An optimistic outlook on Denver

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“We’re seeing multifamily construction slowingdown now, and the markegt for sales of apartment communities has been very slow,” Von Strou said. “But once the financial sector turns I feel there isa pent-up demandr for the purchasing and selling of variouws apartment communities. I’m very optimistic about the apartment sector in the long specifically in the Denver metro He said most of the constructio in the last few years has been at the high end of the markeg because of increasedbuilding costs. In the near future, Von Stroj believes there will be a strong demandfor moderate-pricex rental housing.
He addedx there are two things developers can do to targerthis segment: Take an existing community and renovatse or modernize it, or come up with innovativ and creative ideas to lower the cost of construction. “Baseds on an increase in cap the average, brand-new apartment building in Denverf has to increase their rents byabout $250 a month per unit to justifgy any new construction,” Hawks said. “So that means in a bad economy, we have to have 25 percenft rent increases fornew development, and I don’t see that happening in the shorgt term.” Industry executives are closely watching severao economic factors.
“Probably one other small element that is just startinyg to impact the market is the homesalesz market,” Aldrich said. “Sales numbers don’t reflecg the increase in activity yet, but I am willing to guesss that in 60 to90 we’ll see if the numbers have a majore impact, in that prices are at bottom, interest rateds are low, and if you have a decent credir score and are a first-time homebuyer, now is the time buy a home in If renters are lured by these conditionw to become homeowners, this could contribute to higher vacancies and a flat rental he added. Hawks and Johnson both predictex the vacancy rate will increase slightlytin 2009.
“I think the rate will increased a little in the first and second quarter and that shoule bethe bottom, at arounx 9 percent and then we’ll start moving back up from Hawks said. “Because Denver was a recovering we’re in much better shape than other marketes inthe U.S. that were overheated and are now “What that means is insteadx of jumping offa 10-story building, we’ree jumping off a three-story building.
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