A recently built Colorado Springs apartment complex that’s only 80 percent occupied commanded top dollar in a recent sale to a California company, a sign that new multifamily projects — especially in fast-growing parts of town — remain in demand by investors.
NALS Apartment Homes of Santa Barbara paid $66.5 million last month to purchase the 264-unit Overlook at InterQuest apartments, northwest of InterQuest and Voyager parkways. The per-unit price of $251,894 was a record high in Colorado Springs, according to Newmark Knight Frank Multifamily in Denver, which represented the seller in the deal.
The brokerage declined to disclose the seller’s identity. Overlook at InterQuest was developed by Nor’wood Development Group of Colorado Springs and Western National Group of Irvine, Calif., which has partnered with Nor’wood on several local apartment projects.
The purchase by NALS is its first in Colorado Springs, although it also owns four Denver-area apartment projects, according to its website. Along with its Colorado properties, the real estate investment firm owns and manages more than 15,000 apartments in Arizona, California, Nevada, New Mexico, Oregon, Texas, Utah and Washington.
A recent trend in Denver has seen investors buy apartment projects that are “pre-stabilized” or less than 95 percent occupied, which is roughly considered to be full occupancy, said Kevin McKenna, executive managing director at Newmark Knight Frank Multifamily. He and Director Saul Levy represented the seller in the deal.
The sale of Overlook at InterQuest is the Springs’ first pre-stabilized sale, McKenna said, which demonstrates the strength of the local market and that Colorado Springs is getting closer to Denver in its attractiveness. The first apartments at Overlook at InterQuest were leased about a year ago, he said.
Overlook at InterQuest is part of the booming retail and commercial area taking shape east of Interstate 25 and InterQuest Parkway, which is home to restaurants, stores, movie theaters, hotels and more apartments.
Employers increasingly are moving into the area. In-N-Out Burger plans to build production and distribution facilities and its first restaurant southeast of InterQuest and Voyager; Ent Credit Union has targeted a new headquarters near I-25 and InterQuest; and Centura Health will build a hospital southeast of I-25 and InterQuest.
“That location is phenomenal,” McKenna said. “It’s right in the path of growth. The demographics are the strongest in the city. You have schools. You have all that retail coming in right out your front door. Then you have the new hospital that’s a five-minute walk away. Ent Credit Union’s headquarters is going in up there ... In-N-Out is catty corner. It’s kind of the main-and-main as far as the northern part of town.”
As Colorado Springs’ economy has recovered from the Great Recession, apartments have been in demand by millennials, empty-nesters and others, making apartment properties attractive to local and out-of-town buyers.
Rents have set several record highs in recent years and averaged nearly $1,160 a month in the third quarter of last year.