4 Apartment Development Projects Signal Relief in Tight Northern CO Market
Northern Colorado continues to experience strong demand from market-rate apartment developers, with the majority of the interest being in Fort Collins, Loveland and the outlying communities, including Johnstown,Windsor and Timnath – although there also is some demand in the Greeley/Evans area. This demand is due to the ongoing favorable drivers in Northern Colorado – employment and population growth. Employment in Larimer and Weld counties, combined, grew at a tremendous rate of 4.4 percent from July 2016 to July 2017, according to the Colorado Department of Labor & Employment.This equates to approximately 11,300 new jobs in a single year.
With respect to population, the Fort Collins/Loveland metropolitan statistical area grew by 6,125 people, or 1.8 percent, from July 2015 to June 2016, ranking the MSA’s growth 51st in the nation. I believe this population growth was held back somewhat by the extremely tight housing market during that time period, which made it difficult for both buyers and tenants to secure housing. The beneficiary of that extremely tight housing market was the Greeley MSA, which experienced population growth of 9,879 people, or 3.5 percent, during the same time period, ranking as the fourth-fastest growing MSA in the U.S., according to the U.S. Census Bureau. Another factor that likely contributed to the Greeley MSA growing faster than the Fort Collins/Loveland MSA is the relative advantage the Greeley MSA has in terms of housing affordability.
These strong demand drivers have resulted in a stable apartment market despite a significant number of new units being delivered. Asking rents for Class A, institutional quality/scale communities increased approximately 4.35 and 5.03 percent in Fort Collins/Loveland and Greeley/ Evans, respectively, from October 2016 to October 2017. During that same time period, occupancy remained virtually the same, declining by just 0.6 percent in Fort Collins/Loveland area, to an average of 95 percent. The communities in the Greeley/Evans area experienced impressive occupancy growth of 4.63 percent to an average of just over 97 percent, according to our October market report.
With the strong demand drivers and the stable apartment market, I expect that several projects that just began leasing units or will begin to lease units within the next six months, will experience strong lease-up phases (subject to seasonality). These Class A, institutional-quality/scale projects include:
- Cycle Apartments. Loveland based McWhinney is developing this 405-unit apartment community, located adjacent to the newly redeveloped Foothills Mall in midtown Fort Collins. The project will consist of 18 three- and four-story buildings. The unit mix will consist of approximately 20 percent studio units, 60 percent one-bedroom units and 20 percent two-bedroom units. The first units became available for occupancy earlier this month. McWhinney is targeting the urban professional and baby boomer demographics.
- Bucking Horse Apartments. There are 322 units under construction, consisting of condo-style apartment units and townhome-style apartment units within the development, just northeast of Timberline and Drake roads in Fort Collins. The project will include one-, two- and three-bedroom units within two- and three-story buildings situated on an 18.26-acre parcel and will include 572 parking spaces. The project broke ground in January, with plans to deliver units in December. This project is being developed by Fort Collins-based Bellisimo Inc.
- Vibe Apartments. This project is under construction and is located north of the Terra Vida apartment community, southeast of Harmony Road and Lady Moon, in southeast Fort Collins. The community will include 276 units within 10 three-story apartment buildings, plus a 6,000-square foot clubhouse, pool and picnic area, constructed on a 10.2-acre site. Additionally, nine live-work units will be included. Delivery of units is estimated for this winter. The project is being developed by a joint venture between Fort Collins-based Imago Inc. and Denver-based Milestone Development Group.
- Pinyon Point. McWhinney also is under construction on a 166-unit lifestyle apartment community in south Loveland, near the north-east corner of U.S. 287 and 14th Street SE. The community is being constructed on approximately 10 acres.The project will include studio, one-bedroom, two-bedroom and three-bedroom units ranging in size from 549 sf to 1,300 sf. The community is expected to deliver units in December, with construction scheduled for completion by April.
With the continued population and employment growth Northern Colorado is experiencing, additional apartment development should continue and the apartment developers should enjoy strong performance of their projects for the next several years.
Author: Jake Hallauer