The Colorado Springs apartment market is making a strong comeback, as shown by recent sales and new construction starts.
Major investors from out of the area have recently purchased large multifamily properties in Colorado Springs. In October, Sequoia Property Partners of New York closed on the South Circle Arms, a 112-unit apartment complex built in 1969. Many new upgrades were completed in the last five years, including new 30-year roofs on all the buildings. The $5.4 million purchase price produced a value of just over $48,000 a door.
Another October purchase was of the Rustic Hills Park Apartment, one of the last large distressed properties in Colorado Springs. The 243-unit property went for the bargain price of just over $17,000 per unit, or $4.2 million.
The new owners, Connexion Asset Group of Lakewood, CO, need to address a backlog of deferred maintenance and a low occupancy rate to stabilize the property. They have a successful track record of turning around failed assets, which is why they were selected from the 15 bidders on the offering.
This past summer Advenir, a Florida-based real estate company, bought the 220-unit Briarglen Apartments for $16.3 million, or $74,000 a door. They have announced plans to buy up to 2,000 units in the Denver and Colorado Springs markets. Chief Acquisitions Manager Todd Linden says, ““We think, long-term, Colorado is a great state to invest in. There’s going to be a lot of job growth there.”
At the end of September they purchased the Cheyenne Crossings Apartments for $19.5 million, coming in at over $85,000 per unit for the 220 units.
Seagate Properties of California now has a Denver office and hopes to build their Front Range portfolio to 2-3,000 units. They already own a couple of smaller apartments in downtown Colorado Springs, and in 2010 purchased the 115-unit Fillmore Ridge Apartments for $2.8 million, or just over $24,000 a door.
After years of little or no multifamily development, several new projects are under way, or awaiting final approval.
Grading is already underway at the corner of Woodmen Road and Union Boulevard, where Denver-based Southwestern Investment Advisors and Utah-based Talos Holdings have teamed up to build a 230-unit luxury apartment complex.
Up north in Monument, local group Vision Development has begun a 177-unit complex and at the south end of town, long-time local developers, the Nor’wood Development Group, has broken ground on the 240-unit Mesa Ridge Apartments. This project is close to Fort Carson, which should continue to add troops coming back from tours in Afghanistan, as well as the aviation brigade, expected to arrive with their helicopters and support staff in 2013.
On the east side of town, near Peterson Air Force Base, there is a large mixed-use project in the planning stages that would include 450 apartment units in addition to two military office buildings, restaurants and retail space. It will be near the intersection of two major arterials, Powers Boulevard and Airport Road.
All of this new construction activity has pushed the number of multifamily permits granted this year to 407, the most since 2002, when 1,664 permits were issued. That single year had more permits issued than all the subsequent years combined. In fact, in 2009, exactly zero multifamily permits were pulled.
With 44,000 apartment units now available, this year’s total will add less than 1% to the total. With its low vacancy rate and rising rents, it’s no wonder the Springs is looking so attractive to investors and developers.