By Miles King, CCIM, Associate Broker, Colorado Group, Inc., Realtor
Boulder Multi-Family (MF) Market:
During the fourth quarter of 2017, Boulder experienced 8 MF sales, ranging in price from $700, 000 for a duplex at 1823 18th Street to $35,000,000 for the 119 unit apartment community at 4550 13th St. There were a total of 34 Boulder MF sales in 2017 which was an increase of 21% from 2016. Although this may seem like a low number of transactions for a full year, it’s about average. One has to go back to 2005 for the largest number of closed transactions in recent history for an annual total of of 55. There were more properties for sale, even though there were significantly fewer apartments 13 years ago.
Historic cap rates also tell an interesting story. Back in 2010, our average sold cap rates were 5.3%. Ever since then they have gradually compressed down to the 20 year low we experienced in 2017. As most everyone has heard; historically low interest rates, millennials preference to rent in downtown locations, increasing market rents, Boulder’s strong job creation, along with a sub 3.0% unemployment rate, increased single-family housing costs, and the tougher mortgage qualification standards have all made significant increases in investors’ demand to purchase MF properties.
*In 2017 the average rent per bedroom per month increased 8.8%, and sales prices per bedroom were up 18.5% from 2016. The average yearly sales metrics for 2017 revealed a GRM of 18.1, an estimated cap rate of 4.0%, a price per sq. ft. of $436, a price per unit of $394, 550, a price per bedroom of $210,073, and a rent per bedroom of $932 per month. One note of interest is a slight increase in the 4th quarter’s average cap rate.
Please contact Miles King, Scot Smith, Wade Arnold, or one of our other Colorado Group Brokers for additional detailed information including Cap Rates in each of 11 geographic sub areas of Boulder. No cost Market Evaluations of your MF investment are also available to owners considering selling or exchanging.