Tech Companies Remain Big Driver Behind Denver Multifamily
Bay Area tech companies relocating to Denver will remain a big driver behind Denver’s growing apartment market in 2020, a forecast by Marcus & Millichap said.
As companies like Amazon, Slack, Strava and Facebook have, and continue, to plant their flags in Denver, they bring with them high-wage jobs. This has fed into the delivery and investment in apartments in the urban core.
Downtown Denver and surrounding neighborhoods will receive more than half of the metro’s new supply in 2020, the forecast said. Even though there has been a considerable influx of new units on the market, Class-A vacancy is in the 4% range, the lowest level in four years. Class-B and Class-C properties will also see low vacancies.
“Sustained job creation in service-oriented fields and ultra-tight unemployment will remain a boon to workforce housing this year, keeping upward pressure on rent growth for these properties,” the report said.
In the past five years, the Class-C average effective rent increased 41%, while the Class-B measure rose 30%, according to Marcus & Millichap data.
The report broke the 2020 investment forecast down by metro Denver areas as well. It said that Colfax Avenue remains “the common denominator” of many apartment deals, providing investors numerous dynamics.
Northeastern Aurora will also likely see considerable investment volume in 2020, as it provides favorable price points with per unit values averaging approximately $120K. Its proximity to UCHealth helps keep rental demand strong, the report said.
Unsurprisingly, Capitol Hill will continue to be an investment target, the forecast said, based on its location and relatively affordable price points. North Lakewood and West Colfax were also mentioned as investment hot spots in the report.
The numbers in the market forecast project employment will be up 1.3%, vacancy will drop to 4.4% and rent will be up 4.5%.