DENVER: I Wish I Was an Apartment Broker in Denver

I asked Jeff Hawks, the top multi-family broker in the Mountain Region, “How’s business?” His answer was, “It’s the same as I tell everyone else, it’s great! I am a multi-family broker in Denver.”

While the industrial, retail, office and investment Denver markets continue to be strong, I am not sure that the multi–family market could be much better. Get the picture – 1 in 10 people in Denver rents an apartment. Four people per hour are moving to Denver. That means that every 2.5 hours Denver needs a new apartment. The largest population segment, with 833,00 people, is the millennial demographic. It is estimated that over 1/3 of those still live with their parents. That’s another 275,000 people that will need apartments soon. Current new supply is about 7000 units per year. This doesn’t include the “Silver Sunomi” of empty nesters that are selling their 4 and 5 bedroom houses, banking the cash and moving to high end apartments.

New property rents range from $1.70 per square foot for suburban garden style to $3.30 per square foot for high-rise units. That means 1000 square feet in the suburbs costs $1700 per month. Accordingly, the millennials need to make $61,000 a year to live on their own in a new apartment. That’s pretty much on par. Denver residents are the second highest educated in the U.S. and average making $54,619 per year.

There are some challenges associated with the huge demand for apartments. Construction costs are rising faster than rents. Everyone wants to live closer to the core, but the rents are higher intown and the lower income end of the tenants is growing faster than the upper income end. I call this a high class problem.