FROM THE PRESIDENT
DEREK AVERY | LEGACY PARTNERS
Some highlights from the Economic Conference
In case you were unable to attend last month ' s Economic Conference, you missed a world of education about our industry and what to expect for 2017.
For starters, the fact that average monthly rents were down $ 21 to $ 1,347 isn’ t that unusual for the forth quarter, but such a significant drop( 3rd largest ever) was somewhat unusual. Averages rents were down the most in communities built from 2010 to now( an average drop of $ 42 for this class of community).
For 2016, the Metro Denver area added nearly 10,000 units, for a total of 323,241 units in the market. While the market vacancy rose from 5.1 % to 6.2 %, the magic line for occupancies to affect upward pressure on rents is 94 %, according to a live poll that Teo Nicolais presented during his intense lesson on economics.
There is a recap of the Economic Conference beginning on page 16 with a summary of the current Vacancy & Rent Report on page 19, but here are some quick hits from the Conference.
• In 2016, just over 11,000 units were absorbed( net change in units rented), that’ s a lot especially when you consider in the fourth quarter we had negative absorption
• Average rents per square foot were down $. 02 to $ 1.58. Rent per square foot ranged from $ 1- $ 1.10 for several years in the early 2000’ s
• Concessions were down in the 4th quarter, but it was predicted that they will be on the rise as more units get delivered in 2017.
• Construction lending is becoming more restricted and difficult for developers to get financing
• Property owners have been reinvesting in their portfolios, fixing them up, and many are selling to outside or newer investors. New buyers are targeting large communities and they’ ve been willing to pay a premium price with several record sales in 2016
• Average Denver area apartment value is approximately $ 185,000 per unit, which makes our industry valued at over $ 60,000,000,000
• The population of the Metro Denver area is now roughly 3,075,000, by 2020 the estimate is 3.3 million. The population of Colorado is roughly 5,460,000. As a state, Colorado ranks 14th on the economic competitive index
• In 2016 for every 1 condo unit build there were 60 apartment units built, the average price for a condo sold was $ 235,480
323,241 UNITS IN METRO DENVER
25,000 UNITS UNDER CONSTRUCTION
$ 185,000 APPROXIMATE VALUE PER UNIT
3,075,000 APPROXIMATE POPULATION OF DENVER
5,460,000 APPROXIMATE POPULATION OF COLORADO
1:60 RATIO OF CONDO TO APARTMENT UNITS BUILT IN 2016
17
# STAYOCCUPIED
ECON
• Job growth continues to be the driver for apartment development, the pace of job growth is slowing as it was in 2015 before taking off again.
• Metro Denver has one of the most diverse economies in the nation, and the marijuana and the micro beer industries were two significant factors in the growth of our economy
• 33 corporations relocated to Denver in 2016, $ 55 million dollars were used as incentives to lure companies here, and that investment should yield an estimated $ 728 million dollars into our economy!
• Some of our areas most difficult challenges include: FastTracks technology failures and delays, price of housing is considered to be too high by companies that want to move here, our roads and highways suffer significant deferred maintenance.
• We ' re only 4-5 years away from self driving cars being prevalent in our city.“ Car trains will be used in ten years to transport people to mountain resorts," according to Tom Clark.
• Wind technology will continue to grow and become a larger source of energy in Colorado
• Ken Schroeppel provided a history of the relationship between housing and transportation, including how rail lines have returned and main street zoning has become more prevalent … and how keeping and preserving old stuff is how we maintain the sole of communities
• Ken described how the 2010’ s are the time of“ Walkable Urbanism” which includes a lifestyle where everything is close by and cars become less important
• A consumer’ s top 2 expenses are typically housing( 33 %) and transportation( 17 %), which totals to half of one’ s income.
Of course, the Economic Conference was the first of many events that AAMD has in store for 2017. Opposite this article is information about the amazingly popular Maintenance Olympics, which grows each year both in attendance and value to your company.
Also, on page 28, you ' ll see an article about Mark Sanborn. I already shared my enthusiasm for The Fred Factor concepts, so I encourage you to take a look at it and consider who you ' ll be sending to the Education Conference and Trade Show on May 24!
6 | TRENDS • FEBRUARY 2017 www. aamdhq. org