aside from the strong apartment fundamentals enjoyed by the entire Front Range, northern Colorado has been known for its quality of life with both Fort Collins and Superior being ranked as the top places to live in the United States within the last 3 years. This area has also added employers from expanding industries such as renewable energy and health care.
Terrance Hunt is a principal in Apartment Realty Advisors’ Denver office.
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