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First Quarter 2012 Multifamily Investing News for Colorado Springs

“The local economy showed its strongest growth in two years. The Business Conditions Index stands at 106.91, its highest value since June 2008.” Thus begins the January 2012 version of the Quarterly Updates and Estimates report published by Fred Crowley, Senior Economist at the University of Colorado at Colorado Springs (UCCS).


In the report’s section on the multifamily market, we learn that the average rent for an apartment in September was $779, and the vacancy rate was 6.2%. The author expects the market to remain tight through 2012 as troops returning to Fort Carson will outnumber the new apartment units in the construction and planning stages.

The report also states that unemployment dropped for six months in a row compared to the previous year. The rate stood at 9.37% in December 2011.

In other local news, Seagate Properties of San Rafael, California has bought its third apartment complex in the city in the last ten months. The latest acquisition was the 310-unit apartment complex known as Sunset Creek Apartments. Located at 5400 N Nevada, it is across the street from the UCCS campus and next to the University Village shopping center. Part of the Pikes Peak Greenway trail system goes right by the complex. The new owners plan to build a new swimming pool and clubhouse, as well as upgrading the tennis and volleyball courts among other improvements both inside and out.

Seagate now owns five properties in the area totaling 685 units. The others include Copper Chase, Cascade Park Apartments, Boulder Crescent Apartments and the Fillmore Ridge Apartments. They plan to buy a total of 2,000 units in Colorado in 2013.

U.S. News & World Report recently named Colorado Springs as one of the Top 10 “Best Weekend Getaway” destinations in the country. We made the list at the number six spot largely for our “prime picture-taking real estate” as well as for being home to the United States Air Force Academy and the Olympic Training Center. The top three recommended places to visit were the Garden of the Gods, Manitou Springs and the top of Pikes Peak.

In late-breaking news, Frontier Airlines has recently announced they are making Colorado Springs one of its first “focus cities”, a term they use to represent their new focus on local markets. In January, the airline announced new non-stop flights to Phoenix, Los Angeles, Seattle and Portland, starting in May. Part of the strategy is to use larger, newer, more fuel-efficient planes on these new routes.

“They clearly see the potential in this market,” said Dave Csintyan, interim CEO of the Greater Colorado Springs Chamber of Commerce and Economic Development Corp. “I think they see this as an underserved market.”

As the economy continues to improve and more troops and visitors return to Colorado Springs, it’s looking more and more positive for investors in the region.

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Colorado Springs Economy On Slow Path Upward – Crowley

Fred Crowley, Senior Economist at UCCS has released his November 2009 Quarterly Updates and Estimates document. According to his research, the Business Conditions Index has risen by almost 19% since its low point in February of this year and now stands at 81.3. It is expected to stay in the high 70s to mid 80s through the 1st quarter of 2010.

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The main reason for this good news is that 9 out of 10 factors that go into this computation are predicted to improve in the early part of next year. The only laggard was sales tax revenue, which won’t be a surprise to anyone who lives here and keeps up on the news. Employment and income are expected to improve enough to notice by the middle of 2010. Housing prices have stabilized and are beginning to rise slightly, and foreclosures should taper off after a record-setting pace in 2009.

In the multfamily sector, Colorado Springs continues to have the highest vacancy rate in the state, in spite of the number of troops assigned to Fort Carson. Many of these soldiers aren’t in town because they’ve been deployed again. Since we’re so far overbuilt, the requests for building permits for apartments has basically ground to a halt, and Dr. Crowley doesn’t foresee the need for any new units in the next six months. Over the course of 2010 the vacancy rate should begin to drop, partly because of the influx of returning troops, and partly because the improving economy will  allow some people to seek their own housing instead of living at home or with roommates.

The annualized vacancy rate was 9.65% for all of 2008. Rents have risen 6.5% since March of 2004, but since inflation went up 13.8% for the same time period, landlords are bringing in 6.9% less income in today’s dollars. Rents are not expected to increase until the vacancy rate drops to about 8% and normal inflation returns as the economy recovers.

Here is where you can read the entire report.

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Economist Claims Recession Over in Colorado Springs

According to Fred Crowley, Senior Economist at UCCS, “The Business Conditions Index (BCI) now stands at 79.09, up from its March value of 70.4.  This is a 12.35% improvement since March.  The bottoming of the BCI and significant improvement in several local indicators since March suggests the Colorado Springs economy is probably out of its recession.”

He goes on to say,”The most important measure of the area’s economic health might be employment.  Since employment tends to lag the business cycle,  the Forum expects this barometer of the economy will be slow in its recovery.  Real wages are expected to be stable for several more months.  Building permits normally begin to slow in the late summer.  Car sales are expected to rebound sharply in July and August due to the Cash for Clunkers (CARS) program.  Car sales are expected to be a little stronger with the introduction of the 2010 model year cars.  Sales tax should see a spike from the new troops at Fort Carson and the Cash for Clunkers program (CARS) before a relative decline in the late third quarter.”

In his Quarterly Updates and Estimates report, Crowley covers the local residential housing market, including foreclosures and MLS activity, the multi-family market, airport emplanements,  car sales trends, and sales tax results.

You can read the entire report here:

http://coloradospringsapartmentinvestor.com/PDFs/QUE 2009 – Vol 08 No 1 Jul 2009