q3 2018 the multifamily investor

THE MULTIFAMILYINVESTORYour Local Apartment Advisors

The Multifamily Investor

Q3 2018

SUMMARYDespite vastly mixed forecasts on the direction and

timing of the real estate market, we have a basic synopsis: the Colorado Springs market is booming. High demand for both residential and commercial product alike is quite evident by the sight of cranes throughout downtown, while the outskirts of the city crawl with heavy construction equipment in an attempt to keep single family completions in check with continued strong demand. In the apartment world, rents continue to reach

record levels - music to an investor’s ears. Yet the recent record rent for an apartment in the Colorado Springs market of $1,156.76 isn’t quite as rosy when infl ation is factored in. Actually, effective rent growth turns slightly negative over the past twelve months. Coupled with interest rates having climbed enough to all but halt the refi nance market, it would make sense that investment interest may slow down to some degree. Is this the case? The answer is a resounding “No”. On a brokerage level we continue to receive

unsolicited offers on properties at substantially higher prices than what they traded for just two or three years ago. Which leads us to say: if you are thinking of selling, please let us know! It’s a serious seller’s market and you may be surprised how much the value of your property has increased, even in the past six to twelve months.

MULTIFAMILY Statistics2018 Q1 2018 Q2

Rent $1,018 $1,031Vacancy 5.9% 5.5%Number of Sales 11 12Average Price/Unit1 $156,927 $142,937Median Price/Unit2 $83,750 $85,544Under Construction 2,198 2,3041. 12 month avg.; 2. 12 month avg.

OLIVE REAL ESTATE GROUP, INC www.olivereg.com

► 12 Month Absorption is -154, with 210 units absorbed in 18Q2

► 12 Month Rent Growth was down to 3.2% in 18Q2; this time last year it was 7.2%

► The average vacancy rate decreased to 5.5% in 18Q2; was 4.7% in 17Q2

► 48 Units completed in 18Q2; hundreds more expected later this year

HIGHLIGHTS

Previously awarded in: 2014, 2015, 2017

102 N CASCADE AVE, SUITE 250, COLORADO SPRINGS, CO 80903

t. 719.598.3000 | www.olivereg.com

2018 Best Real Estate Broker - Commercial -

Olive Real Estate Group, Inc.

Absorption, Net Deliveries & Vacancy

Absorption Net Deliveries Vacancy

Absorption & Net Delivered Units

800

600

400

200

0

-200

-400

-600

8.0%

7.5%

7.0%

6.5%

6.0%

5.5%

5.0%

4.5%2013 2014 2015 2016 2017 2018

The Best in Business awards highlight the businesses the

readers think are tops in their fi elds.

Colorado Springs announced plans to move forward with the fourth City for Champions project, which will bring two separate facilities to the downtown area. The fi rst is a 10,000 seat stadium that will become the permanent home of the Colorado Springs Switchbacks, along with an adjacent mixed use residential/commercial facility. The second is a 3,000 seat event center for the Colorado College hockey team. The total investment including private and State funds equals nearly $100 million.

MULTIFAMILY RENT & SALES

Key Statistics


Property Name Address Sales Price # Units Sale DateRagan Portfolio (7 Properties) Various $102,260,000 1,190 5/24/2018Citadel Apartments 3616 Galley Rd 80909 $4,060,000 46 6/22/2018Foothills West Apartments 720 Melany Ln 80907 $3,550,000 34 5/18/2018Monument Townhomes 1010 Magic Lamp Way 80132 $1,775,000 10 6/25/20181

1341 N Tejon St 80903 $829,000 5 4/2/20182

624 Prairie Rd 80909 $670,000 8 4/25/2018The Irish Spring Apartments 1902 Dublin Blvd 80918 $625,000 8 4/17/20181. Condominiums, Estate Sale; 2. Non-Profi t Buyer

2018: Second Quarter Sales

Vacancy, Asking Rent & Rent Growth

$1,200

$1,000

$800

$600

Asking Rent Vacancy Rent Growth

Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

6.0%

4.0%

2.0%

0.0%

-1.0%Q1 18 Q2 18

Total Sales Volume & Avg. Price/Unit

2013

$400M

$300M

$0M

Average Price/Unit (12 mo)Total Sales Volume

2014 2015 2016 2017 2018 YTD

$200M

$100M

$500M

$600M

$700M $210K

$0K

$120K

$90K

$60K

$30K

$180K

$150K

Olive Real Estate Group, Inc. Copyright 2018. Information contained herein, while not guaranteed, is from sources deemed to be reliable. Prices, terms and information subject to change. path: S:\Admin\@Multifamily\4-Newsletters\2018\Q3\OREG-MultifamilyInvestorNewsletter-August2018-V2

***Disclaimer*** Some second quarter sales may not be recorded at time of publishing and are not listed

• I-25 Proposed Widening* The US. Department of Transportation has granted $65mm to the State of Colorado to fi nish expanding I-25. Groundbreaking is expected to take place this September, with completion taking approximately 2 years. Widening "The Gap" will add to the growth of northern El Paso County and help boost in-state tourism to the area as well.

Final City for Champions Project* The city announced a total of nearly $100 million in public and private funds to construct the 4th City for Champions project (details to the right). The project must show "signifi cant progress" by the end of this year to qualify for funding from the State. The goal is for both projects to break ground before year's end. The stadium and arena are expected to create 650 jobs and infuse $32 million into the local economy, as well as generate $1 million in city sales tax revenue annually, according to a recent article from The Gazette.

WHAT TO LOOK FOR in Q3 2018 CITY ANNOUNCES PLAN FOR STADIUM City of Colorado Springs 7/25/18

Source: coloradosprings.gov

LocationCentrally located in a quiet neighborhood, the property has easy access to Downtown, Interstate 25, as well as east to the Powers corridor via Palmer Park Boulevard, one of the primary east/west corridors in the city. Two city bus lines are within walking distance of the property.

The immediate neighborhood consists of single family residences, well maintained multifamily properties, several churches, restaurants and a neighborhood Walmart Neighborhood Market. Jefferson Elementary School and Wasson High School are both in close proximity.

OLIVE REAL ESTATE GROUP, INCVisit www.olivereg.com for more information

OFFERING SUMMARYNumber of Units 48Building SF 30,885 SFYear Built 1969Price $4,900,000Price Per Unit $102,083Price Per SF $158.65Down Payment $1,225,000Proforma Cap Rate 6.60%Proforma IRR 13.94%

LELARAY APARTMENTS 2115 Lelaray St., Colorado Springs, CO 80909

OFFERING SUMMARYNumber of Units 5

Building SF 7,414 SF

Year Built 2017

Price $1,690,000

Price Per Unit $338,000

Price Per SF $227.94

Down Payment $538,000

Proforma Cap Rate 6.77%

Proforma IRR 15.26%



PUEBLO AVENUE APARTMENTS 210 Pueblo Ave Colorado Springs, CO 80903



NEW LISTINGS

New Construction, High-End FourplexesNorthgate Area

• Townhome-style• 2200 square feet• 3 bed, 2.5 bath, 2 car garage• Highly desirable area with great access to I-25

Call us today about the opportunity to invest in brand new construction, high-end townhome style fourplexes in booming Northgate. Approved plans are for 2,200sq.ft. 3 bed, 2.5 bath units with attached 2-car garage.

Delaware Townhomes1201 Delaware Dr., Colorado Springs, CO 80909

• $750,000• 6 units, Townhome style• Off -Street Parking

Hard to fi nd townhome style units, centrally located on a quiet street. Spacious kitchen/living area. All units have washer/dryer hookups.

Fountain Pointe Apartments312 W Alabama Ave., Fountain, CO 80817

• $2,200,000• 24 Units• Refi nished roof, newly painted exterior, interior remodels

Located across the street from the brand new Fountain Middle School campus and within walking distance of a grocery store slated for construction in the next 12-24 months.

COLORADO SPRINGS MOST DESIRABLE PLACE IN NATION – Colorado Springs Business Journal 7/31/18

US News and World Report says Colorado Springs is the most desirable place in the country to live. While the city was ranked the second-best place to live earlier this year, this most recent ranking excluded things like value and the job market. The publication asked people across the country to pick where they would most desire to live among 125 of the nation’s largest metro areas. The rankings were then based on the percentage of votes each city received. This is just another indicator that people around the nation are beginning to recognize Colorado Springs is a great place to live.

NEW TROOPS AT FORT CARSON - The Gazette 5/19/18

Fort Carson has been chosen as the location for a new brigade that will specialize in training foreign militaries. The brigade will bring approximately 800 new troops and 1,200 family members, pushing Fort Carson’s troop population above 25,000.

US MULTIFAMILY RENT GROWTH SURGES TO RECORD IN JUNE - Connect Media 7/17/18

Average rent nationwide increased by $12 in June to

an all-time high of $1,405, according to Yardi Matrix’s survey of 127 markets. Rents grew by 2.1% in Q2 2018, the highest for any quarter since 2015. This shows that “demand generally is holding up, and that robust supply growth is not an impediment to rent growth in most markets.”

PLENTY OF CAPITAL, BUT MULTIFAMILY FACES SOME HEADWINDS - BISNOW 7/10/18

The multifamily market is in the late stages of a prolonged expansion, and capital sources continue to put money into the sector although industry experts say internal rates of return are declining. With cap rates coming down, the advantages of fi nancing with debt are decreasing. More investors/developers will opt to pay cash for deals or use less debt, which will help soak up available capital.

2017 VISITOR SPENDING UP IN REGION - Colorado Springs Business Journal 7/5/18

Last years overnight spending numbers surpassed 2016 by 7 percent. Total spending including day travelers was $2.3 billion, an increase of 3 percent over 2016. This equals approximately $6.3 million being spent everyday by visitors to the region, a valuable source of income to local businesses and taxes for the city and county governments.

MULTIFAMILY CONSTRUCTION

NEWS ARTICLES

Under Construction and Proposed

Recently Completed

All items

Proposed Apts.xlsx

All items

Under Construction Apts.xlsx

All items

UNDER CONSTRUCTION

PROPOSED

RECENTLY CONSTRUCTED

Property Name Address # UnitsSprings at Allison Valley 11320 New Voyager Heights 300Crowne at Cordera 6896 N Powers Blvd 276Elevation Apartments 4637 Asher Heights 272Crowne at Briargate Grand Cordera Pky 272The Overlook at Interquest - Phase II 11124 Cedar Glen View 243Copper Range 7535 Copper Range Hts 240Enchanted Springs Apartments 3075 Tutt Blvd 200Cascade Apartments 609 S Cascade Ave 183333 ECO 333 E Colorado Ave 172La Bella Vita Phase II 4986 Amarosa Heights Dr 146


EconomyColorado Springs Multi-Family

Source: Moody’s Analytics

YEAR OVER YEAR JOB GROWTH

DEMOGRAPHIC TRENDS

1 yr GrowthCurrent Level

Colo Spgs U.S.Colo Spgs U.S.Demographic Category

10 yr Growth Forecast Growth

Colo Spgs U.S. Colo Spgs U.S.

Population 327,403,320732,571 1.5% 0.7% 1.7% 0.8% 1.3% 0.7%Households 125,743,844278,408 2.0% 0.8% 1.4% 0.8% 1.8% 1.1%Median Household Income $60,267$67,640 3.6% 3.5% 1.9% 1.6% 2.3% 3.0%Labor Force 161,332,214343,226 3.6% 0.8% 0.9% 0.5% 1.6% 0.8%Unemployment 4.1%3.3% 0.2% -0.5% -0.2% -0.1% - -

Source: Moody’s Analytics

POPULATION GROWTH

Source: Moody's Analytics

LABOR FORCE GROWTH INCOME GROWTH

4/5/2018Copyrighted report licensed to Olive Real Estate Group - 912813.

Page 15

Demographic Trends

102 N Cascade Ave, Suite 250Colorado Springs, CO 80903t. 719.598.3000 f.719.578.0089 www.olivereg.com

THE MULTIFAMILY INVESTOR

Stuart [email protected]

Adam [email protected]

WHY Use your Local Broker?

Working with a local broker adds valuable insight to help maximize your investment dollars. An inside track on developments in the commercial real estate market, fi rst-hand knowledge of troop deployments and insight on job growth are just a few of many things that have substantial impacts on investment property in both the short and long term.

RECENT APARTMENT LISTINGS

Smokey Trail ApartmentsLimon, CO 80828

• $3,300,000• 38 Units

SOLD

To learn more about the Colorado Springs market or to receive a free Broker Opinion of Value or Financial Review, Call Us at 719-598-3000


Foothills West720 Melany Ln.,

Colorado Springs, CO 80907• $3,550,000• 34 Units

SOLD

LOCAL EXPERTISEWe are the ONLY team based in Colorado Springs that focuses

exclusively on Multifamily Investment Properties!

Cooper Apartments2120-2140 Cooper Ave.,

Colorado Springs, CO 80907• $800,000• 6 Units• Large lots, newly remodeled units

PENDINGEXCELLENCE

Top Sales Firm: 2013, 2014, 2016, 2017Top Sales Broker: 2014, 2016, 2017

Best in Business AwardBest Commercial Real Estate Broker:

2014, 2015, 2017, 2018

EXPERIENCESince 2014:

Over $100 million in multifamily sales

60+ multifamily transaction

q3 2018 the multifamily investor

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