W ith inflation driving up construction costs faster than rent growth, as well as other stressors like the newly minted inclusion- ary housing ordinance in the city and county of Denver, proposed apartment communities are fac- ing increasing feasibility chal- lenges. And while land sellers may not like to hear it, this feasibility squeeze limits what a developer can pay for an apartment site. Due to downward pressure on land prices, this article examines the appreciation rates derived from 628 apartment land sales throughout the Denver metro area that closed from Jan. 1, 2020, through Sept. 30, 2022. In order to ana- lyze this large data set, covering an almost 23-year period, we divided the sales into five density groups. Since higher densities tend to be in superior locations (i.e., downtown or transit-oriented development) and sell for much higher prices, it is not appropriate to compare the sales for those sites with prices for tra- ditional suburban walk-up locations. We calculated appreciation rates for each group based on both 1) price per unit and 2) price per square foot. Annual appreciation rates generally ranged from 3% to 4.2%. However, the group with densities from 100 to 200 units per acre showed much higher appreciation of just above 15% per year. Sales for the lowest-density group, from 10 to 30 units per acre, which generally represents subur- ban walk-up product, are shown in the graphs on Page 28. The regres- sion lines equate to annual appre- ciation rates of 3.5% on a per unit basis (Density price per unit graph) Please see Market Update, Page 28 INSIDE 90.00% 91.00% 92.00% 93.00% 94.00% 95.00% 96.00% 97.00% 98.00% 99.00% 100.00% $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 FORT COLLINS / LOVELAND / JOHNSTOWN Average Asking Rent / Unit / Month & Overall Occupancy Rate (Class A, institutional size & quality communities) Despite apparent headwinds, apartment funda- mentals continue to attract investors, developers Market Updates What do a former church, college dorm & school have in common? Adaptive reuse Affordable housing PAGES 34-40 Amenities, particularly outdoor spaces, remain top of mind in state's multifamily designs Design considerations PAGES 23-26 November 2022 PAGES 4-6 Cary Bruteig, MAI President, Apartment Insights Long-term trends in Denver land prices Scott Rathbun President, Apartment Appraisers & Consultants