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July 5, 2018
Atlas co-founder and partner Jason Shepherd spoke with Multi-Housing News’ Keith Loria about the investment market and new development trends he’s seeing.
“In Denver, we have been flooded with new multifamily construction over the last few years. This comes on the back of five years of extremely high positive-net migration especially within the younger demographics. Recently, we’ve started to see the units getting smaller, inclusive of co-living and micro units. These new living experiences are serving the desire of the vibrant tenant mix that prefer community over privacy. The question is how sticky are these tenants? As an owner of multifamily, vacancy and turnover are two costs that have a gigantic impact on your return. Will these communal multifamily assets retain tenants for a few years, or do these new residents to a city or people transitioning from post college into their adulthood use this housing sector as a quick stop until they find something long term? Only time will tell but it’s a trend that is moving from the primary markets (LA, NYC, SF) quickly into the secondary markets like Denver.
Developers have overbuilt the multifamily asset class in Denver and I’m keeping my eye on this over the next couple years. I’m patiently waiting to see what happens to these units as 10 years of apartment supply (using our average absorption rate for this asset class) enters our market. How do these units pivot? I like the idea of repurposing to independent living for the aging community or condo conversions but only time will tell. I’m really interested to see how suburban multifamily will play out as transportation begins to change, increasing mass transit and the undeniable introduction of autonomous driving might inspire some city people to venture out to the suburbs if traffic was less of an issue.”