The records keep on being set in Colorado Springs.
Grand River Canyon sold in the highest-priced multifamily transaction to ever close in Colorado Springs and the third-largest trade of any asset class in the city’s metropolitan area since 2001.
Atlanta-based Courtland Partners paid $73.3 million, or $166,590 per unit, according to public records, for the 440-unit Grand River Canyon. Approximately a dozen offers were received on Grand River Canyon from a number of investors from around the country – a testament to the increased interest and growing confidence in apartment assets in the city.
“With job growth, rent growth, minimal construction and low vacancy, Colorado Springs checks all of the boxes of a model multifamily investment market,” said Kevin McKenna of ARA Newmark. “Annual rent growth is 9.1 percent, the fourth highest in the U.S., while vacancy is at a 15-year low. New buyers are developing confidence in such attractive fundamentals, which has helped us achieve record-breaking prices.
“The rents, the occupancy are really some of the strongest in the country and are really driving NOI growth, and that, obviously, improves the value at the end of the day,” continued McKenna, who represented seller Griffis Residential with ARA Newmark’s Doug Andrews, Jeff Hawks and Saul Levy. “Given those attractive fundamentals, more and more buyers are looking at the market and see that it has a bright future and are willing to jump in.”
Grand River Canyon is the latest in a series of record-breaking apartment transactions to close in Colorado Springs this fall. The Encore at First and Main community sold for $67.3 million and at a record price per unit of $213,650. Talon Hill sold for $56.5 million – the third-largest overall sale by dollar volume and price per unit at $204,710 – and The Vineyards, which sold for $55.25 million, was the fourth-largest overall sale by dollar volume and price per unit at $184,167 ever in the Colorado Springs market.
“Grand River Canyon is the third-largest community in Colorado Springs,” noted McKenna. “It is not often that you see 400-plus units in one single asset. You just don’t build assets like this anymore so it offered immediate scale for a group wanting to plant its flag in Colorado or Colorado Springs specifically. Its size attracted institutional, JV partners, which are relatively rare in this market.”
The market’s dearth of new construction on the horizon also is of interest to potential buyers.
“The lack of construction is what is getting people excited. Construction continues to be minimal; our absorption is far outpacing our supply,” added McKenna.
Grand River Canyon represents Courtland Partners’ first acquisition in the Colorado Springs market. Courtland purchased the community, constructed in 1999, with plans to update the property, comprising one-, two- and three-bedroom units.
The apartments at Grand River Canyon are not renovated, making it an ideal candidate for a value-add program that will allow it to compete with newer product, according to ARA Newmark.
“The average unit size at this property is smaller than the competition, allowing an attractive price point in a submarket with the highest rents in the city and an amenity package superior to newly built product,” added McKenna, noting Grand River Canyon features an average unit size of 800 square feet and amenities including a three-tier, resort-style pool and the largest pool deck in the city, a fully equipped clubhouse with an indoor tanning bed, business center, fitness center and a dog wash station.
The ability to update unit interiors offers “a lot of opportunity to add value and still be priced below new product coming on line,” he added.
Grand River Canyon was 98 percent occupied at the time of sale. It is located at 7755 Kaleb Grove Road.
