Page 4 — Multifamily Properties Quarterly — May 2023 We’re not just multi-family, we’re multi-faceted. The broad depth of our capabilities has made Legacy Partners a proven leader in all aspects of multi-family real estate. Dallas │ Denver │ East Bay, CA │ Inland Empire, CA │ Los Angeles Orange County, CA │ Portland │ San Diego │ San Francisco │ San Jose, CA │ Seattle Contact us today to learn more about our experience and capabilities. 8400 E. Crescent Parkway Suite 400 Greenwood Village, CO 80111 303-320-3500 For over 50 years, Legacy Partners has a track record of consistently outperforming the competition: • Acquisition & Development • Investment Management • Entitlement Assistance • Construction Management • Asset Management Third Party Multi-Family Property Management Includes: • New Community Lease-Up • Conventional Stabilized • Mixed-Use Retail • Renovations & Repositioning • Senior Communities • Tax Credit & Affordable • Receiverships & Broken Condominium Projects Northern Colorado T he Northern Colorado Class A, institutional-quality/scale apartment market continues to demonstrate resiliency amid the macroeconomic uncertainty and turbulence in the capital market. This likely is due to a number of factors but, most importantly, to continued popula- tion and employment growth in the region as well as the continued, and growing, challenges developers face while attempting to deliver new product to the market to meet the continued demand. While it’s a bit hard to predict the future in such an uncertain time, if the population and employment growth continue in the region, while home prices continue to increase and mortgage rates remain more than double what they were just over a year ago, I believe it’s extremely likely that the region will continue to experi- ence strong demand for new Class A apartment communities. One dynamic that likely will cre- ate additional demand for new Class A apartments over the coming years is the decline in homebuilder activity in the region. Given the challenges for homebuyers, par- ticularly first-time homebuyers, to affording to purchase new homes given the rapid rise in interest rates and prices in the market, I expect many of those would-be homebuy- ers will likely be renters of Class A apartments or build-to-rent com- munities (as those are developed), and to be renters for the foreseeable future while 30-year mortgage rates remain over 6%. This may result in additional demand for larger units, including two-bed- room apartment units, three-bed- room apartment units and town- homes. According to our recently completed biannual market survey/report, stabilized commu- nities in Larimer County experi- enced a year-over- year increase in average asking rents, per square foot, per month, of approximately 2.56%, with that rate climbing from about $1.89 to about $1.93. Over that same period, “chunk” rents grew from $1,783, to $1,826 per month. Occupancy decreased slightly dur- ing this period, moving from 96.03% to 94.94% year over year. It appears that some landlords favored push- ing rents in this period vs. main- taining very high occupancies. Just under 95% occupancy still indicates a very healthy market, particularly when factoring in the decline in homebuilding activity in the region, as the overall rate that new hous- ing is delivered in the region is likely to decline in the near term. It also remains challenging to find an appropriately zoned site and to pencil new communities in Larimer County given the impact fees, water costs, land costs and construction costs, as well as the effect that the capital markets turbulence and the significantly higher interest rates are having on financing these proj- ects. In the northern Weld County (Greeley, Evans and east Windsor) area, occupancies increased, moving up slightly from 95.3% to 95.78%, year over year. Average asking rents, per sf, per month, were up even more dramatically than in Larimer County during that period, increas- ing from about $1.71 to about $1.77 for a growth rate of 3.68%. Chunk rents grew impressively during this period, increasing from $1,566, to $1,650 per month. In terms of investment sales, the market is likely still in “pricing dis- covery” mode given that the last sale transaction was Trails at Tim- berline in Fort Collins, which sold in October 2022 for $110 million, at over $350,000 per unit and an approximate cap rate of 4%, accord- ing to CoStar. That cap rate is up ever so slightly from the absolute cap rate low we saw in the market about 18 months ago of approxi- mately 3.8%. This is almost unbe- lievable given that over that same period the 10-year Treasury yield increased approximately 250 basis points. That seems to indicate the desirability of investing in Class A, institutional quality/scale, in the region remains high, although there appears to be a large gap in buyer and seller expectations on pricing at this point in the market. I don’t expect to see many investment sales of these types of assets in the region for the remainder of 2023, but the next few sales may help with the “pricing discovery.” Despite the continued uncertainty NoCo Class A apartment market looks promising Jake Hallauer, CCIM President, NAI Affinity Please see Hallauer, Page 21