Jeff Hawks would be disappointed if he listed a Denver area apartment community and didn’t receive at least 10 offers.
Hawks is seldom disappointed these days.
“To a lot of people’s surprise, the apartment market is holding up fairly well. Everyone believed that we were overbuilding” and Denver’s red-hot apartment market was cooling, said Hawks, a vice chairman and top apartment broker at ARA, a Newmark company.
Steele Creek in the heart of Cherry Creek recently sold for $141.5 million, or a record $649,083 per unit, if the high-end retail in the tower was excluded. Jeff Hawks and his ARA team, sold the building, in the latest example of the strength of the Denver multifamily market.
Hawks, on the morning of Oct. 19, will help host the 2017 Fall Multifamily Development & Investment Conference & Expo sponsored by the Colorado Real Estate Journal.
The conference, to be held from 7 a.m. to 11:45 a.m., will be held at the Hyatt Regency Aurora. It will be Colorado’s largest multifamily development, investment and finance conference of the year. More than 500 are anticipated to attend.
Hawks said many observers had expected so many cranes constructing apartment buildings in Denver would lead to financial crashes, allowing investors to pick up new buildings at distressed prices.
“So far, we haven’t even seen one example of that happening,” Hawks said.
In fact, new investors are coming to Denver each month, looking to stake a claim, he said.
And while some new, luxury apartment buildings in downtown Denver are offering concessions for the bigger units, the owners are still charging high enough rents that the buildings are profitable.
“The smaller, more affordable units in these buildings are still flying off the shelf,” Hawks said.
One theory is that millennials are moving to Denver without having any local connections. That has made it difficult for them to find roommates to split rents, he said. In the coming years, as newcomers meet people at work and in social settings, more people will begin renting the bigger, more expensive units, he said.
And if Amazon moves its second headquarters here, creating 50,000 high-paying jobs, it will be quickly apparent that there is a shortage, not a surplus, of apartments here, he said.
Jeff Hawks
“Amazon would just magnify everything that already is happening,” Hawks said.
Indeed, there will be no easy way to construct enough new apartments to meet the demand, said Hawks, who will present an overview of the market at the CREJ conference.
The hurricanes that devastated parts of Texas, Florida and communities in the Southeast will lead to an exodus of workers from Denver, he said.
“I did some math,” Hawks said, estimating the number of people it would take to rebuild the 100,000 to 200,000 homes damaged by Harvey in Houston. He concluded it would take 500 construction crews of five people each five years to rebuild the homes in Houston.
“And the drywallers, and framers and other guys in the trade can make 50 percent more working in Houston than in Denver,” he added.
That will mean that, as demand builds for more apartments in Denver, there will be fewer people available to build them, causing delays in new developments coming on line, he said.
As I was talking to Hawks last week, the Republican tax reform plan was fresh in the news.
Little was available on the fate of such things as the 1031 exchange and current tax breaks available to real estate professionals.
Bids are due on Oct. 25 for The Huron, a 296-unit apartment community at 2975 Huron St.
“That is going to be one of the big issues addressed at the Oct. 19 conference,” Hawks said.
Bob Nicolls of Monarch Investment & Management Group will provide an update on proposed tax law changes.
“Bob is on a task force looking at this issue,” Hawks said. “He really has the inside track on what is going on. There probably will be much more detail available on the possible impact – and maybe some unintended consequences – if the tax proposal, in its current form, is approved.”
ARA is a title partner of the CREJ conference. In addition to CREJ, the conference is being produced in association with Apartment Appraisers & Consultants.
Cary Bruteig
Cary Bruteig, principal of AA&C, armed with graphs and numbers, will provide his empirical historical, current and future look at the apartment market.
Bruteig also will moderate a developer panel at the conference.
Other panel members at the conference will include:
- Adam Sands, FirstBank;
- Nic Bley, Chase Commercial Term Lending;
- Peter Keepper, Essex Financial Group;
- Ralph Lowen, Walker & Dunlop;
- Teo Nicolais, Nicolais LLC;
- Marti Page, Anchor Investments;
- William D. Evans, Madison Realty Investors;
- Mark Nealon, Sentinel Advisors;
- Ted Halaby Jr., Peak Investment Co.;
- Spencer Bradley, ARA;
- Austin Alexander, Castle Lanterra Properties;
- Zach Rivas, TruAmerica Multifamily LLC;
- Bobby Hutchinson, RedPeak Properties;
- Trey Hilberg, Carmel Partners Inc.;
- Brian Soss, Starwood Capital Group;
- Eric Frank, Cardinal Group Investments;
- Doug Andrews, ARA;
- Christopher Gillies, LMC, a Lennar company;
- Matthew Schildt, Trammell Crow Residential;
- Kevin Brinkman, Brinkman Colorado;
- Brian Wynne, Mill Creek Residential;
- Leland Ferguson, Forest City; and
- Andy Mutz, AMLI Development Co.
