Growing workforce drives demand for housing in Corridor

BROOMFIELD ? As business booms n Boulder County, new companies aren’t the only ones looking for a place to set up shop along the Corridor.

Despite the area’s traditionally tough building restrictions, residential developers are looking to fill the gap between the area’s growing workforce and its available housing with a number of new, record-breaking development projects.

Doug Andrews, a real estate broker with Denver-based Grubb & Ellis, said Broomfield, particularly the area surrounding Interlocken, and Boulder traditionally have been two of the most difficult areas to develop because these communities have taken anti-apartment stances.

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Apartments traditionally have been more controversial than other housing types, because they are associated with a transient and student population and problems such as noise and increased parking needs. But with rents averaging around $1,000 per month and all the job growth that has accompanied development along the Denver/Boulder Corridor in recent years, Broomfield is changing its tune. “There is a real housing shortage in that part of town,” Andrews said.

Large employers like Level 3 Communications, Sun Microsystems and Corporate Express either have established their headquarters in Interlocken or built huge campuses to support their growing workforces. For many employees just moving to the area, apartments are a starting point, the first housing option they look for before seeking a more permanent residence.

Of all Denver metro area communities, Andrews said, “Rents tend to be highest in the northwest corridor.” Entry-level costs for single-family homes are high, he said.

Andrews said new apartment developments with units between 900 square feet and 1000 square feet have rents of about $1,100, or about $120 per square foot. “There’s no question (Broomfield) is a much more expensive place to live today than it was five years ago,” he said.

In Boulder, Victor Strayer, leasing director/management acquisition at Four Star Realty and Property Management Inc., said rent rates have escalated significantly this year. In 2000, most monthly apartment rates increased $50 compared with 1999 rates; some have increased even more. In the past, Strayer said those types of increases were unheard of. He estimated that monthly rates for a two-bedroom apartment in Boulder range between $800 and $950.

But despite increases in rent rates, apartment demand, particularly in Boulder, has skyrocketed. This year, Strayer said Four Start rented 47 of 50 units with August availability before the Fourth of July.

Strayer has houses available to rent in cities surrounding Boulder such as Longmont and Louisville, but apartment availability in Boulder right now is scarce. The lack of availability is due in part to the time of year. Strayer said October, November and December are slow months, with availability picking up around the beginning of the year.

Four Star’s Pearl Street office focuses on the premium housing market with most clients being professionals and families, but he said there was a shortage of student properties this year as well.

Although he didn’t have figures specifying increases in rent rates, Ken Hotard, senior vice president of the Boulder Area Realtor Association, said the law of supply and demand is at play in Boulder County, and apartment rents, like home prices, have been on the rise for some time.

Between 1990 and 1999, the average monthly rates for studio, one, two and three-bedroom apartments in Boulder County have nearly doubled, according to information from the Apartment Association of Metro Denver. In 1990, the average monthly rate for a two-bedroom apartment with two bathrooms was $568. In 1999, the average rate was $1,048.

Out of all metro areas being targeted for residential development, Jeff Hammerberg, real estate broker and founder of DenverIncome.com, an Internet resource for metro area apartment investment opportunities, said the Denver/Boulder Corridor is the hottest spot right now.

To illustrate, Hammerberg pointed to the 284-unit Glen Eagles apartment development in Northglenn. After achieving substantial success on the first half of the complex, Embrey Partners, the Texas firm developing the property, decided to use the extra funds to add upgrades to the remaining units. The mountain lodge-style apartments are being built at 120th Avenue and Clod Court.

In August, Broomfield city council started review procedures for four developments that would include more than 5,200 residential units and more than 13 million square feet of commercial structures, according to information provided by the Boulder area Realtor Association.

Kevin Standbridge, community development director for Broomfield, said new employees relocating to the Interlocken area has facilitated housing growth. Broomfield has no housing programs in place, but Standbridge said the city is working with developers to provide housing and is encouraging multi-family housing in specified areas close to transit facilities.

The increased demand for apartments causing higher rent rates can be predicted by the growing demand for other types of housing. Hammerberg said the apartment market traditionally has followed the single-family home market, which has been on the rise for the past eight years and has doubled in the past five. The apartment market, he said, is typically slow to follow, but in the past three or four years, it has caught up.

One of Grubb & Ellis’ most recent, record-breaking sales illustrates this trend. In August, Andrews and fellow broker Jeff Hawks sold the Jefferson at Town Centre, a new apartment development near Interlocken, to Austin investment firm CWS Town Centre Holdings LP for $33.1 million.

Dallas-based JPI developed the 283-unit “community” at 1001 E. First Ave. in Broomfield. Andrews distinguishes the Jefferson as an apartment community, not merely a complex, because it includes such perks as a fitness center, a movie theater with digital surround sound, a gourmet kitchen facility designed for teaching cooking classes in the main clubhouse, and a swimming pool that, according to Andrews, puts resorts to shame.

Construction of the Jefferson was completed in May. Andrews said the property was nearly full in July. The 1,000-square-foot apartments are going for $1,230 per month, a record rent rate for Broomfield. Andrews said there is only one vacancy.

But Broomfield isn’t only one of the county’s most expensive places to live. According to Andrews, it’s also the most expensive place to try to build new apartments. “Land costs are 30 percent to 50 percent higher than any other part of town,” he said. And there are very few available sites. “Every developer wants to find a site in that market.

“Costs before construction will be around $30,000 per unit,” he said. Five years ago, the cost per unit for the same area would have been under $10,000. Costs before construction consist of land and governmental fees. In the Interlocken area, Andrews said they are about 25 percent to 30 percent of the builder’s costs.

Despite rising construction costs, a number of residential developers have submitted proposals to build apartment complexes within the vicinity of Interlocken.

Denver-based Fairfield Development is in the process of getting a building permit for a 350-unit apartment complex it plans to build along Colorado Highway 128 between Eldorado Boulevard and Indiana Street, according to Richard Duplantis, project manager for what Fairfield is calling the Jeffco Project.

Construction costs per unit have not been determined yet, but Duplantis said the complex will have one, two and three-bedroom rentals. Square footage for the units will range from 707 square feet for a small one bedroom, to 1,235 square feet for a three-bedroom unit. Fairfield expects to get the building permit within the next month or two. Duplantis said the project should be complete by August 2001.

Another project in its preliminary stages is being developed jointly by Englewood-based Fiest & Associates and the Greystone Group of Greenwood Village. The community-focused, mixed-use project is planned for a site along U.S. Highway 36.