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
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• 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