Apartment sales hot in local area

Local apartment complexes have become attractive acquisitions with vacancy rates down.

Local apartment complexes have become attractive acquisitions with vacancy rates down.

Colorado Springs is the newest hot market for the sale of apartments, according to information from the El Paso County Assessor’s Office.

The total sales volume of apartment complexes of more than 30 units between Jan. 1 and July 1 in the county topped more than $273.5 million.

That compares with a sales volume in 2013 in the same time period of $37.2 million, according to figures released by Realtor Ron Spraggins of Commonwealth Commercial Properties, in information he obtained from the El Paso County Assessor’s Office.

Last year’s total sales volume of apartment buildings in El Paso County was $166.7 million, Spraggins said.

A total of 3,302 apartment units sold during the first six months this year, compared with 248 sold last year during the same period.

Eighteen complexes were sold in the first six months of this year, compared with 20 sales total for the entire year of 2013.

Colorado Springs

“There’s been a lot of sales activity across the state, but especially in Colorado Springs,” said Saul Levy, Realtor with ARA Real Estate Investment Services.

Levy’s figures differed slightly from those supplied by Spraggins. According to Levy, last year’s total sales volume of apartments reached $171 million.

“We’ve sold seven properties so far,” including Spring Canyon, Santa Fe, Garden Terrace, Hill Park and others, Levy said.

“There’s just been a ton of focus on Colorado. A lot of the investors have come in from both coasts.”

Levy said once Denver prices increased, investors began moving south.

“When Denver’s prices go way out of sight, they come down to Colorado Springs and Pueblo,” Spraggins said.

“The Denver market has been hot, and Colorado Springs is catching up. We’ll see more growth in the next couple years here. It’s definitely a good sign that the apartment market is taking off,” Levy said.

The buyers are bringing with them interesting stories, he added. One of his buyers sold a duplex in California and purchased an apartment building in Colorado.

Apartment classes

In the arena of apartments, there are four classes, A, B, C and D.

Class A includes the best complexes in terms of location, quality of construction, amenities and more. The quality of the construction, location and amenities drops at every step, with Class D being apartments typically more than 30 years old, in poorer condition, in poorer locations and with poorer curb appeal.

Class D sales “continued to be hot with nine sales, the most of any class,” Spraggins said. “They were also No. 1 in 2013 with 16 separate sales.” The average price per square foot was $50 in Class D sales.

Sales of Class A apartments topped both the sales volume and number of units sold during the first six months of the year.

There were four sales totaling 1,186 units. The price per square foot ranged from a low of $115 for the Pinnacle Apartments to $138 for the new Spring Canyon Apartments. Bella Springs apartments sold for $133,242 per unit.

The price per unit ranged from $138,699 at Class A Spring Canyon to $23,889 for each of the apartments at Vistas at the Citadel, 3955 E. Bijou.

Class B sales included Garden Terrace Apartments on Rusina Road, which sold for $15.8 million, or $84,615 per apartment, and Cheyenne Crest at 4008 Westmeadow Drive, which sold for $17.6 million, or $80,612 per unit.

Class C apartments included Park Ridge, which sold for $9.5 million for 204 units, or $46,569 per apartment and Windmill Apartments, which sold for $18 million, or $60,033 per unit.

Some of the Class D sales include the Carlton Manor on East Bijou Street for $42,222 per unit, or $1.52 million, Hill Park, which sold for $5.9 million, or $35,119 per unit.

Vacancy rates

According to Colorado Apartment Insights, the Colorado Springs vacancy rate for apartments having 50 or more rental units decreased to 5.23 percent in the second quarter of this year. The trailing four-quarter average vacancy rate was 5.66 percent. This is a record low for the past eight years.

Of the nine submarkets, seven showed lower vacancy this quarter.

There was a large increase in the vacancy rate of the north central area, that area circled by Circle Drive, Interstate 25, Platte Avenue and Austin Bluffs Parkway.

The vacancy rate there increased from 4.13 percent to 8.77 percent, the highest of any submarket area in Colorado Springs, Apartment Insight reported.

After a slow first quarter in apartment sales, the second quarter made up for it. 

According to Apartment Insights, the average price per unit of $106,200 is more than double last year’s average of $50,641.

The price per square foot also increased to $124.24, but didn’t double from last year’s $78.68.

Rents have also gone up, from $776 in the fourth quarter last year, to $781 in the first quarter this year and $801 for the second quarter, the Apartment Insight reported.