Monday, January 25, 2010, 3:58pm MST

Denver improves as apartment market, says report

Denver Business Journal

Metro Denver’s ranking increased to No. 21 this year from 27th in 2009 in Marcus & Millichap’s “2010 National Apartment Report” index of U.S. apartment markets, the brokerage firm said Monday.

The ranking of 44 U.S. cities’ apartment markets is based on average scores for indicators such as expected marketwide employment change, apartment vacancies, new-apartment construction and rents.

Washington, D.C., was the index’s top market again for 2010, as it was for ’09, and Jacksonville, Fla., traded places with Las Vegas for the 44th position this year.

Metro Denver rose on the index because its fundamentals started to firm up late last year, especially in downtown Denver and the western suburbs, “setting the stage for fairly healthy operating conditions throughout much of the metro [area] this year,” the report said.

Forecast job growth this year was another major factor in metro Denver’s improvement on the index. Denver-area employers are expected to add 13,000 jobs in 2010, improving the employment rate by 1.1 percent, the report said.

From an investment standpoint, large private buyers, syndicates and institutions started purchasing local apartment properties in late ’09. Selling prices have remained fairly stable in the Denver area over the last five years, “a trend that will likely accelerate transaction velocity this year,” the report said.

Other significant points in the Marcus & Millichap outlook for metro Denver’s apartment market in 2010:

• Completions of new apartment units are expected to slow to roughly 2,000 units this year, following the delivery of some 2,550 units in ’09.

• Asking apartment rent is expected to dip 1.2 percent this year to an average of $843 per month. In ’09, average asking rent dropped 3.8 percent.

• Few distressed properties will come on the market this year, but some deeply discounted complexes may come up for sale in northern Aurora because vacancies there are well above the metro-area average.

Marcus & Millichap Real Estate Investment Services Inc., based in Encino, Calif., is a real estate brokerage firm specializing in investment sales. The company has offices nationwide, including in Denver and Fort Collins.

— Paula Moore

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