Getting your player ready...
When the Wall Street Journal came out last summer with a section-one story pointing up how apartment developers were putting too many luxury-end rental units into Denver, one person that wasn’t surprised was developer Darell Schmidt of Greenwood Village-based Allante Properties. Schmidt – whose development model uses smaller accredited investors to supplement his lender financing – has become a specialist in what he’s calling micro units – apartments no larger than 400 square feet that are affordable to millennial generation renters.
Last July, when Allante completed Highland Place in the popular Highlands area with its millennial-luring lineup of taverns and restaurants, the apartments were leased up within weeks; and the commercial/retail space was right behind. Last month, a wave of young renters bought homes, and Highland Place lost seven leases within weeks of each other. “The net effect of that,” says Schmidt, “was that all seven units re-leased immediately, and we raised rents on all of them.” Now Allante is deep into construction at Tennyson Place, 39th and Tennyson in Denver’s Berkeley neighborhood (the financing on that one is already complete); and is designing a third project, Emerson Place, a short walk from night life on E. 17th Avenue in Uptown (investment positions on that will be assembled soon). Both projects include that same unit mix formula in favor of smaller units, matched to the younger demographic that’s being priced out of Denver’s residential for-sale market. Even without that strategy, Schmidt says, rental apartments have been a proven performer, right through the deep market swings the Mile High City has experienced for the last 30 years. “Real estate is a sound way to conservatively build wealth,” says Jordan Meylan, Allante’s Director of Finance and Marketing. “When you look at the 25-year performance of Denver’s apartment market from the S&L crises of the late 1980s, through the 1990s tech bubble, through the subprime crisis to 2014, Denver has averaged an increase in sale price per unit of $5,128/year.” “The double-digit rent growth we’ve seen in the last few years is likely unsustainable,” adds Schmidt. “But even with the supply hitting the market now, Marcus & Millichap predicts rent growth at 7.8 perent this year; and a ten-year average at 7.2 percent.” Meanwhile, Schmidt and his team are setting their sights on 1833 Emerson in Uptown. Emerson Place will have the same walkability that’s proved so popular in Allante’s other projects, along with millennial-oriented amenities: private underground parking, a club room with fitness center, a view-swept Sky Deck with views of downtown’s skyline and the mountains, and an outdoor kitchen and fire pits. Along with the design, Allante is preparing documents that can be reviewed soon for investor positions — some expected as low as $25,000. “This will be another opportunity for smaller investors to invest in apartments and diversify out of stocks, into local real estate,” Schmidt says. Accredited investors can register and express their non-binding expression of interest to see more detailed information soon by going to GoInvestDenver.com. WHERE: Allante Properties, apartment developers currently building Tennyson Place, 81 Class-A apartments at W. 39th and Tennyson Ave in Denver’s Berkeley neighborhood, studios & 1-bedrooms, next to prime dining & shopping block on Tennyson Street north of W. 38th Ave. Also now in planning for Emerson Place, Emerson at Park Ave, in Denver’s Uptown neighborhood
