In recent years, Real Estate investors saw a profitable Denver Apartment Market. Unfortunately, this type of construction is expected to slow significantly in 2018.

According to studies, the demand for “high-end” developments, and financial backing for construction is going to become exceptionally tight and difficult to obtain. This economic-based prediction was featured in the Colorado Business Review from the University of Colorado. There are far fewer plans to construct new apartment complexes. Summer of 2018 is when this will become most evident.

abandoned construction

The slowdown of construction on apartments, according to the professionals that contributed to the published report, comes as a result of steady decreases in property values because the buildings are being constructed in areas that lie in the outskirts of Denver.

The city no longer has a high demand for apartments. Additionally, a cultural shift has become extremely evident.

The Millennials that once dominated the apartment market within the downtown Denver area are now looking to actually purchase property away from the center of the city. This could be the result of an increase in age and/or the establishment of families among the Millennials.

young family desire to move to the suburbs

In June of 2017, RealPage established that approximately 25% of all of the apartment complexes that were under construction were being built in downtown Denver areas. These include – but, are not limited to – Highland, Union Station, as well as Golden Triangle. Unfortunately, this has completely oversaturated the market and has resulted in financial detriment to those that specialize in property management.

This is especially true among those property managers that create high-end apartment complexes. When individuals make the decision to move to this city, it is often the case that they are unable to afford the rent associated with these high-end complexes. If apartments are constructed and advertised more towards the working class and their income levels, construction might would continue to abound within Denver; however, this is not likely to occur – at least at this point in time.

People are flocking to the suburbs for several reasons – the top one being cheaper land.

In the city, there is less financing available and property owners are increasing the prices of rent and leases in order to cover the costs that they are incurring as a result of the massive amounts of construction that they are engaging. The lenders in the area are starting to lean towards financing suburban-based construction projects because that is what people are able to afford.

There has been an increase in growth in terms of townhomes, homes designed for single-families, and condos; however, the availability of these types of residences is low.

If you are a property manager, you should start considering suburban projects. In doing so, you are setting yourself up for success.

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