It is partnering with Irvine, Calif.-based Western National Realty Advisors to build four apartment complexes with at total of 1,075 units in Colorado Springs and Fountain.
“We were involved in the apartment business many, many, many years ago when they first put air in tires,” said Vice President Fred Veitch, Nor’Wood vice president.
The three complexes in Colorado Springs will be “Class A” apartments, the type that offer business centers, movie theaters, community barbeque patios and lifestyle amenities such as granite countertops, garages and spacious floor plans.
A shift in the market has directed the change.
“We’re an entrepreneurial commercial developer,” Vice President Stephen Sharkey said. “We have a sense of what is currently in demand. And we see long-term demand for apartments.”
Vacancy rates fell below 6 percent at the beginning of 2011 and stayed low throughout the year, driving average rental rates higher, according to reports from the Colorado Division of Housing.
Nor’Wood has started construction on a 240-unit apartment project in Fountain, though it will not offer as many of the high-end amenities that the Colorado Springs’ apartments will.
The first Colorado Springs project will be the 360-unit First and Main Apartments, which are scheduled to break ground next month near the First and Main retail center at Powers Boulevard and North Carefree Circle.
The next project will be the 260-unit North Pointe Apartments north of Rockrimmon Boulevard and Delmonico Drive. Nor’Wood expects to break ground on that project in April or May.
The third will be the 260-unit Woodmen Ridge View Apartments at Woodmen Road and Powers, which should be under way by summer.
The Rockrimmon project will be close to I-25, in a treed and mountainous neighborhood area not far from the successful new University Village shopping center, Sharkey said.
Nor’Wood has worked on a number of commercial projects recently, including a Brazilian steak house at First and Main, the Brunswick Zone family fun center at the Market at Interquest and the Planet Honda dealership, but the apartment projects will be some of the biggest construction projects in the city.
They will occupy land Nor’Wood has owned for several years, Veitch said. The land at First and Main was designated to be apartments or offices.
Nor’Wood is one of the few local developers delving into apartment construction.
Veitch suspects that’s because funding for apartment projects hasn’t been easy to get.
It’s also the sticking point that he believes will keep the market from being over-built as it was in the past.
Doug Carter, a Realtor who specializes in the apartment market for Sperry Van Ness, said the Colorado Springs apartment market has a history of growth spurts and lulls which causes a dueling cycle of high vacancy and few rental rate increases. Developers overbuild, then apartments go vacant for a decade without any apartment construction.
That’s the decade we’re emerging from now, Carter said. The years between 2001 and 2011 were the dark ages for apartment owners. Rents remained flat and have just now risen above their 2001 levels. Very little has been built in the Colorado Springs market in the past decade.
Kevin McKenna, a sales associate with Denver-based Apartment Realty Advisors said Colorado Springs lacks real Class A properties that now dominate the Denver market.
“The market demand wasn’t there for that kind of property before,” Veitch said.
The tight lending market that makes it tough to secure financing for apartment projects is what’s driving apartment demand in the first place.
“It’s harder to get a mortgage today than ever,” Veitch said. “That’s creating an uncertainty in the buyers’ market and apartments provide a respite from that.”
It was easy to get financing for a house in the early 2000s and people who could afford it were buying.
Now, people — especially young professionals with a surplus of discretionary income — are steering clear of home buying and are looking for the high-end apartments that offer a sense of community and luxurious amenities, Veitch said.
That’s what Nor’Wood’s apartments in the Springs and Fountain will become.
“We think these are “A” properties, and they are all “A” locations,” Veitch said.