Under construction: Apartment shortage solution

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Statistical Data: $31.5 million worth of multi-family permits issued through April 30 by the Pikes Peak Regional Building Department 1,086 Number of apartment units under construction 1,345 square feet Average size of new apartment units $130,855 Average cost per unit to construct new apartments 4.7-4.5 percent Vacancy rate for Colorado Springs

Developers and apartment complex owners are taking advantage of high occupancy rates, more costly rents and older apartments in Colorado Springs.

And they’re finally catching up after a decade of sluggish apartment construction in the region, said Brian Bahr, founder of All Pro Capital and Challenger Homes.

Currently, there are a total of 1,086 apartment units under construction in the Pikes Peak region, with 1,700 more in the planning stages, according to industry figures and building permits from the Pikes Peak Regional Building Dept.

Colorado Springs is now experiencing a trend that other cities already have gone through, said Tatiana Bailey, executive director of the UCCS Southern Colorado Economic Forum.

“We are having a robust economy, and guess what comes with that? More need for apartments,” Bailey said. “I live on the north side. You can’t believe how many apartments are being built.”

New residents are driving the demand for more rental housing, said Tim Seibert, owner of NES Landscape Architects and president of the Housing and Building Association of Colorado Springs.

“People want to get a taste of the community, to discover what Colorado Springs is about, before buying a home,” he said.

Apartments also offer an affordable option for people who can’t afford to purchase a home, and an option that includes attractive amenities such as swimming pools, saunas, weight rooms, game rooms and laundry facilities, Seibert said.

Vacancy rates

The overall apartment vacancy rate was 5.2 percent for the first quarter of 2016 in Colorado Springs, and 4.8 percent on average during the preceding four quarters, according to a report from the Apartment Association of Southern Colorado, the Colorado Division of Housing, Apartment Realty Advisors Inc. and Yardi-Matrix.

The report showed the lowest vacancy rate was 3.4 percent in the northeast market — the area from Nevada Avenue to Academy Boulevard, including Austin Bluffs Parkway and Union Boulevard, east of Interstate 25.

The Security, Widefield and Fountain market area also had a lower-than-average vacancy rate, at 3.5 percent in the first quarter.

Apartments in the area fill quickly because of their proximity to Fort Carson and because of the low number of newer apartments in the area, said Laura Nelson, executive director of the Apartment Association of Southern Colorado.

The highest apartment vacancy rate, 7.2 percent, was in the far-northeast section of the Springs. This area is bordered on the west and northwest by Academy Boulevard and I-25 and on the south by Platte Avenue.

Some industry analysts put the figures even lower. Doug Carter, who operates Apartment Insights, says the current city vacancy rate has dropped to 4.53 percent, down from 6.03 percent last year at this time — a record low for the city.

At 9403 Cadmium View, Elements at Briargate are set to begin renting this summer.

Increased needs

As tight as the rental market is now, some experts say it will only get tighter.

“I think the demand is going to increase,” Nelson said.

The growth is fueled by more Millennials moving to Colorado Springs, retired Baby Boomers downsizing their living space and people who work in Denver seeking this area’s more affordable housing options, she said.

But the Springs market won’t be saturated any time soon. The additional units will add to the market, said Carter.

“Seven of the developments are concentrated in the northern part of Colorado Springs,” he said, “With 1,000 units, we will not be overbuilt. The Colorado Springs apartment market is pretty much in balance right now.”

Apartments under construction — plus the 1,758 in the planning stages — will bring a healthy number of new apartments for this market, he said.

Details

Developers are building the 1,086 units in three large complexes between 200 and 300 apartments each, with the remainder in smaller developments of 70 housing units each, Carter said.

Other apartment developments in various stages of planning include 1,758 units in nine separate developments, he said, including 260 units at the new Encore at Interquest and Voyager parkways.

Some units are just waiting on the final financial documents before construction begins.

“We are prepared to break ground in Castle Rock, downtown Colorado Springs, student housing near UCCS and a few others around Colorado Springs,” Bahr said. The downtown project will add 48 units at 22 Spruce St.

Future Challenger projects include 84 units near Fillmore Street and Centennial Boulevard, 300 in the Broadmoor View area and two separate apartment communities with a total of 450 apartments in the northeast section of the Springs, Bahr said.

In addition, Mesa Ridge Apartments in Fountain is adding another 100 apartments to its complex, Nelson said.

“It’s such a successful project because it’s beautiful and the soldiers love being that close” to the Mountain Post, she said.

Weidner Apartment Homes

At least one large national company sees opportunity in the tight Springs rental market. Weidner Apartment Homes, a Seattle-based owner-operator of apartment complexes, is building 650 apartment units in three projects in the Springs, augmenting the 18 apartment complexes the company already owns in the city, said Robert Carr, regional vice president for Colorado.

Weidner’s investment on the three local projects equals more than $85 million, using figures from the Pikes Peak Regional Building Department, with a cost averaging $130,855 per unit.

The firm considers market trends, vacancy figures, rent growth and market demand in choosing where to build, Carr said.

“Compared to other markets like Denver, the demand hasn’t been as great,” he said. “But it’s been pretty balanced down here.”

Three projects

At 9403 Cadmium View off Research Parkway, Elements at Briargate will create 300 apartments. The construction project features six buildings with 50 units in every building, said Project Superintendent Pete Connell.

“A lot of developers are itching to get buildings up,” he said. “It’s not far-fetched to see four, five or six of these [complexes] in the next two years, with the number of people moving to Colorado.”

Connell is with Big-D Construction, a company based in Salt Lake City that averages $1 billion in annual sales.

Weidner is building another project on 17.67 acres it purchased in 2011 for $3.87 million off Brainard Drive and Briargate Parkway, just west of Powers Boulevard. Called La Bella Vita, this project will offer 278 apartments in 30 buildings.

With a main clubhouse and four apartment buildings, Phase I construction is scheduled to be finished in July, and Phase II of six apartment buildings is slated to be completed by Oct. 31. The final two phases of 20 buildings will be finished next year.

Weidner is also adding 72 housing units on 2.5 acres next to its Vista View Apartment Homes at 5537 N. Union Blvd.


Statistical Data:

$31.5 million

worth of multi-family permits issued through April 30 by the Pikes Peak Regional Building Department

1,086

Number of apartment units under construction

1,345 square feet

Average size of new apartment units

$130,855

Average cost per unit to construct new apartments

4.7-4.5 percent

Vacancy rate for Colorado Springs

1 COMMENT

  1. Michelle

    Too bad not one single complex will address low income housing. The rental rates for these complexes is over a $1000 month. Minimum monthly salary must be 2.5 x your rent so $2500. Minimum hourly wage in Colorado Springs is $8.75. Just another building to those who cannot afford it. What a crying shame!

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