Colorado Real Estate Journal - October 15, 2014
The landscape of Denver’s housing market has evolved over- the past decade. No longer are we living in a traditional housing market to which Denver has historically been accustomed. We are now in a period that will forever change Denver residents’ perspective of what amenities are important to them in their homes. The trends leading the new generation of homes are emerging not through the for-sale product but, instead, through the new multifamily developments in the metro area. It is amazing to see how different multifamily in Denver is today from where we were only 10 short years ago. The new apartment developments reflect not only significant differences from those built a decade ago, but also demonstrate a shift in resident mentality, lifestyle, and priorities that are evident in both the location and amenities now incorporated into each new community. Traditionally, apartment construction in Denver consisted of three-story gardenstyle product with low density. Today’s new construction is anything but low density and with an amenity package that would have been considered “out of touch” during the previous development cycle. During the previous expansion cycle (2001-2004), the density of an average new community was 25.45 units per acre and was built on approximately 13.5 acres. Today’s newest communities contrast significantly from those of the previous cycle. The average apartment community is now built on only 3.57 acres with an average density of 66.29 units per acre. This means that new communities are being built on 74 percent less ground than those built 10 years ago. These higher-density communities are also located in areas on the opposite end of the spectrum from those built in the previous cycle. Today’s new communities are concentrated on a commuter rail line (light rail) in Denver’s urban core. Of the 53 communities built since 2011, only 30 percent were built in Denver’s suburbs. In contrast, during the previous cycle, 107 communities were delivered with over 90 percent of those considered suburban product and nontransit-oriented development. The dynamics that have altered the locations and the type of product being constructed today are also influencing how developers are approaching and integrating the common areas and amenities into these new communities. In the previous cycle, communities were very traditional with straightforward amenities: a clubhouse with a heated outdoor pool and a basic fitness center. As previously mentioned, most of the traditional garden-style product was built on larger areas of land with very low density.
At that time, the individual automobile was a higher priority and resulted in developers having to include private garages, both attached and detached, to accommodate the demand. The amenity package of today’s modern apartment community differs greatly from the previous generation. Today’s newer, higher-density developments leave less room for the larger resortstyle pools but, in turn, provide amenities that create a more social environment that encourages interaction between tenants, including Wi-Fi lounges, beer taps and pub rooms, smaller wading pools and rooftop lounges. Fitness centers are still prevalent but are more functional and have evolved into what renters today enjoy – yoga studios, cycle rooms, space for cross-fit classes, Pilates, etc. Fido has become a major priority for the typical Colorado resident. Dog grooming stations are now readily found in new communities. The ratio of units paying a monthly pet fee perfectly demonstrates the increase in pet popularity. In 2005, the average percentage of units paying a pet fee was roughly 22 percent. In comparison, that ratio today has increased to an average of 32 percent. Another contributing factor to the change in multifamily housing is that Denver has become a much more walkable city, which has encouraged renters to forgo their car and opt for one of the multiple options of shared transportation. Over just the past few years, Denver has fully embraced the idea of bike-share and car-share programs. Car2Go, Zipcar and Occasional Car are all new companies that offer car-share services. As a result of the shift in transportation preferences, bike repair stations have begun to appear in many communities, and attached/ detached garages have declined in demand. Light rail, which was just an idea during the previous development cycle, has become a focal point for new development and an economic powerhouse that every major city in the country now envies. The apartment communities of today are more than just a place to live. They are a window into how our world is evolving. We are a changing community, and what we once prioritized has become outdated. More over, Denver has entered into a new era that is transforming our beloved city from what was once considered to be a beautiful, but secondary, city to a top-tier metro area with more intangibles to offer than 99 percent of the country. Denver is now a destination that is drawing new residents and employers from every corner of the country. Our population is not only growing quickly, but also changing quickly, which is ultimately changing our market. The apartment market in Denver is now positioned not just for short-term success but also for long-term and sustainable prosperity. This is the most exciting time Denver has seen in its history, and the changes that we are experiencing now should be embraced and celebrated.