Denver Continues to Be a Hot Apartment Market Even as Yields Shrink

Denver has landed at the top of investors’ buy lists for years, and even as competition has increased in the market and yields have waned, it hasn’t budged. Heslin Holdings—an investment firm that is planning to place $400 million in capital across commercial asset classes over the next 12 months—has been an active player in the Denver market for six or seven years, and this year, it still considers Denver its top target market for multifamily investment.

“Denver has been our number one focus geographically for the last six or seven years,” Matt Heslin, CEO of Heslin Holdings, tells GlobeSt.com. “Demographically speaking, the market is the most exciting that we have seen, and we have studied all of them. Denver has 50,000 millennial moving in and a highly educated and diversified workforce in everything from bioscience to technology. The GDP of the local economy, and the unemployment is below the national average. From a demographic point-of-view, it made sense to start in the market, and we did. We were one of the early adopters in the multifamily value-add space.”

The firm has acquired 6,000 units in the market, including the recent $177 million of a 1,000-unit complex in Denver. However, increased competition, particularly in the middle-market niche, has made finding new opportunities a challenge. “When we started, we had a strong opportunity to have our pick of the litter, so to speak,” says Heslin. “We have seen more aggressive posturing by the institutions to play at a more medium-priced level. Now, we are seeing institutions step into the $25 million to $75 million sphere and have started absorbing those properties in the middle markets. That is where we were one of the few players in the early days. We have also seen smaller players entering the market and teaming up with funds and institutions. Those factors have pushed pricing up and yields down in the market.”