A recent analysis by ApartmentList.com found that Denver is the No. 1 city in the U.S. for inbound renters. The firm determined that Denver was its most-searched city and then tracked IP addresses to determine where that search was coming from.
Denver came in at 48%, according to the study, followed by Baltimore (47%), San Diego (44%), and Tampa (44%). The study attributes Denver’s thriving job market — especially in the tech industry. The top city of those searching apartments in Denver was Washington, D.C., which the study hypothesizes may be due to a need for tech companies to attract workers with policy backgrounds.
What the study doesn’t touch on, though, is what this inbound of renters means for investors and the overall real estate market.
First, the migration to Denver is still very strong. And that means there needs to be places for all of those people to live. Apartments have proven to be great investments in the Mile High City over the past several years, but those Millennial and Generation Z renters want to eventually become homeowners.
That’s why it’s so critical that developers — and policymakers — focus on attainable housing, like condos, as the city densifies. It’s been estimated that Denver is behind similar-sized cities by about 18,000 condo units. Some policies, like the one recently presented concerning construction defect laws, could again stifle further condo development in Denver and put the city even further behind its counterparts.
Not everyone wants an “apartment”
There are “OK” apartments, “nice” apartments, and then the “really nice” places — think higher-end condos — that don’t fall into that cookie-cutter-type of rental. In Denver, Greystar is getting ready to welcome residents to “The Pullman,” a 13-story, 168-unit luxury apartment tower that features penthouse rents at $20,000 per month. Average rents throughout the building range from $7,000-$8,000 per month.
Greystar officials have said for those prices, renters get their choice of 35 custom floor plans, which all feature made-to-order cabinetry, top-of-the-line appliances, and condo-like amenities, like a concierge service, valet and a yoga studio. In other words, they look and feel like condos. The fact that developers are pursuing projects like The Pullman (The Confluence, 1441 Little Raven St., has a penthouse that rents out for $15,000 per month), shows that not all renters want basic living conditions. In fact, many want the quality of the condo lifestyle.
Also, Denver has led the nation in growth of renters who make more than $100,000 per year, according to ApartmentList. Those renters want to put a portion of their disposable income toward a nice place.
Great time for investors
So, what does this all mean for investors? It proves that investing in a condo to rent out and later sell — especially units in new developments like The Coloradan or Lakehouse on Sloan’s Lake — can deliver a nice return. Combined with low interest rates, that investment could prove to be extremely valuable.
Of course, investors need to weigh all of their financial obligations when purchasing a condo to rent out, from insurance to homeowner association fees. Work with a condo expert from Denver High-Rise Living today to ensure you’re making the best possible decisions.