Real Estate Investing in Denver: Origin Capital’s Strategy for a Booming City
The Mile High City has an even higher ceiling for the smart real estate investor.
Real estate investors, like pioneers and gold miners, have long known that Denver is the key to the West. As the biggest city between the Mississippi and the the Pacific, and the hub of a major metropolitan region, Denver has long been the economic powerhouse of a multi-state region, thanks to its location and prowess in shipping. Even so, its recent growth and the transformation of its economy have come as a surprise to some. This western city, best known for its gold, its altitude, and its breathtaking views, is now at the center of a technological and telecommunications boom, which is having a huge impact on the real estate market.
To say that the Denver real estate market is doing well is a vast understatement. It’s one of the hottest markets in the country, thanks to new industries and a sudden revitalization of the downtown area. Denver has managed its growth well by maintaining a steady presence. Even as the residential market has flooded with new workers from around the country and the world, Denver has maintained a relatively inexpensive – though growing – standard of living. This will help keep new jobs and new talent coming in, raising the value of both commercial and residential real estate, as the city becomes an international paradise.
Real Estate Investing in Denver: Understanding the City
When investing in the Denver real estate market, it’s important to understand why the city is doing so well and changing so rapidly. This is caused by a number of factors:
Geography doesn’t lie. Denver is almost uniquely situated to be a hub of shipping around the West and Southwest. It is nearly equidistant from Midwestern cities like Chicago and St. Louis as it is to coastal cities like Los Angeles, San Diego, and San Francisco. This leads to tremendous investment in shipping and warehousing units, which attract tons of workers, all of whom need housing.
- Shipping is changing. As shipping becomes more and more international, businesses will want to go to hub cities with a global reach, like Denver. This brings in international businesses, as well as auxiliary companies. This is one of the reasons why Denver is a leader in aerospace technology. Logistics workers also do extremely well in Denver.
- The heart of the region. Denver is the largest city in at least 500 miles in any direction. This means it is a magnet for top talent from much of the West. This educated talent, drawn to the natural beauty and easy-going lifestyle, means that more companies are moving in to compete for Denver’s worker base.
- New industries mean new workers. While Denver is never going to lose what makes it so economically important, the economy is still growing. Telecommunications and tech businesses are pouring into downtown and other neighborhoods, changing the landscape of the city. The economy is doing extremely well and property is going fast.
- Rates and vacancies are complementary. Rental prices in Denver have skyrocketed, but only relative to historically low prices. The median apartment is currently $1,300 for a one-bedroom. However, the cost of living is only 6.7% above the national average, which makes Denver a very livable, affordable city. In addition, new construction means new vacancies – an estimated 15,000 in 2015. These factors will keep people moving in while maintaining a reasonable cost of living.
- Retail and commercial construction keeps vacancies low. At less than 5%, the commercial real estate market has remained tight, which keeps rental prices steady and flexible enough to avoid a bear market. New construction is helping in both the commercial and retail markets, with Class-A mixed-use multi-families blooming in downtown and other areas.
Proactive Government: Denver has one of the best private/public partnerships in the Country. Recent government initiatives include a new light rail transportation system, redevelopment of obsolete government buildings and incentives for making investments in the region.
- Outstanding Natural Amenities: Denver is well known for its natural beauty, something that inspires painters, singers, and real estate investors. The ability to access mountains, lakes , trails, and other natural amenities is a huge driver for millennials.
These factors combine to make Denver an exciting city to invest in. It’s no wonder that Forbes ranked it the #1 city for businesses and careers. With a strong mineral and mining base, and with its enviable geographic location, Denver has a sturdy foundation that is being augmented by high-end technology jobs. This adds up to a solid city with a great future, and a ceiling as high as the Rockies.
Key Neighborhoods in Denver
At Origin Capital, we always look at the city as a whole, but also bore into each neighborhood to find the best investments:
Central Business District/Downtown: Denver has made a concerted push to bring entertainment and other lifestyle options to the CBD, and the city has been rewarded with a boom in residential real estate, as people seek to move close to the action. Once moribund after five o’clock, downtown is now arguably the heart of the city. The area is also near top neighborhoods like Cheeseman Park, Baker, and City Park.
Lower Downtown (LoDo): The original Denver settlement, LoDo is a model of urban reinvestment, with new cafes, restaurants, shops, and residential units transforming the neighborhood. Businesses are growing in this mixed-use neighborhood. This is the quintessential loft area.
- River North (RiNo): The artist district, this neighborhood is filled with art galleries, architectural firms, designers, photographers, and sculptors. RiNo is one of the trendiest places to live, and it’s considered on the verge of a huge population boom.
- Midtown: A residential community that is now experiencing a major rush thanks to reinvestment and urban infill projects, this neighborhood is possibly the next big thing.
- Southwest: The Southwest region has great and growing neighborhoods such as Bear Valley, Harvey Park, Marston, and Fort Logan. The industry drivers include many government contractors, most notably Lockheed Martin.
- Southeast: This thriving and growing area boasts some of the best demographics, retail amenities, schools and housing stock in the area. Hampden, Goldsmith, Southmoor Park, and Kennedy are some of the big draws in this residential region.
- Southwest: The Southwest region has great and growing neighborhoods such as Bear Valley, Harvey Park, Marston, and Fort Logan. The industry drivers include many government contractors, most notably Lockheed Martin.
- Midtown: A residential community that is now experiencing a major rush thanks to reinvestment and urban infill projects, this neighborhood is possibly the next big thing.
Anyone who has lived in Denver for more than a decade can tell you that it is a changed city, with a vital downtown, new industries, and a thirst for further growth. But at it’s heart, it’s still the same Denver: a pioneer city, filled with people traveling west to find their dreams. With a solid economic foundation based on mining and transportation, and a new boom of tech and international business, Denver is a dream for real estate investors as well.
At Origin Capital, we understand Denver and we know where to invest to ensure the highest returns. We know how the city is growing and we can use our unmatched expertise to find the spots that will experience the most growth. Our comprehensive research is how we go the extra mile (high) for our partners. Let Origin Capital be your rock in the Denver real estate market.
If you are a real estate investor looking to broaden your portfolio and join other investors in major developments in Denver or other markets, Origin Capital Partners would be excited to work with you. At Origin Capital Partners, we have a powerful connection with the cities we invest in and we understand what makes them tick. We know which areas are booming and which commercial and residential investments will make the most sense moving forward. Our Funds deliver consistent returns, because we know how to make sense of the real estate market. Contact us today to talk about how your investments can grow with the city.
