the multifamily investor - olive real estate group...greenway flats 31 w las vegas st 65 casa mundi...
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THE MULTIFAMILYINVESTORYour Local Apartment Advisors
The Multifamily Investor
Q1 2019
SUMMARYEntering Q4 2018, the only obstacle preventing a
continued bull run in our local multifamily investment market centered on expectations that interest rates would continue their steady climb of eight increases over the prior three years. While the Fed Funds Rate did increase by another quarter point late in December, expectations of 2019 rate hikes shifted radically the last week of January. In fact, at the press briefing following the Fed meeting Jerome Powell would not even commit to whether the next rate change would be up or down.
This shift may lend itself to a strong cautionary stance in light of economic slowdowns in Europe and China, international trade tensions, and other unknowns, such as Brexit. But close to home, strong fundamentals in the Colorado Springs apartment market lead us to believe that the bull run will continue for multifamily investments well into 2019. This will likely relieve the upward pressure on cap rates we have begun to see, while at the same time instilling further confidence over alternative investments, such as the stock market.
OLIVE REAL ESTATE GROUP, INC www.olivereg.com
► 12 Month Absorption is 489 units, with -84 units absorbed in 18Q4
► 12 Month Rent Growth was 3.0% in 18Q4; this time last year it was 5.3%
► 12 Month Net Completions were 419 Units, down from 841 this time last year
► The average vacancy rate increased to 6.3% in 18Q4; was 6.1% in 18Q3
HIGHLIGHTS
102 N CASCADE AVE, SUITE 250, COLORADO SPRINGS, CO 80903
t. 719.598.3000 | www.olivereg.com
Last month Adam and Stuart presented their 2019 Multifamily Outlook at the IREM Economic Forecast Breakfast. For those unable to make it to our presentation, we’ve created a video to get you all
caught up. Just visit the link below!
bit.ly/COSmultifamily19-1
IREM Economic Forecast Breakfast
MULTIFAMILY Statistics2018 Q3 2018 Q4
Rent $1,051 $1,049
Vacancy 6.1% 6.3%
Number of Sales (12 mo.) 65 56
Total Sales Volume (12 mo.) $559,152,000 $597,952,000
Average Price/Unit (12 mo.) $137,911 $140,861
Median Price/Unit (12 mo.) $87,500 $92,500
Under Construction 2,121 1,748
Source: CoStar Group, Inc.
Absorption, Net Deliveries & Vacancy
Absorption Net Deliveries Vacancy
800
600
400
200
0
-200
-400
-600
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4
Source: CoStar Group, Inc.
MULTIFAMILY RENT & SALES
Key Statistics
The Multifamily Investor
Property Name Zip Code Sales Price Price/Unit # Units Sale DateCreekside at Palmer Park 80915 $72,500,000 $221,037 328 12/7/2018Elevation Apartments 80917 $65,800,000 $241,912 272 12/19/2018Advenir at the Village 80918 $51,100,000 $164,839 310 11/9/2018Woodland Hills 80918 $27,000,000 $168,750 160 12/7/2018Fireside Apartments 80915 $13,600,000 $125,926 108 11/20/2018Carefree Village Townhomes 80917 $12,875,000 $201,172 64 12/28/2018Meadows Point Apartments (Portfolio Sale) 80905 $10,250,000 $91,517 112 12/17/2018
Eagleview Apartments 80909 $8,750,000 $134,615 65 12/21/2018Academy Manor 80920 $7,550,000 $117,969 64 10/10/2018Mesa Vista Apartments 80817 $4,200,000 $87,500 48 10/19/2018
2018: Fourth Quarter Sales
Contact us if you’re interested in learning more about the Colorado Springs market or are considering purchasing or selling a property in the next few years. We have qualifi ed investors seeking to purchase properties of all types from $500,000 to $50 million. We also provide Broker Opinions of Value and Financial Reviews. 719-598-3000
Asking Rent Per SF
Vacancy, Asking Rent & Rent Growth
$1,200
$1,000
$800
$600
Asking Rent Vacancy Rent Growth
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
6.0%
4.0%
2.0%
0.0%
-1.0%Q1 18 Q2 18 Q3 18 Q4 18
Source: CoStar Group, Inc.
Total Sales Volume & Avg. Price/Unit
2013
$400M
$300M
$0M
Average Price/Unit (12 mo)Total Sales Volume
2014 2015 2016 2017 2018
$200M
$100M
$500M
$600M
$700M $210K
$0K
$120K
$90K
$60K
$30K
$180K
$150K
Source: CoStar Group, Inc.
***Disclaimer*** Some sales may not be recorded at time of publishing and are not listedSource: CoStar Group, Inc.
RentColorado Springs Multi-Family
From 2015-2017, Colorado Springs produced some ofthe strongest rent growth in the nation, an averageannual increase of nearly 7%, while metros targeted bydevelopers earlier in the cycle largely saw rents comeback to earth (such as Denver).
But Colorado Springs, now at the onset of its largestsupply test to date (that will stretch through at least2019) has finally seen rent growth start to moderate. In2018 rents by about 3% year-over-year, now in-linewith the national average. In the North and Northwest ElPaso County submarkets (where virtually all of the activedevelopment is located), rents grew by closer to 2%year-over-year, a sign of supply beginning to have animpact.
While rent growth has moderated, the concessionenvironment remains highly favorable. During the fullyear 2018, discounts of at least one-month's free rentwere tied to 3% of all available apartments, one of thelowest rates in the country. In fact, only two of the largest100 metro areas in the country had a lower incidence ofsuch concessions (Sacramento and Oxnard). Nationally,about 10% of all available apartments were tied to a one-month discount in 2018.
This does represent an uptick from 2016, whenconcessions of at least one-month's free rent were tiedto a mere 1% of all availabilities (then the lowest level inthe country), but concessions nonetheless remain wellcontrolled, and outsized discounts almost nonexistent.
DAILY ASKING RENT PER SF
1/25/2019Copyrighted report licensed to Olive Real Estate Group - 912813.
Page 6
Source: CoStar Group, Inc.
FREDDIE MAC RESEARCH PROJECTS STRONG 2019 MARKET - MHN 01/16/19
"Freddie Mac expects another strong year for the multifamily market in 2019 with solid rent growth - projected at a nationwide average increase of 4 percent - and vacancies continuing to perform at historical averages…origination volume is estimated to grow to $317 billion from about $305 billion in 2018..." Freddie Mac estimated it's been 10 years since the cost to own was lower than the cost to rent, and the cost to own has increased 60% since that point compared to rent growth of 30%. Colorado Springs is expected to be one of the top 10 markets for gross income growth in 2019.
PROGRESSIVE INSURANCE LOOKS TO HIRE 1,100 EMPLOYEES IN COLORADO SPRINGS [IN 2019] - KRDO 01/24/19
Progressive announced in a press release that it is planning to hire 10,000 employees in 2019, with 1,100 in Colorado Springs. These positions will include customer service, sales, and IT. According to the press release, the company has grown more than 50% in the last 3 years.
THE SHUTDOWN IS OVER, BUT THE PAIN FOR LOW-INCOME FAMILIES LINGERS -NBC NEWS 1/29/19
While HUD employees when back to work on January 25th, it’s going to take some time to get back on track and extend funding for Section 8 vouchers and contracts. As of 1/30, the government is only funded through February, and this uncertainty has caused the department to freeze vouchers currently waitlisted until they receive greater assurances that HUD will receive necessary funding. This will continue to create uncertainty for tenants and landlords who rely on government funding for rent.
JOB GROWTH EXPECTED DESPITE POTENTIAL DOWNTURN - CSBJ 01/04/19
Colorado Springs is less reliant on the defense industry than in years past, and should be more resilient should there be a downturn this year. Last month there were over 13,000 current job postings with a median salary of over $80,000, higher than the national average of $75,300. The state's minimum wage increased to $11.10, which may incentivize more people to re-enter the workforce.
MULTIFAMILY CONSTRUCTION
NEWS ARTICLES
UNDER CONSTRUCTION
PROPOSED
RECENTLY CONSTRUCTED
Property Name Address # UnitsSprings at Allison Valley 11320 New Voyager Hts 300Crowne at Cordera 9124 Grand Cordera Pkwy 276Crowne at Briargate 9110 Crown Springs Vw 272Watermark on Union 9915 N Union Blvd 243Copper Range 7535 Copper Range Hts 240Enchanted Springs Apartments 3075 Tutt Blvd 200Cascade Apartments 609 S Cascade Ave 183La Bella Vita Phase II 4986 Amarosa Heights Dr 146Greenway Flats 31 W Las Vegas St 65Casa Mundi 418 S Tejon St 27
OLIVE REAL ESTATE GROUP, INCVisit www.olivereg.com for more information
Source: CoStar Group, Inc.; Colorado Springs and El Paso County Planning and Development
EconomyColorado Springs Multi-Family
Source: Moody’s Analytics
YEAR OVER YEAR JOB GROWTH
DEMOGRAPHIC TRENDS
Current ChangeCurrent Level
Local U.S.Local U.S.Demographic Category
10-Year Change
Local U.S. Local U.S.
Forecast Change (5 Yrs)
Population 329,197,205739,797 1.4% 0.7% 1.7% 0.7% 1.2% 0.6%Households 126,789,305278,357 1.6% 0.9% 1.3% 0.8% 1.6% 1.0%Median Household Income $63,828$68,968 3.5% 3.6% 1.9% 2.1% 2.2% 2.8%Labor Force 162,881,653358,107 4.3% 1.3% 1.4% 0.5% 1.5% 0.8%Unemployment 3.7%3.5% 0% -0.4% -0.3% -0.4% - -
Source: Moody’s Analytics
POPULATION GROWTH
Source: Moody's Analytics
LABOR FORCE GROWTH INCOME GROWTH
1/25/2019Copyrighted report licensed to Olive Real Estate Group - 912813.
Page 16
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. Put this knowledge to work for you.
RECENT APARTMENT LISTINGS
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
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. S:\Admin\@Multifamily\4-Newsletters\2019\Q1\OREG-MultifamilyInvestorNewsletter-Feb2019-4pg
Downtown Apartments210 Pueblo Ave.,
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LOCAL EXPERTISEWe are the ONLY team based in Colorado Springs that focuses
exclusively on Multifamily Investment Properties!
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Colorado Springs, CO 80909• 48 Units• New tapered roof system, vinyl windows, newer boiler, security gate, LED exterior lights, and parking lot sealcoat
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EXCELLENCE
Top Sales Firm: 2013, 2014, 2016, 2017Top Sales Broker: 2014, 2016, 2017
Best in Business AwardBest Commercial Real Estate Firm:
2014, 2015, 2017, 2018
EXPERIENCESince 2012:
Over $130 million in multifamily sales
75+ multifamily transactions
Fountain Pointe312 W. Alabama Ave., Fountain, CO 80817
• 24 Units• Refi nished roof, newly painted exterior, interior remodels• Across street from brand new Fountain Middle School campus• Walking distance from planned grocery store
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