Great insight!
I had a great time attending the Fall Multifamily Development and Investment Conference hosted by the Colorado Real Estate Journal. It’s always valuable to hear the perspectives of other real estate professionals and gain insights into current market focuses. Here are some key takeaways I found particularly useful: ◾ Vacancy rates due to new supply are better than expected. Most markets have successfully absorbed thousands of new units with relatively flat rent growth. ◾ Denver remains a magnet for talent, with continued in-migration driving up median incomes and sustaining strong demand in rental markets. ◾ Homeownership is significantly more expensive than renting, currently around 95% higher in today’s market. ◾ Construction starts and permits for market-rate apartments have plummeted with increased interest in sectors like LIHTC, 55+, and build-to-rent. ◾ Class A properties are trading at cap rates in the high 4% range, but investors are showing greater discipline, ensuring these assets meet strict criteria. ◾ Urban submarkets are seeing a buying trend, while development is shifting to suburban areas where building costs and replacement costs are becoming increasingly critical. ◾ Insurance costs remain elevated as Colorado faces record losses from weather events, including fires, hail, and high winds. ◾ Developers are observing a 3-5% drop in hard costs, though these reductions are likely coming from subcontractor profit margins rather than actual price declines. ◾ Local municipalities are creating significant hurdles for development and need to improve public-private partnerships to address housing challenges. Overall, the mood at the conference was much more optimistic than at recent events. It feels like we’ve hit the bottom, and there’s a shared sense of encouragement given the current interest rate trends. #denverrealestate #CREJ #multifamily #commercialrealestate