Out-of-town buyers remain bullish on Colorado Springs’ multifamily market, including older properties.
Four apartment complexes built in the 1970s were purchased this month by investors attracted by the Springs’ population growth and surging economy, industry experts say.
“Five, 10 years ago, it was a hard time to get investors down there who were from Denver and would be interested in that market. It was usually a pass,” said Saul Levy, a director with Newmark Knight Frank Multifamily in Denver. “Today, they’re really more calling us. At this point, everyone knows the path that Colorado Springs is on, and they’d like to get more involved.”
Among the city’s strengths, Levy said, are more jobs, higher wages and a robust health care industry led by the expansions of UCHealth, Penrose-St. Francis Health Services and Children’s Hospital Colorado.
Colorado Springs’ U.S. News & World Report ranking as the nation’s most desirable place to live for two straight years also is catching the attention of buyers.
Investors also like the money-making opportunities they see in Colorado Springs, said Mike Krebsbach, a senior adviser with Pinnacle Real Estate Advisors in Denver.
Springs-area average rents have risen steadily for years and hit a record high of nearly $1,175 a month during the first quarter , according to the Colorado Division of Real Estate and Apartment Association of Southern Colorado. At the same time, purchase prices in Denver have skyrocketed and the Springs’ profit potential is more attractive.
“The market’s really been taking off,” Krebsbach said of Colorado Springs “There’s a lot of rent growth happening and investors can see more opportunity and more upside in the returns they can provide to their investors than they can find elsewhere, especially in Denver.
“Denver metro is very, very, very expensive,” Krebsbach added. “It’s harder and harder for people to make sense of the deals there and to be able to offer favorable returns to their investors.”
Stuart Sloat, a broker specializing in multifamily properties with Olive Real Estate Group in Colorado Springs, echoed that view.
“They’re just chasing higher yields,” Sloat said of investors looking to the Pikes Peak region. “And appreciation in Denver has lent itself to more attractive deals in Colorado Springs.”
In recent Colorado Springs transactions:
• The 180-unit Lincoln Springs Apartments, 1170 S. Chelton Road, sold for $19.5 million to Monarch REI, a Denver limited liability company, state and local records show. Levy and Newmark Knight Frank colleague Kevin McKenna represented the property’s previous owner, a Boulder group. Krebsbach, of Pinnacle Real Estate Advisors, represented the buyer.
• The 150-unit Regal Estates Apartments at 105 S. Academy Blvd. sold for a little more than $17 million to Hazel Grace, a Denver limited liability company. Krebsbach represented Hazel Grace; the seller, a Breckenridge owner, was represented by Sloat and Adam Rezner of Olive Real Estate Group.
• The 374-unit Summer Grover Apartments and 112-unit Tanglewood Apartments, southeast of Academy and Austin Bluffs Parkway, sold for $31 million and $10.2 million, respectively. The properties were purchased by a partnership formed by The Bascom Group, an Irvine, Calif., private equity firm that specializes in apartment, commercial and other real estate investments, and The Axton Group of San Francisco, a privately held investment management firm.