Sweeney Analyzes Local Apartment Market

DENVER-It will take jobs, lots of them, to fill the empty apartments in the metro area.

A rule of thumb is that it takes four jobs to fill one apartment unit, says Chuck Sweeney, of the Denver office of Hendricks & Partners. Sweeney, who founded the office, has sold more than $1 billion in apartments during his career.

Sweeney says the metro area needs to create 60,000 new jobs to fill 15,000 apartment units, bringing the market back to equilibrium. That’s almost equivalent to the 70,000 jobs lost in Colorado since 2001.

He made his comments at the recent Rocky Mountain Commercial Real Estate Expo and the University of Denver Fall Economic Forecast at the Colorado Convention Center.

However, despite the dire news, apartment communities still sell for fairly high prices, Sweeney notes. One reason is that there are still more sellers than there are buyers, he says, and there’s a lot of money on the sidelines looking to be invested.

The bull market in bonds appears to have run its course, money markets are yielding only about 1%, and many investors are still spooked by the stock market, he says. And thanks to low interest rates, many apartments can have positive cash flow even at lower rental rates, he notes.

On average, apartment sale prices are off a bit from their record levels, but they are not far off the mark, he says. And he expects that at least two communities will sell for record prices by year-end.

Apartment communities that will be in especially high demand will be those along transportation corridors, such as those near light rail stops, he concludes.