The Denver multifamily market is gaining traction among investors, as demonstrated by a recent nine-figure deal. Harbor Group International (HGI), a well-established commercial real estate owner, lender, and developer, has acquired two recently built apartment complexes in Denver for a total of $132.5 million. This marks HGI's first national asset purchase in 2024 and adds to their growing portfolio of multifamily properties in the Denver area. In 2023, HGI bought 13 multifamily properties, spending a total of $891.5 million.
A Shifting Multifamily Market
The Denver purchases come at a time when the multifamily market is experiencing changes both nationally and locally. Uncertainty over financing for deal activity has stabilized in recent months, according to cap rate data from brokerage CBRE. Buyers and sellers are finding common ground on the value of apartment assets post-pandemic.
Additionally, new construction in Denver, which had tempered rent growth to some extent, is starting to level off. Although more apartments entered the Denver market in the third quarter of 2023 than ever before, data suggests that this surge may have reached its peak. While more units are expected to come online in Denver, the volume of new construction is projected to decrease, creating a scenario where demand will exceed supply once again. This shift is expected to benefit landlords like HGI.
The Prospector Modern. Photo: HGI
Favorable Conditions for Landlords
Several factors favor the interests of landlords in the Denver multifamily market. Mortgage rates remain approximately twice as high as they were only two years ago, making home ownership unattainable for many. In addition, institutional buyers are purchasing large numbers of properties to rent out, further increasing competition for rental units.
Jordan Slone, HGI's chairman and CEO, predicts strong multifamily fundamentals in the coming years. He anticipates that the absorption of new construction deliveries will drive this growth, with a notable upturn expected from the second half of 2025 into 2026.
The Denver Deals in Detail
HGI's acquisition includes the Prospector Modern, a 238-unit apartment complex located in Castle Rock, a suburb of Denver. As of 2024, the complex boasts an 86.1% occupancy rate. Situated approximately 25 minutes away from the Denver Tech Center, a major business hub for Colorado, the Prospector Modern offers one-bedroom units starting at $1,855 per month.
The second property, Ladora Modern, is located in Denver proper, just a 10-minute drive from Denver's airport. With 196 apartments, the complex had an occupancy rate of 84.7% in 2024. One-bedroom units at the Ladora Modern start at $1,795 per month. According to CBRE data, Denver's average effective rent (rent minus incentives) was $1,902 per month in the fourth quarter.
These upscale apartment complexes come with the amenities that tenants expect in higher-end properties, such as in-unit washer-dryers, pet spas, fitness centers, pools, and even garages in some cases.
A Collaborative Effort
The seller of both complexes, believed to be the Garrett Companies, was represented by a CBRE multifamily team based in Denver. In addition, CBRE arranged the acquisition financing, with teams in New York and Denver facilitating the process.
While the Garrett Companies declined to comment, the acquisition represents another successful venture for HGI. As the multifamily market in Denver continues to evolve, HGI's strategic investments position them favorably in a promising market.
Tom Acitelli can be reached at [email protected]
