SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.
Top Multifamily Market to Watch: Denver, CO
The Denver multifamily market has experienced significant additions of new supply as its population has grown 10.6% from 2010 to 2014, according to the Census Bureau. Further, the employment market is outstanding with 3.0% unemployment as of January ‘16 and annualized job growth of 2.5%, according to the Bureau of Labor Statistics. Denver features a larger renter population with approximately 50% of its metro’s housing units used for rental purposes; still rental rates are relatively affordable for a metro of its size, giving it room to grow. Top sectors for employment growth include Leisure and Hospitality, Financial Activities, Manufacturing, and Professional and Business Services growing at annualized rates of 6.0%, 3.9%, 3.5%, and 3.2%, respectively. As such, rent growth could hit 7% in 2016.
Advisor Insights: SVN | Denver Commercial
SVN’s Advisors at SVN | Denver Commercial have some multifamily market highlights to share. Here’s what to look out for in Denver’s multifamily market in 2016:
- As population grows, (over 100,000 additional people since 2014), demand grows likewise for multifamily.
- Household formation is growing with a younger demographic makeup in Denver. The CBD area alone now is housing a population of 90,000 residents, mostly in multifamily buildings.
- Rents have risen significantly over the past few years but are now reaching affordability limits.
- Renters are demanding fully amenitized properties when higher rents are asked by landlords.
- Expect to see more micro-apartments to address affordability issues, especially in the CBD area.
- Vacancy rates are now approaching more “normalized” conditions of 5-7%, versus virtually nil in the last couple years. This is due to increased delivery of new apartment units to the region, somewhat outpacing demand.
Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.
To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.
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