Denver Multi-Family Apartment Investor Update

Investors from California, Arizona and other states have moved to the Denver multi-family apartment market to acquire real estate for the last several years. These larger investors are coming from over-valued markets to the undervalued Denver market. This has not failed to catch the attention of investors focused on the lower end of the multi-family market who realize that values still exist in this segment.

So what is driving this move? The Denver Post reports that "Apartment vacancies dipped while rental rates increased during the third quarter [of 2006]..." The newspaper goes on to say, "The vacancy rate for metro Denver dropped to 6.7 percent, compared with 6.9 percent the previous quarter, according to the Apartment Vacancy and Rent Survey" released this past week by the University of Denver. The current vacancy rates are a marked improvement over the double-digit vacancy rates experienced in Denver for the last few years. The Post continues, "The rental rates increased 2.6 percent to $865.76 for the third quarter."

Why are vacancies decreasing and rents increasing? Colorado continues to experience lower unemployment rates and an improving economy. People, particularly the younger demographic, who have been living with others or at home while the economy had slowed, are now feeling enough confidence in the local economy to move back into the apartment market. Other real estate experts speculate that the high rate of home foreclosures has forced previous homeowners to also move back into the rental market.