6642 DECATUR STREET - LoopNet...dining options like Starbucks, Culver’s, and Guadalajara Mexican. Tennyson Street is a major local shopping and dining area stretching between 38th

6 6 4 2 D E C A T U R S T R E E T

D E N V E R , C O

6 6 4 2 D E C A T U R S T R E E TM U L T I F A M I L Y L A N D

O F F E R I N G M E M O R A N D U M

OFFICES THROUGHOUT THE U.S. AND CANADAwww.marcusmillichap.com

N O N - E N D O R S E M E N T & D I S C L A I M E R N O T I C E

C O N F I D E N T I A L I T Y & D I S C L A I M E RThis Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the

subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and

makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and

square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations,

the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant's plans or intentions to continue its occupancy

of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not

verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty

or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the

information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc.

© 2018 Marcus & Millichap. All rights reserved.

N O N - E N D O R S E M E N T N O T I C EMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's

logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or

any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to

prospective customers. Activity ID: Z005

A L L P R O P E R T Y S H O W I N G S A R E B Y A P P O I N T M E N T O N L Y .P L E A S E C O N S U L T Y O U R M A R C U S & M I L L I C H A P A G E N T F O R M O R E D E T A I L S .

6642 Decatur Street

GREG PRICESenior Vice President InvestmentsSenior Director National Multi Housing GroupMarcus & Millichap DenverDirect: 303.328.2047 // Fax: [email protected]: CO FA40026598

6 6 4 2 D E C A T U R S T R E E TKENT GUERINAssociate National Multi Housing GroupMarcus & Millichap DenverDirect: 303.328.2059 // Fax: [email protected]: CO FA100067469

V i s i t U s A t : w w w . p r i c e a i g . c o m

GREG PARKERAssociate National Multi Housing GroupMarcus & Millichap DenverDirect: 303.328.2015 // Fax: [email protected]: CO FA100074810

E X C L U S I V E LY L I S T E D B Y

OFFERING PROCEDURESMarcus & Mil l ichap is pleased to exclusively offer 6642 Decatur Street , a land development opportunity.

Locat ion: Denver, Colorado

Price: $599,000

Interest Offered: Fee Simple / Warranty Deed

Purchasers wishing to make an offer should submit :• Letter of Intent

• Proof of Funds and Banking References• Resume ( including a l ist of other investment real estate owners, past or present)

At the t ime that the Owners select a Purchaser, they wi l l have considered a number of factors which include: pr ice, earnest money amount, track record, knowledge of the asset , and the perceived abi l i ty of potentia l Pur-

chasers to complete the contemplated transact ion. Therefore, interested Purchasers are encouraged to submit as much of the above information as possible with the Letter of Intent.

Al l communicat ion, inquir ies , and requests , including property tours , must be addressed to the Marcus & Mil l i -chap List ing Agents. We ask that you do not contact the Owners or anyone at the property direct ly.

To schedule a tour, p lease contact Kent Guerin: 303.328.2059 | kent.guerin@marcusmil l ichap.com

TA B L E O F C O N T E N T S

PROPERTY DESCRIPTIONSECTION 1

FINANCIAL ANALYSISSECTION 2

MULTIFAMILY LAND COMPARABLESSECTION 3

MARKET OVERVIEWSECTION 4

L O C A T E D A T

6 6 4 2 D E C A T U R S T R E E T6 6 4 2 D E C AT U R S T R E E T , D E N V E R , C O 8 0 2 2 1


This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the infor-mation. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment

Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2017 Marcus & Millichap ACT ID ZAA0050040

7

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P R O P E R T Y D E S C R I P T I O N6642 DECATUR STREET

6642 Decatur Street is a land development opportunity in north Denver, Colorado. The preliminary Plat

Development map details plans for seven duplexes across the 2.19-acre parcel.

6642 DECATUR STREET

L O C A T E D A T : 6 6 4 2 D e c a t u r S t r e e t , D e n v e r , C O 8 0 2 2 1

$

ZONED R-2

PORTION OF LAND LEASED TO CITY THROUGH 2019

PRELIMINARY PLANS DETAIL 7 DUPLEXES

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I N V E S T M E N T H I G H L I G H T SThis Lot is Zoned R-2 and Allows for Duplex and/or Single Family Residential Development

Several Great Development Possibilities with Zoning Change

Current $1,000 Per Month Land Lease with the City of Westminster in Place Through 2019 on a Small Portion of the Lot

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L I S T P R I C E

$599,000P R I C E P E R S Q UA R E F O OT

$6.28

VITAL DATA

Price $599,000

Lot Size (SF) 95,440 SF

Lot Size (Acres) 2.19

Price/SF $6.28

Zoning R-2

6642 Decatur Street, Denver, CO 80221

6642 D E C AT U R S T R E E TM U L T I F A M I L Y I N V E S T M E N T O P P O R T U N I T Y

O F F E R I N G

H I G H L I G H T S

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S I T E

P L A N

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Nearby Retail

► Starbucks ► Wendy’s ► McDonald’s ► Subway ► Tacos Y Salsa’s ► Guadalajara Mexican ► Pho on 74th ► Out-Post Bar

► Panda Express ► Culver’s ► Little Caesar’s ► Denny’s ► Sheridan Cafe ► Sonic Drive-In ► Papa Murphey’s ► Taco Bell

► Westminster Plaza Shopping Center (1.0 Miles) ► Tennyson Strip (3.9 Miles) ► King Soopers (2.3 Miles) ► Walmart Supercenter (2.5 Miles) ► Lakeside Shopping Center (4.2 Miles) ► Old Town Arvada (4.4 Miles)

► Regis University (2.6 Miles) ► Francis M. Day Elementary (1.9 Miles) ► M. Scott Carpenter Middle (2.2 Miles) ► Westminster High School (1.7 Miles)

► Lutheran Medical Center: Regionally Ranked by U.S. News (#7 in Denver, #10 in Colorado), 543 Beds, 549 Physicians on Staff (6.5 Miles)

► Centura Health - Sports and Spine Center: Spe-cializing in Rehabilitation and Therapy Services (2.8 Miles)

A R E A

A M E N I T I E S

Nearby Schools

Nearby Hospitals

Nearby Restaurants (Within 2.0 Miles)

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6 . 5 M I L E S F R O M D O W N T O W N D E N V E R

► Denver’s Unemployment Rate Is One Of The Lowest Of Any Major Metro In The Nation At 2.6 Percent. Nonetheless, Hiring Activity Remains Strong.

► During The Past 12 Months, Denver Organizations Staffed 40,400 New Workers. At The Same Time, Office-Using Employment Grew 3.2 Percent With The Addition Of Roughly 13,200 Employees

► Tight Vacancy In Class B And Class C Multifamily Properties Throughout The Den-ver Metro Market Has Attracted Strong Investor Interest

► Apartment Absorption Recently Reached Its Highest Level In Nearly 20 Years ► Multifamily Outlook: Rising Interest Rates Shouldn’t Impact Investor Sentiment

Moving Forward As The Area’s Diverse Economy Keeps Denver An Attractive Market

M A J O R D E N V E R A R E A

P R I V A T E E M P L O Y E R S ► HealthONE Corp. ► CenturyLink ► Children’s Hospital Colorado ► Charles Schwab ► Lockheed Martin Corp. ► Comcast ► Frontier Airlines ► University of Denver ► United Airlines Inc. ► UC Health

M A R K E T

D R I V E R S

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D E N V E RC O L O R A D O

P O P U L A T I O N7 0 4 , 6 2 1

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6642 Decatur Street is located in a rapidly developing area just 15 minutes north of Downtown Denver and 30 minutes southeast of Central Boulder. This residential environment provides a quieter atmosphere outside of the busy city, while remaining close to major amenities like schools, hospitals, parks, shopping, dining, and light rail.

With scores of major destinations located within just a few miles of the property (including Coors Field, Mile High Stadium, Lakeside Amusement Park, Sloans Lake, and the alluring night-life of Downtown), transportation plays a major role in the Denver metro area. Though bus routes can be found just a few blocks away, and major highways are easily accessible to those with a car, this property is conveniently located within walking distance of the Westminster Light Rail Station. This station hosts a Park-n-Ride area as well as bike lockers, and runs on the B Line. The six miles of commuter rail will transport riders from the historic center of Westminster to the dynamic Union Station Transit Center where they can connect to the C, E, and W light rail lines, as well as the new University of Colorado A Line to Denver International Airport.

Shopping and dining amenities are abundant in the surrounding area. Residents can easily jump on one of the many surrounding highways (I-25 to Denver and I-36 to Boulder are both within close proximity) in order to get to places like 16th Street Mall in Denver or Pearl Street Mall in Boulder, but closer options exist within just a few miles of the property. Major retail within the area includes Walmart Supercenter, King Soopers, and Walgreens, while there are countless dining options like Starbucks, Culver’s, and Guadalajara Mexican. Tennyson Street is a major local shopping and dining area stretching between 38th and 46th Avenues that hosts tons of eclectic neighborhood boutiques like book stores, tattoo shops, and donut shops, as well as some major foodie destinations like Hops & Pie, Brazen, and Pasty Republic. This popular strip has seen a lot of renovation in recent years, and the ever-changing environment keeps locals and visitors alike coming back for more. Located less than four miles away, residents will be sure to stop in for a unique experience just a few minutes from home.

Regis University—which for 23 consecutive years has been named a top school in the West by U.S. News & World Report—is located just 2.6 miles from the property. Regis hosts 132 degree programs and five colleges across their four campuses, and is attended by over 10,500 students currently. Nearby public schools include Francis M. Day Elementary School, M. Scott Carpenter Middle School, and Westminster High School.

C i t y O f

D E N V E RL O C AT I O N

H I G H L I G H T S

1 5 M I N U T E S F R O M D O W N T O W N D E N V E R

6 - M I N U T E D R I V E T O R E G I S U N I V E R S I T Y

A P P R O X . 0 . 5 M I L E S T O W E S T M I N S T E R L I G H T R A I L S TAT I O N

C L O S E T O I - 2 5 , I - 7 0 , I - 7 6 , A N D H W Y - 3 6 W H I C H P R O -V I D E A C C E S S T O T H E M E T R O A R E A A N D F R O N T R A N G E

1 M I L E / 4 M I N . T O W E S T M I N S T E R S H O P P I N G P L A Z A3 . 9 M I L E S / 1 0 M I N . T O T E N N Y S O N S T R I P4 . 4 M I L E S / 1 1 M I N . T O O L D T O W N A R V A D A

S E V E R A L N E A R B Y R E S TA U R A N T S W I T H I N A S H O R T D R I V E

3 0 M I N U T E S F R O M C E N T R A L B O U L D E R

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O V E R V I E W

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C O M P A R A B L E P R O P E R T I E S6642 DECATUR STREET

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M A R K E T O V E R V I E W6642 DECATUR STREET

368,353

$73,885 148,308

2017 ESTIMATE FOR TOTAL POPULATION WITHIN 5 MILES

AVERAGE HOUSEHOLD INCOME WITHIN 5 MILES

2017 ESTIMATE FOR TOTAL HOUSEHOLDS WITHIN 5 MILES

D E M O G R A P H I C S H I G H L I G H T S

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DENVEROVERVIEW

The Denver-Aurora-Lakewood metro is at the center of Colorado’sFront Range, nestled at the convergence of the Great Plains and themajestic Rocky Mountains. The market consists of 10 counties:Broomfield, Arapahoe, Denver, Adams, Douglas, Jefferson, ClearCreek, Elbert, Gilpin and Park counties. Denver, which is both acounty and a city, is the largest of each, with approximately 700,000residents. Denver also houses the state capitol. The eastern andnorthern reaches of the metro are expected to receive the majority offuture development, as land in these areas is relatively flat and moreaffordable. Denver’s elevation of 5,280 feet above sea level provides itwith the nickname “Mile-High City.”

METRO HIGHLIGHTS

MAJOR TRANSPORTATION CENTERDenver serves as the vital transportation gateway to the West, with a well-developed infrastructure. The region is accessed by three interstates and two freight rail lines.

EMPHASIS ON SKILLED JOBSDenver’s highly educated labor force attracts tech employers. Roughly 40 percent of residents age 25 and older hold at least a bachelor’s degree.

GROWING ALTERNATIVE ENERGY SECTORThe National Renewable Energy Laboratory located in Golden helps lure energy-related businesses to the region.

M A R K E T O V E R V I E W

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ECONOMY▪ Key drivers of the region’s economy include aerospace, bioscience, energy, financial

services, healthcare, aviation, information technology and telecommunications.▪ Denver’s economy is expanding, with the annual change in gross metropolitan product

(GMP) expected to reach 3.4 percent this year.▪ Many of Denver’s largest employers are in population-serving businesses such as retail

and healthcare, and their expansion will track a rise in population and income growth.▪ There are 10 Fortune 500 companies located in the metro, including Newmont Mining,

DISH Network, DaVita Healthcare, Level 3 Communications and Liberty Interactive.

SHARE OF 2017 TOTAL EMPLOYMENT

MAJOR AREA PRIVATE EMPLOYERS

HealthONE Corp.

CenturyLink

Children’s Hospital Colorado

Charles Schwab

Lockheed Martin Corp.

Comcast

Frontier Airlines

University of Denver

United Airlines Inc.

UC Health* Forecast

MANUFACTURING5%

GOVERNMENT

HEALTH SERVICESEDUCATION AND

+OTHER SERVICES

4%

LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES

18%AND UTILITIES

TRADE, TRANSPORTATION CONSTRUCTION

PROFESSIONAL ANDBUSINESS SERVICES

3%INFORMATION

18%

6%

13% 12% 7%

13%


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DEMOGRAPHICS

▪ Rapid employment growth fuels in-migration. The metro is expected to gain roughly 162,000 new residents during the next five years.

▪ Gains in higher paying employment sectors are expected to raise the median household income 11 percent through 2021, well above the national median.

▪ Elevated incomes have allowed nearly 63 percent of households to own their homes, slightly below the national rate, maintaining rental demand.

The Denver metro area offers residents urban and rural surroundings, in addition to excitingnightlife and outdoor fun. Four professional sports teams play in venues within a short walkor drive of downtown Denver. The local arts community is vibrant and the city’s large park

system provides relaxing opportunities to enjoy the outdoors. The lure of the RockyMountains keeps residents active. Rocky Mountain National Park is less than two hoursfrom the metro and offers numerous campsites and hiking trails. Avid skiers and

snowboarders are close to world-class ski resorts, such as Vail, Beaver Creek and CopperMountain. The Denver metro will continue to grow as the area’s high quality of life attractsnew residents.

* Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau

QUALITY OF LIFE

2017 Population by Age

0-4 YEARS

6%5-19 YEARS

19%20-24 YEARS

6%25-44 YEARS

31%45-64 YEARS

26%65+ YEARS

12%

ARTS & ENTERTAINMENT

36.32017

MEDIAN AGE:

U.S. Median:

37.8

$70,400 2017 MEDIAN

HOUSEHOLD INCOME:

U.S. Median:

$56,300

2.9M2017

POPULATION:

Growth2017-2022*:

5.7%

1.1M2017

HOUSEHOLDS:

7.6%

Growth2017-2022*:


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Diverse employment base aids rental demand. Robust employment gains, particularlyamong white-collar positions, have helped keep apartment demand vigorous inDenver. Since last June, market vacancy remained idle, although an influx of newunits expected to finish by year end will put upward pressure on the rate. Thisprojected rise should cause little concern, as the metro’s favorable demographics willsupport a more level vacancy trajectory moving forward once this period of short-term oversupply subsides. Rent growth, which has eased over the past few quarters,will continue to moderate as more Class A units include concessions to attract newtenants.

Heightened apartment construction to continue. Developers will remain active inDenver over the next several months, as roughly 8,200 units are slated for delivery inthe second half of this year. Although the majority of this year’s apartmentdevelopment is in the urban core, areas in Parker and Castle Rock also receiveelevated builder interest. Located well outside of the city center, these places provideresidents with amenity-rich complexes and relatively affordable rents. This hascontributed to the areas’ strong household growth in recent years.

Vacancy Climbs, Rent Gains Ease

Amid Strong Development Activity

DENVER METRO AREA

* Cap rate trailing 12-month average through 2Q; Treasury rate as of June 28Sources: CoStar Group, Inc.; Real Capital Analytics

Investment Trends

Multifamily 2018 Outlook

14,100 units will be

completed

3.4% increase in

effective rents

90 basis point

increase in vacancy

Construction:

Rents:

Vacancy:

This year’s completions far exceed 2017’stotal of 8,200 apartments. Developers willfocus heavily on the urban core in 2018.

Rising vacancy contributes to modest rentgrowth in 2018, driving the market’s averageeffective rent to $1,436 per unit.

The net absorption of 10,700 units will fail tokeep stride with Denver’s accelerated paceof construction, pushing market vacancy up90 basis points to 6.4 percent.

• Institutional investors remained interested in Class A complexes in the CBDand the Denver Technology Center. Due to the areas’ numerous corporatecampuses, apartment demand is relatively strong as residents seek to liveclose to their place of employment. Cap rates for assets in these submarketstypically sit in the mid- to high-4 percent band.

• The East Colfax Avenue corridor in North Aurora posted strong deal flowover the past year; units changed hands for approximately $100,000 each.This area’s favorable price points continue to attract yield-driven privateinvestors, specifically those coming from California, as well as a considerablenumber of local buyers.

• Cap rates continued their downward trend, decreasing 30 basis points to 5.5percent year over year. Average first-year returns for Class A assetsexperienced the largest decline during the period, sliding 40 basis points to4.7 percent.


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EMPLOYMENT

• Construction accelerated over the past year compared with the previous 12-month period when 6,500 rentals were finished. The CBD logged the most new supply as roughly 2,700 apartments were completed; also, areas just south of downtown noted strong development.

• There are 9,900 units set for delivery in 2019 as builders again focus on areas in and around the urban core.

CONSTRUCTION

• Denver’s vacancy rate remained at 5 percent since June 2017, on par with the national level. In the prior yearlong period, the metro’s vacancy rate increased 20 basis points.

• The forthcoming expansion of the light rail to the North Lakewood/Wheat Ridge submarket has bolstered rental demand in the area, aiding a sharp vacancy decrease.

VACANCY

• Rent growth eased over the past four quarters, as the market’s average effective rent increased to $1,437 per unit. A number of Class A units offering concessions contributed to this modest overall gain.

• Strong rent growth in nearby Boulder has trickled down into Denver’s Northwest Corridor, leading to robust gains in the Broomfield submarket.

RENTS

DENVER METRO AREA

increase in effective rents Y-O-Y2.5%basis point change

in vacancy Y-O-Y0units completed Y-O-Y11,800increase in total

employment Y-O-Y2.8%

* Forecast2Q18 – 12-Month Period

• During the past 12 months, Denver organizations staffed 40,400 new workers. At the same time, office-using employment grew 3.2 percent with the addition of roughly 13,200 employees.

• Denver’s unemployment rate is one of the lowest of any major metro in the nation at 2.6 percent. Nonetheless, hiring activity remains strong.


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Investor Demand Stays Strong Despite Longer Market Times

Outlook: Rising interest rates shouldn’timpact investor sentiment moving forwardas the area’s diverse economy keepsDenver an attractive market..

VacancyRate

Y-O-YBasisPoint

ChangeSubmarket

EffectiveRent

Y-O-Y %Change

North Lakewood/Wheat Ridge

3.1% -140 $1,305 3.3%

Arvada/Golden 4.2% -40 $1,391 1.6%

North Aurora 4.2% 10 $1,238 5.0%

Westminster 4.5% -20 $1,350 4.0%

Southeast Denver 4.6% 30 $1,314 4.1%

Broomfield 4.7% -90 $1,571 4.7%

Tech Center 5.2% 20 $1,585 1.3%

Five Points/Capitol Hill/Cherry Creek

5.7% -60 $1,719 1.1%

Parker/Castle Rock 6.0% 30 $1,403 0.2%

Downtown/Highlands/Lincoln Park

6.4% -10 $1,864 3.1%

Overall Metro 5.0% 0 $1,437 2.5%

Submarket Trends

Lowest Vacancy Rates 2Q18

Sales Trends

• With increased inventory on the market, buyers are being more selective. Nonetheless,overall transaction velocity remained stable in relation to the prior year due to strongdemand from out-of-state investors.

• Since June 2017, apartments changed hands for an average of $190,000 per unit, a8.1 percent annual boost. During the same time, Class A rentals traded for $290,000per unit, up 22 percent year over year.

* Trailing 12 months through 2Q18Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics

DENVER METRO AREA

* 20t17-2022 **2016


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Rapidly Rising Home Prices Entice Investors to Colorado Front Range

Diverse job creation expands Denver’s renter pool. The intense in-migration of Bay Area tech companies to the Mile High City serves as a driving force behind the metro’s employment growth. While these jobs are igniting apartment demand in the urban core, suburban rental demand is increasingly bolstered by strong hiring activity among retailers and logistics firms. Additionally, Denver’s median single-family home price has risen astronomically in the past five years, climbing roughly 60 percent to $450,100 while bumping the affordability gap up to $1,166. These prolific demand drivers pushed vacancy down 40 basis points during the past year with the expectation of a continued downward trend moving forward.

Outer-ring locales generating more developer interest. In the coming months, the urban core will remain the focal point for builders. Neighborhoods in this area are expected to receive nearly 7,000 units during the next 18 months. The Capitol Hill and Five Points neighborhoods record especially strong apartment development as builders look to accelerate revitalization efforts in these areas. Some of the metro’s more southern locales are also witnessing surges in apartment construction, particularly neighborhoods in Castle Rock and Parker.

• Neighborhoods around the University of Denver attracted a number of investors seeking value-add plays, particularly those under the $3 million mark. Here, units sold for roughly $170,000 each as strong renter demand from the student population boosts these assets’ appeal. Investors with similar criteria targeted older properties in the Colfax Avenue corridor in North Aurora where cap rates generally sit in the mid-6 percent band.

• West Coast investors homed in on recently renovated assets in the Capitol Hill area. These once-Class C buildings provided viable options for investors seeking yields in the mid-4 to low-5 percent range. Capitol Hill’s rejuvenation efforts continue to lure investors of several assets classes as Class B and C product can be found here.

• Cap rates continue their downward trend, falling 20 basis points over the past 12 months to 5.5 percent. At the same time, yields for Class C assets slid 30 basis points to 5.7 percent, while Class B returns stagnated at 5.4 percent.

Multifamily 2018 Forecast

Construction:Deliveries will pick up markedly this year after 7,800 units were finalized last year. Areas in and around the urban core record the most construction this year.

12,400 units

will be completed

Rents:Strengthening demand will ad-vance rents at the fastest clip since 2015, moving Denver’s average effective rent to $1,451 per month.

4.1% increase

in effective rents

30 basis point

decrease in vacancy

Vacancy:Strong absorption will offset the surge in development, pushing market vacancy down to 5.3 percent. Last year, vacancy decreased 20 basis points.

Investment Trends

Employment Trends

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Metro United States

Uni

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00s)

Completions and AbsorptionCompletions Absorption

0%

1.5%

3.0%

4.5%

6.0%

0

4

8

12

16

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Vacancy Rate Trends

Metro United States

Vac

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Rat

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0%

2%

4%

6%

8%

Rent TrendsMonthly Rent Y-O-Y Rent Change

Mon

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$800

$1,000

$1,200

$1,400

$1,600

0%

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12%

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Local Apartment Yield TrendsApartment Cap Rate 10-Year Treasury Rate

0%

3%

6%

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Sales Trends

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$50

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rowth

0%

7%

14%

21%

28%

Sales Price Growth

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Multifamily ResearchMarket Report Fourth Quarter 2018

Denver Metro Area

* Cap rate trailing 12-month average through 3Q; Treasury rate as of Sept. 28Sources: CoStar Group, Inc.; Real Capital Analytics * Forecast

Denver

2.8% increase in total employment Y-O-Y

• Since September 2017, employers created 41,500 jobs while pushing metro unemployment down to 2.8 percent. Denver’s unemployment rate has dropped 360 basis points in the past five years.

• Trade, transportation and utilities led job growth with the addition of 8,300 positions. Professional and business services followed with 6,800 new workers.

EMPLOYMENT: Employment Trends

Yea

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0%

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3.0%

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Vacancy Rate Trends

Metro United States

Vac

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Sales Trends

$0

$50

$100

$150

$200

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Year-over-Year Grow

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0%

7%

14%

21%

28%

Sales Price Growth

18*17161514

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40 basis point decrease in vacancy Y-O-Y

• Strong net absorption offset the onslaught of new supply, pushing market vacancy down to 4.5 percent. One year earlier, vacancy dropped 20 basis points.

• Vacancy in Broomfield has benefited from rapid employment growth in Denver’s Northwest Corridor as the submarket’s rate slid 130 basis points to 3.8 percent over the past year ending in September.

VACANCY:

12,100 units completed Y-O-Y

• The pace of development accelerated during the past year following the completion of roughly 7,000 apartments in the previous period. Northeast Denver, which includes RiNo, logged strong construction activity with the addition of almost 1,700 units.

• The pipeline remains full as the metro currently has more than 11,000 apartments underway.

CONSTRUCTION:

RENTS:

3Q18 – 12-MONTH PERIOD

3.0% increase in effective rents Y-O-Y

• Robust apartment demand resulted in a steady rent increase, driving the market’s average effective rent to $1,470 per month.

• Rents are rising at an accelerated pace in Westminster thanks to elevated household growth. Here, the average asking rent climbed 5.8 percent during the past year to $1,390 per month.


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Multifamily Research | Market Report

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• During the past year, transaction velocity decreased roughly 17 percent. Concurrently, sales activity involving Class B units picked up as investors focused on more recently renovated buildings.

• The annual appreciation of assets averaged 9.1 percent, pushing the average price per unit to $186,200. In that time, Class A units traded on average for $299,400, an annual increase of 12.2 percent.

Outlook: The forthcoming arrival of the light rail to Wheat Ridge should continue to tighten the area’s vacancy, drawing more investors to its value-add options.

Investors Target Class B Properties;Asset Appreciation Remains Strong

Employment Trends

Yea

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Metro United States

Uni

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0%

1.5%

3.0%

4.5%

6.0%

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Vacancy Rate Trends

Metro United States

Vac

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6%

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$1,200

$1,400

$1,600

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$50

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DEMOGRAPHIC HIGHLIGHTS

10,017 1H 2018

FIVE-YEAR HOUSEHOLD GROWTH**

3Q18 MEDIAN HOUSEHOLD INCOME

3Q18 MEDIAN HOME PRICE

Compared with 1H 2014-2017

MULTIFAMILY (5+ Units) PERMITS

0.9%

12,350 1H 2018

SINGLE-FAMILY PERMITS

32%

3Q18 AFFORDABILITY GAP

U.S. 1.2% Annual Growth Compared with 1H 2014-2017

*Mortgage payments based on quarterly median home price with a 30-year fixed-rate conventional mortgage, 90% LTV, taxes, insurance and PMI. **2017-2022 Annualized Rate

Renting is $1,166 Per Month LowerAverage Effective Rent vs. Mortgage Payment*

Metro $77,734 U.S. Median $61,789

Metro $450,056 U.S. Median $260,016

96,000 or 1.7% Annual Growth

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Lowest Vacancy Rates 3Q18

Submarket Vacancy Rate

Y-O-Y Basis Point

Change

Effective Rents

Y-O-Y % Change

North Lakewood/Wheat Ridge

2.8% -190 $1,345 3.9%

Arvada/Golden 3.2% -170 $1,427 3.8%

Broomfield 3.8% -130 $1,606 4.2%

Glendale 4.1% -150 $1,348 1.0%

Westminster 4.1% -50 $1,390 5.8%

Northeast Denver 4.6% -70 $1,447 2.6%

Tech Center 4.6% -30 $1,601 1.6%

South Denver/Englewood 4.9% -30 $1,493 5.3%

Downtown/Highlands/Lincoln Park

5.0% -60 $1,914 2.8%

Parker-Castle Rock 5.1% -110 $1,441 0.5%

Five Points/Capitol Hill/Cherry Creek

5.4% -30 $1,805 6.4%

Overall Metro 4.5% -40 $1,470 3.0%* Trailing 12 months through 3Q18

Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics

Multifamily Research | Market Report

The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. Note: Metro-level employment growth is calculated based on the last month of the quarter/year. Sales data includes transactions valued at $1,000,000 and greater unless otherwise noted. This is not intend-ed to be a forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide specific investment advice and should not be considered as investment advice.

Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.; Experian; National Association of Realtors; Moody’s Analytics; Real Capital Analytics; RealPage, Inc.; TWR/Dodge Pipeline; U.S. Census Bureau

National Multi Housing Group

Visit www.MarcusMillichap.com/Multifamily

John SebreeFirst Vice President, National Director | National Multi Housing GroupTel: (312) [email protected]

Prepared and edited by

Brandon NiesenResearch Associate | Research Services

For information on national apartment trends, contact:

John ChangSenior Vice President, National Director | Research ServicesTel: (602) 707-9700 [email protected]

Price: $250

© Marcus & Millichap 2018 | www.MarcusMillichap.com

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Baltimore Office:

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Boston Office:

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Chicago Area Offices:Richard Matricaria Senior Vice President/Division Manager333 West Wacker Drive, Suite 200, Chicago, IL 60606(312) 327-5400 | [email protected]

David Bradley Regional Manager | Chicago Downtown333 West Wacker Drive, Suite 200, Chicago, IL 60606(312) 327-5479 | [email protected]

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Cincinnati Office:

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Tim Speck First Vice President/District Manager5001 Spring Valley Road, Suite 100WDallas, TX 75244(972) 755-5200 | [email protected]

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Charleston Office:

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Per

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of D

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Apartment Mortgage Originations By Lender

3Q18 Apartment Acquisitions By Buyer Type

Listed/REITs, 4%

Equity Fund& Institutions, 23%

Other, 1% Cross-Border, 9%

Private, 63%

0%

25%

50%

75%

100%

18*17161514

Gov't AgencyFinancial/InsuranceReg'l/Local BankNat'l Bank/Int'l BankCMBSPvt/Other

* Through 2QInclude sales $2.5 million and greaterSources: CoStar Group, Inc.; Real Capital Analytics

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By DAVID G. SHILLINGTON, President, Marcus & Millichap Capital Corporation

• Fed pushes overnight lending rate higher, cites economic strength in case for additional increases. The Federal Reserve increased the federal funds rate by 25 basis points in late September, lifting the Fed funds rate to 2 percent. Remarks from the Fed highlight a robust economy, spurred by accommodative fi scal stimulus, while infl ation remains broadly in line with expectations. Provided the economy continues to perform as expected, the Fed is likely to increase rates in December, as well as up to three times next year.

• Benchmark interest rates, lending costs push higher post-Fed meeting. After the Federal Reserve lifted overnight rates and maintained a positive economic outlook, long-term interest rates have pushed higher. The 10-Year Treasury yield has quickly traded toward the 3.25 percent range, which is prompting lenders to pass on the increased cost to borrowers. However, fi erce competition for loans is also leading to some cost absorption among lenders. While greater borrowing costs may prompt buyers to seek higher cap rates, strong economic performance should enable rent growth above infl ation. As a result, sellers remain committed to higher asking prices, which is widening an expectation gap as property performance and demand trends remain positive.

• The capital markets environment continues to be highly competitive. Government agencies remain the largest source of funds, commanding slightly over 50 percent market share. National and regional banks control approximately a quarter of the market. Pricing resides in the high-4 percent realm with maximum leverage of 75 percent. Portfolio lenders will typically require loan-to-value ratios closer to 70 percent with interest rates in the low-5 percent range. The passage of tax reform and rising fi scal stimulus will keep the U.S. economy growing, underpinning strong rental demand and supporting a national apartment vacancy rate of 4.6 percent at the end of 2018.


6642 Decatur Street

GREG PRICESenior Vice President InvestmentsSenior Director National Multi Housing GroupMarcus & Millichap DenverDirect: 303.328.2047 // Fax: [email protected]: CO FA40026598

E X C L U S I V E LY L I S T E D B Y

6 6 4 2 D E C A T U R S T R E E TKENT GUERINAssociate National Multi Housing GroupMarcus & Millichap DenverDirect: 303.328.2059 // Fax: [email protected]: CO FA100067469


GREG PARKERAssociate National Multi Housing GroupMarcus & Millichap DenverDirect: 303.328.2015 // Fax: [email protected]: CO FA100074810

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6642 DECATUR STREET - LoopNet...dining options like Starbucks, Culver’s, and Guadalajara Mexican. Tennyson Street is a major local shopping and dining area stretching between 38th