Our focus on the downtown Denver loft and condo market allows us to see the inventory on a weekly basis with our clients. This allows us to “keep our fingers on the pulse” of what is happening in this niche market. So, what are the important trends as we look at what is currently available as far as lofts and condos in Denver?
First, broad generalizations as far as trending are of minimal value. I say this because the Denver loft and condo market so different based on price range. At the very low end of the market, pricing remains stable and days on market remain low. This is primarily driven by investors increasing the demand for these low priced units. With vacancy rates at an all time low (some reports showing vacancy rates below 2% currently), investors are finding it easier than ever to purchase inexpensive lofts and condos that cash flow with less money down. These vacancy rates are also pushing more renters into purchasing lofts and condos as their primary residences, rather than paying high rental rates or getting locked into long term leases. These units are also more obtainable right now for lower income buyers due to the low interest rates. All of these factors play into the simple economics of supply and demand, creating a stable market at the low end of the Denver loft and condo market.
So, what is happening as you move towards the upper end of the market? The new SPIRE building is a great case study in this. It is currently the fastest selling high-rise loft/condo building in the United States. This success is great news for the Denver market, but a close analysis of their sales reflect the current state of affairs. Their inexpensive 1 bedroom units have literally flown off the shelf, while their highest priced and “penthouse” units are selling at a slower rate. Given the sales volume, you are not seeing discounting in this building, other than the occasional “developer special”, but the specials that you do see are on the upper end units. As the #1 selling firm that represents buyers interested in the SPIRE building, we know how to get good deals for our clients regardless of the price point, but we do find more flexibility at the upper end. The buyers we work with that are looking at the higher priced lofts can still get some extremely premium properties. The amenities, views and location are all second to none at the SPIRE. Thus, those buyers in the market that simply want the best that Denver has to offer will continue to absorb the higher end units in the SPIRE. When you move to other high end properties, you see more challenges for the sellers. Here supply and demand are out of balance and the advantage clearly goes to the buyers. Some downtown lofts/condos have taken a 25% hit from their last sales price. Location is a huge factor with regards to the level of depreciation the owners have taken. Fringe locations that don’t offer very high “walkability” scores, have suffered the most. Upper end buyers can have it all (case in point the SPIRE), views, amenities and location. Not long ago, this was not the case and our clients were having to pick and choose more as to what was most important to them, possibility having to sacrifice significantly in one area to get what they wanted in another. This being said, the options of truly premium properties under the $500K mark are still somewhat limited. Once our buyers move into the $500K+ lofts and condos, the selection improves and the discounting is more significant.
So, what is the moral of the story in the Denver loft and condo market currently? If you own and are looking to sell a lower end loft or condo, now would be a good time as vacancy rates and lower interest rates will help you obtain a good sales price and do so with lower days on market. If you are a buyer at the low end, looking at the buyer vs. rent equation, it may very well make sense to explore a purchase. At the upper end, sellers be ready to take a bit of a hit if now is the time for you to sell your loft or condo. This can be mitigated if your own in a premium location as inventory levels are not that high and people with wealth often recognize the value in getting the best for their money. If you are looking to purchase a loft or condo at the upper end, there are more options even if still somewhat limited. You won’t necessarily be picking up your loft or condo in a fire sale, but you will most likely be setting yourself up to see a good return on your investment as the market recovers. Case in point again with the SPIRE building, as the upper end inventory is absorbed, the selection options will decrease and the developer will likely be in a position to increase pricing over the coming months.
If you would like us to take a look at your positioning as a loft or condo seller, just let us know and we would be happy to provide a market analysis specific to your property. If you are looking to buy, we would be happy to show you the best options available. We would love to put our experience to use for you!
John Stegner & Brian Lehnerz
Broker/Owners
New Era Realty
(303)-522-7746
agents@mynewera.com