There’s a joke: “The Colorado state bird is the crane.”
As in construction crane. A reference to what seems to be the proliferation of new high- and mid-rise apartment buildings in the Denver metro area.
The cityscape, especially in the urban core surrounding downtown Denver, has dramatically changed with new large apartment buildings going up at 8th and Lincoln, 10th and Lincoln, 12th and Grant, 8th and Grant, 7th and Grant, two opposite corners of Speer and Grant, Speer and Logan, Logan and Bayaud, and Logan and Alameda.
And this is just on the very specific route of this reporter’s daily commute to and from the DTC area to Capitol Hill over the past year-and-a-half.
Why all the new — sometimes massive — apartment buildings? What happened to the American dream of single home ownership?
A conversation with Steve Elken, a 40-year veteran of the apartment industry, yields insight.
Elken, along with his son Seth, operates ELKCO Properties/Trybe Property Management, which owns or manages more than 3,500 apartments units in more than 25 rental communities in Colorado and other states.
The reason for so many new apartment buildings in Denver boils down to the most basic economic principle: Supply and demand.
“You still have a strong influx of people moving into the Denver metro area,” says Elken.
The first tendency for many people when they move to a new city is to rent so as to “get the lay of the land,” he says.
People who move to Denver due to a job transfer want time to explore the city and evaluate school districts before they settle on a more permanent home in their neighborhood of choice.
While renting an apartment, the transplants can explore: “Do they want to live in the Hilltop area? Do they want to live by the museum and library? Do they want to live more in the downtown core?
“That’s why you see the disbursement of different new properties like those in Boulevard One in Lowry and things of that nature.”
While suburban Denver has had a number of garden-style apartment communities — clusters of smaller apartment buildings on landscaped grounds — as opposed to more urban-typical high-rise and mid-rise apartment buildings, the latter are also popping up in suburbia.
“You’ll see them in Littleton, Westminster, Lakewood, Arvada, but you’re seeing more being built garden-style” — clusters of low-rise buildings of apartments, each with an outdoor entrance, situated on landscaped acreage.
High-rises are more common in the city as land is scarce and more expensive than in the suburbs. Elken says the number of rentable units per acre contribute to the economic feasibility of an apartment project.
Choosing high-rise or garden-style living is a matter of personal preference, or lifestyle choices. Location, such as proximity to a transportation-oriented district, plays in those kinds of decisions.
Affordability is another factor in the proliferation of rental units in metro Denver. Listing prices for resale homes are at an all-time high, largely due to the lack of inventory of houses for sale. New construction homes are also going up in price because of rising lumber prices.
Young adults are finding it more difficult to amass an adequate down payment to purchase a home, so more and more singles and couples are renting for longer than they would have several years ago, even though — with low mortgage interest rates — a mortgage payment resulting from a sufficient down payment can often be lower than rent.
Elken also points to empty-nesters. Often an older couple will move to the Denver area to live near their children and grandchildren.
Perhaps they come from another city where housing prices are much lower than Denver, and they find that the $250,000 they got for their decent-sized home in Des Moines does not get them very far toward the purchase of a home in Denver. They become renters.
New, amenity-oriented apartments and updated apartments in older buildings offer both younger and older renters the aesthetics and comfort they desire without having to plunk down a large down payment or place all of their equity from their previous paid-off home into a new one.
Actually, Denver is nearly equally divided between owner-occupied — 51% — and renter-occupied — 49% —households, according the apartment search website Zumper.
Rents fluctuate constantly.
• As of May 21, 2021, the median rent in Denver for a one-bedroom apartment is $1,416 a month, reflecting a -2% year-over-year change. There are 1,195 such apartments currently for rent.
• Median rent for a two-bedroom apartment is $1,894 a month, a 2% increase over last year. There are 869 two-bedroom apartments for rent.
• Median rent for a three-bedroom apartment is $2,530 a month, up 6% over last year, with 182 units for rent.
• The neighborhood with the highest median rent at $3,990 for a two-bedroom apartment in Denver is LoDo.
Amenities are another driving force in choosing an apartment community. People want access to the things that they would have in a single-family home, such as exercise space. Swimming pools are important to many people, too, and some high-rises include roof-top pools.
Some of the new and older high- and mid-rise buildings do not have balconies. Some of the projects are built without balconies due to affordable housing components for tax credits, according to Elken.
“I personally believe it’s important to have outdoor space, especially living in Colorado,” Elken says.
Many high-rises have communal rooftop space, some with landscaping and amenities for entertaining such as grills.
An often-heard criticism of the apartment building boom in the city is the traffic and parking ramifications of high-density projects. Sometimes, buildings do not include adequate parking for the residents, let alone visitors. Residents are forced to park on the street overnight — if they can find legal spaces.
Elken agrees with those criticisms. “I think it’s a mistake. In the buildings that I have built, I actually could have fewer parking spaces, but I chose not to because I don’t think it’s right.”
He says some developers skimp on parking because they perceive the market as people who do not have cars and rely on public transportation for commuting to work, or are students and they do not own cars. They may be trying to reduce their carbon footprint.
“Well, they do, because they go skiing, they go hiking or camping. You still need a car to do those things.”
Meridian Village, a rental community Elken’s company is building off I-25 and Lincoln Avenue, will include 78 townhomes. All three-bedroom units will have two-car attached garages, and two-bedrooms will have one-car attached garages. There will be surface parking, too.
“We generally develop our communities in excess of the minimum parking requirements.”
Back to the American dream of homeownership, renting a desirable apartment or home is becoming an acceptable part of that equation, so much so that single-family rental home communities — all-rental subdivisions — are being built in Texas and Arizona, and they’re making their way to Denver. Elken says such a community was recently built in Commerce City, and are some planned for Aurora.
Renting nice apartments providing recreational amenities and convenient locations offers younger singles and couples a version of the American dream applicable to the 21st century.
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