October 2015 — Multifamily Properties Quarterly —
Page 31
Heights and Asbury Plaza, which set
the record for a 1970s price per unit
with an average price per unit of
$105,545.
• 2828 Zuni, in the desired Lower
Highlands neighborhood, sold for
over $300,000 per unit.
• The Stanley, a 43-unit renovated
building in Capitol Hill, sold for $430.09
per square foot, which is the highest
price per sf for a renovated property
in the Denver metro area and only $14
less per sf than the record sales price
for new construction.
• The Cherry Creek Value-Add
Portfolio, a five-property portfolio
including Four Mile Flats, Park Point,
Vantage Point, Infinity Flats and The
Birch, consists of 537 units and sold
for $69.5 million.
• Hearthstone at City Center and
Bella Terra at City Center sold for
$37.6 million and $53.4 million,
which is record pricing for 1980s
product in Aurora.
• 1600 Ironhorse at Mill Village
sold for $50 million as the first Class
A+ multihousing sale in Longmont
in 15 years.
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Hawks
remain methodical as secondary
and tertiary locations are more chal-
lenging to fund.
A primary distinction in today’s
market is that underwriting remains
grounded and is focused on already-
achieved rents in the market rather
than pro forma rents at delivery.
This disciplined look at rent levels,
combined with rapidly rising land
and construction costs, likely will
serve to moderate the multifamily
construction pipeline beyond the
current wave of development sched-
uled for delivery over the next 24 to
36 months.
Overall, Denver is experiencing tre-
mendous growth in nearly all facets
of its apartment market but it is not
an outlier. Major cities across the
nation are experiencing similar cir-
cumstances. Forecasts are unilater-
ally positive for continued growth in
population and employment in the
coming years, and with significant
changes to homeownership rates
remaining unlikely, these projections
will allow Denver to continue expe-
riencing strong demand and absorp-
tion in the coming years.
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Haag
a secondary market, we received 15
offers and nearly all were from new
private capital buyers to the market.
There used to be less competition for
assets in smaller markets, but now
often we have auction-like bidding
for properties, which results in a sig-
nificant improvement in pricing for
sellers.
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Optimistic outlook.
While Denver
may not be a top 10 metropolitan
statistical area in the country in
terms of population, it consistently
ranks in the top five in regard to
other metrics including employment
and rent growth. These rankings are
important as institutional investors
seeking tier-one markets will look at
these growth factors as insulation
against risk. As some of the largest
domestic institutional investors have
already paved the way to Denver and
Colorado, others will follow. While
foreign capital typically invests in
large coastal markets, we anticipate
the next wave of investment in our
market will be from overseas.
There has never been a more
robust apartment market for own-
ers and sellers. Interest rates remain
low, rents are growing at record lev-
els and, at the same time, investor
demand to buy apartments is at an
all-time high. This is an interesting
and exciting time to be in the Colo-
rado apartment market. While we
might bemoan the fact that our daily
commute takes longer and skiing on
the weekend means we must leave
earlier to beat the traffic, one inves-
tor remarked that these pains are the
price of prosperity.
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Stack
make a larger difference over time,
even on a personal level for the resi-
dents of these communities.
“Based on Zocalo’s surveys of resi-
dents, sustainability can, if done well,
create a level of differentiation more
powerful than location or even price,”
said David Zucker, principal at Zocalo.
“The broad concept of sustainabil-
ity or, more basically, ‘conservation,’
means different things to differ-
ent people based on powerful self-
descriptors like politics and environ-
mental interests,” he said. “Therefore,
if we properly convey it, sustainability
becomes a means to empower self-
actualization.”
In this way, Zocalo views sustainable
design practice and “LEED certification
as tactics, not goals – these are ways
to ensure that the foundation of this
self-actualization is rooted in third-
party review,” he said.
Ultimately, the process of incorpo-
rating sustainability into multifamily
properties isn’t, nor will it ever be,
concerned majorly with profit, but
rather the building of communities
that matter.
These communities directly benefit
all stakeholders. Developers benefit
from greater tenant retention and
long-term, increased profit. Tenants
benefit from a greater sense of self
and preservation as well as low-
ered utility obligations. And, most
importantly, our communities ben-
efit because we leave a substantially
smaller carbon footprint as we con-
tinue to discover how to build truly
sustainable communities.
Using sustainable design practices
“is only one of the tactics that sup-
port the goal of making belonging to a
sustainable community matter,” said
Zucker.
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Sustainability
