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Page 4 — Multifamily Properties Quarterly — November 2016
Y ou’ve probably seen
the cranes dotting
the skyline, and you
may have even heard
that apartment
developers are overbuilding
for the current population.
As of the third quarter,
there were 24,831 multifam-
ily units under construction
in Denver and 25,717 in the
pipeline. However, in look-
ing at our population fore-
casts, market dynamics and
the current pipeline, I can
tell you what JLL’s research
indicates: Don’t believe all
of the overbuilding hype.
• Rising population. Let’s
start with our population.
It’s no secret that we are
experiencing a population
boom.
According
to updated
estimates
from the
U.S. Census
Bureau,
Colorado’s
popula-
tion grew
by nearly
102,000
people in
2015.
Den-
ver was
ranked No. 1 in U.S. News
and World Report’s 2016
Best Places to Live and No. 1
on Forbes’ list of Best Places
for Business and Careers in
2016, no doubt due in large
part to our growing pool
of highly educated labor.
The city ranks as the fourth
most-highly educated work-
force in the nation.
With all that educated
talent flooding into the
Denver area, businesses are
understandably following
suit. Denver is expected to
add 130,000 net new jobs by
2020.
• The millennial factor.
We know the population is
growing, but from a mul-
tifamily development per-
spective, it’s important to
look at the demographics of
our new neighbors.
We saw an average net
annual gain of 12,682 mil-
lennials every year between
2009 and 2014. All signs
indicate that Denver will
remain popular among mil-
lennials in the near term.
Earlier this year, Denver
ranked third among U.S. cit-
ies as the place Americans
under 35 are moving to,
according to the Mayflower
Co.’s annual survey.
This demographic needs
housing but, generally
speaking, millennials are
less able to buy into the
city’s increasingly expen-
sive single-family market.
Between student loans and
less-established credit his-
tories, it is simply harder for
them to qualify for a mort-
gage.
That means we’re look-
ing at a large – and grow-
ing – population of people
who need housing options.
With the median home
price in Denver approach-
ing $400,000, renting often is
the only option.
• Lack of affordable hous-
ing. Yes, Denver has been on
a bit of a building spree the
last several years, but here’s
the rub: We’ve just been
playing catch up – and prob-
ably not fast enough.
When construction ground
to a near standstill early in
the recession, we stopped
adding the necessary hous-
ing units to keep up with
our growing population. In
fact, since 2012, Colorado is
about 55,000 units short (not
counting vacant units that
were absorbed).
Now consider that we
added just 25,143 new resi-
dences in 2015.
It’s perhaps not surpris-
ing then that Denver, Boul-
der and Fort Collins were
just ranked No. 1, 2 and 3,
ing appreciation by city.
This is great news if you’re
an owner, but it’s a concern
if you’re a member of the
city’s growing population
of renters we mentioned
earlier. It all means there is
a serious lack of attainable
housing options available to
meet continued demand.
The city of Denver is
Ray White
Vice president of
multifamily sales,
JLL, Denver
Market Update