“We are estimating there are approx. 21 renter households for every available home.”
Denver has a pretty snazzy downtown. We were there this summer for NAREE, the annual June convention of the National Association of Real Estate Editors. We toured pricey new construction in barrio-like ‘hoods that were quickly turning to glam. I thought the prices were as high as the altitude.
Now comes word that Denver is overloaded with luxury apartments. The Mile-High city added 12,000 apartments since 2015 and another 22,000 more are under construction, this according to CoStar Group Inc. as reported in The Wall Street Journal. Further, “More than 90% of those units are considered luxury, meaning they incorporate higher-end finishes and amenities.”
You know, granite and quartz countertops, higher end appliances, vessel tubs, bigger closets and balconies. Things that cost more but draw in the higher-rent crowd. Sound familiar?
There are currently 16,000 vacant units in metropolitan Denver, up 5,500 from three years ago, according to MPF Research. Rents for a typical one-bedroom in Denver range from around $1,200 to $1,600. Rents for luxury apartments are at the top end of that range.
Because the buildings are higher-end, landlords won’t have to undergo the rigorous frequent inspections that make some wary of other government-subsidized housing programs, said Nancy Burke, vice president of government affairs at the Colorado Apartment Association.
There’s one reason why, perhaps, developers prefer building higher end buildings: less oversight intrusion. Save that thought.
Now let’s look at Dallas. We have been going great guns in the apartment building department. We are churning out some GREAT mixed-use developments in Uptown — have you seen The Katy yet? Knock your socks off. Walked in there during the holidays and ran into three people I know living there in luxury and loving it. And the building is leasing up rapidly because quality sells.
Take a gander up and down Coit Road in my ‘hood, District 11, near the new Costco: it’s apartment city. Look at that structure across from Trinity Groves, Sylvan 30. We need apartments, yes, because statistics show that when people move to Dallas on average they lease for at least a year before buying.
But do we have too much?
Sydney Bennett just told us that Dallas metro added more new rental stock than any U.S. metro: 22,851 deliveries in 2017, up from 15,459 in 2016. ALMOST TWENTY THREE THOUSAND UNITS. Most of these were, like Denver, higher end units with hefty rent tags. But can teachers or editors or police or administrative assistants — the bulk of the workforce, in other words — afford these units?
Sydney says “Dallas remains more affordable than many surrounding cities, but apartments in hot neighborhoods including Uptown and Highland Park are often well above the Dallas median. Plano is the most expensive of the 10 largest cities that we have data for in the Dallas metro, with a two-bedroom median of $1,410. Of all the cities we have data for, Flower Mound remains the most expensive, with a two-bedroom median of $2,180.” Now that’s a head-scratcher. Because it’s closer to DFW? (more…)