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Housing Affordability Crisis in Colorado: Denver, Colorado Springs and Grand Junction See No Signs of Improvement

The real estate market may have cooled by some measures, but the housing affordability crisis is still a serious problem in three major markets — Denver, Colorado Springs and Grand Junction – and isn’t showing any signs of improving.

Common Sense Institute, a Denver-based research organization, released results of three studies focusing on the supply of housing, the demand, permitting activity and an analysis of affordability.

READ: The Economics of Housing Inflation in Colorado — Exploring the Supply and Demand Imbalance

The takeaway: “Our housing crisis continues,” said CSI Senior Economist Steven Byers. “Costs are rising for a limited supply and the ability to purchase a home is shrinking for many Coloradans.”

According to the studies, released Feb. 2, housing supplies in all three communities are falling well behind the demand.

“Recent drops in the levels of permitting in each city indicate a new trend, where there won’t be enough new housing units to meet the needs of the projected population growth and fill the existing gaps and stabilize the market,” Byers said.

Key findings of the housing studies:

  • The ability to purchase a home is increasingly difficult. Since 2015, when the Colorado Homebuyer Misery Index surpassed the national average, the affordability of purchasing a new home in Denver has decreased by 101%, by 106% in Colorado Springs and by 96% in Grand Junction. Nationally, affordability has decreased by 86% during that same period.
  • Paying the average mortgage takes more work. Since 2019, the year before the start of the pandemic, the number of hours of work at the average weekly wage required to afford a mortgage on the average priced home has increased by 70% in Denver (61 hours to 104 hours), 76% in Colorado Springs (58 hours to 102 hours) and 74% in Grand Junction (57 hours to 99 hours).
  • Current levels of permitting for new housing may not be enough. To both meet the needs of the projected population growth and to fill the existing gap in housing supply, Denver will need to permit between 5,187 and 8,151 new residential units per year. Colorado Springs will need to permit between 4,730 and 6,485 units. Grand Junction will need to permit between 526 and 779 units.

To read the complete studies and explore the housing affordability crisis, visit commonsenseinstituteco.com.

Introducing the Newest Residential Highrise in Denver’s Golden Triangle

Revesco Properties/Alpine Investments (RPAI), Pinkard Construction, and OZ Architecture celebrated the groundbreaking for a 12-story, multifamily project, akin Golden Triangle, on March 14th. Construction commenced in early February and is expected to continue into Q4 of 2024. The luxury-boutique building will contain 98 units of multifamily and amenities.

READ: Pinkard Completes Construction on Multi-Family Development in Platt Park Neighborhood 

“The Revesco and Alpine teams, along with our design and construction partners, have worked diligently over the past year and a half to get this project entitled and financed in a challenging environment,”said Churchill Bunn, Managing Partner of Alpine Investments. “We are excited to see akin Golden Triangle go vertical in the coming months and look forward to delivering a first-class project to one of Denver’s most exciting urban neighborhoods.” 

Positioned along Bannock Street, akin Golden Triangle is one of four of RPAI’s upcoming projects that will operate under the umbrella of one brand known as “akin”. RPAI is developing the brand to appeal to a sophisticated, discerning, urban-minded resident while elevating each local neighborhood by creating an elegant and timeless living experience. While exterior and interior aesthetics and amenities will vary per location, each will draw upon the same brand foundation: a distinctly urban recipe of design, wellness, culture, service, and connection to the neighborhood. 

“We’ve approached the design of akin Golden Triangle with a deep respect for context, materials, and the inspiring aspirations of our client. The impact of its architecture lies not only in its aesthetic appeal but in its ability to shape its immediate environment and elevate the collective urban experience of Denver,” said Nate Jenkins, Principal with OZ Architecture. “This project is the result of the incredible teamwork of OZ, Revesco, Alpine, and Pinkard. It will leave a lasting impression, enrich the lives of its occupants, and adds to the vibrancy found in the Golden Triangle Arts District.”

Tony Burke, President of Pinkard Construction, says the project is a natural fit for Pinkard’s teams who have extensive experience building almost 200 multifamily projects across the Colorado front range. Burke says he is excited to partner with OZ on another urban Multifamily project. 

“It’s exciting to see the long-term vision of the development team come to life as we break ground on this unique project,” said Burke. “We’re thrilled to partner with Revesco Properties, Alpine Investments, and OZ Architecture to create a vibrant, urban living experience in the heart of Denver’s Golden Triangle neighborhood.” 

Equity for the project was provided by Cohen & Steers (www.cohenandsteers.com) and Posterus Partners (posteruspartners.com). The project’s construction lender is MidWestOne Bank (www.midwestone.bank).

 

Alpine Investments is a Denver-based real estate investment and development company focused on the design, development and construction of upscale, urban infill projects in walkable, high barrier-to-entry neighborhoods along Colorado’s Front Range.  Alpine supplements its own design, development, marketing and asset management expertise with a strong network of dedicated industry partners in order to create differentiated offerings that meet the demands of today’s sophisticated tenants and buyers.  Alpine’s recent projects include Edge LoHi, a 44-unit residential condominium project in Denver’s Lower Highlands neighborhood, Lyric no. 39, a 39-unit mixed-use residential project on Tennyson Street in Denver’s Berkeley neighborhood, and Noble | Old Hampden, a 119-unit multifamily residential project in the Englewood Medical District.  For more information, please visit:  www.alpineinv.com

The Economics of Housing Inflation in Colorado: Exploring the Supply and Demand Imbalance

The lack of affordable housing in Colorado for middle and lower-income households is a lesson in economics. Unlike the healthcare market, which is muddled with third-party payors, the housing market is straightforward supply and demand analysis. Demand has been far outpacing the supply of housing for the last decade in both the ownership and rental markets, driving up housing inflation across Colorado. 

READ: Evergreen Real Estate Group Leads Affordable Housing Development in Globeville

Housing costs have been rising dramatically throughout the state and nation. Since the pandemic, housing has been the greatest driver to our high inflation rates. Even slow- and no-growth areas like the Lower Arkansas River Valley east of Pueblo have experienced dramatic housing inflation even though job growth is minimal in the area. Moderate income Front Range retirees and workers are relocating to the area due to affordability, and investors have followed suit thinking cheap housing assets within a couple of hours of urban areas are a good long-term investment. 

Housing is a basic need where demand is driven by household growth, which is influenced by birth and death rates and urban concentration of economic opportunity pushing migration. In recent decades, relative affluence across much of America has also resulted in housing as an investment through second homes and the acquisition of investment properties. Even the tourism market is increasing housing demand through short-term rentals. Global capital markets, perceiving better potential returns from housing investments, are funneling dollars into the U. S. from around the world. This started after the 2001 dot-com bust and has continued except for the years surrounding The Great Recession. The low-interest rate environment since 2009 added massive fuel to the fire until 2022.

For prices to be increasing so dramatically, demand growth must be far exceeding supply growth – at least supply that meets societal expectations of “suitable housing.” As a result, market adaptation is occurring. More rental households are paying at least 50% of their income in rent. Households are doubling up. Multi-generational households are increasing. Average new unit sizes are decreasing. There is some localized pushback on short-term rentals. RV and van alternative lifestyles are becoming much more prevalent. Innovators are manufacturing tiny homes, pre-fab factories, and even 3-D printed homes.  These substitutes for traditional housing attempt to remain a step ahead of homelessness. 

Our governments, at every level, effectively limit housing supply that could be suitable alternatives to the above market adaptations. They constrain the housing supply growth through adoption of more stringent building codes, planning and zoning limitations, and cumbersome land entitlement processes. A study we did for the Colorado Springs Home Builders Association a few years back found local government requirements equate to 26% of the total price of new housing. Even when local land use policies support new and more affordable housing types being developed, democratic processes are heavily influenced by people who advocate for greater housing opportunity as long as it’s “not in my back yard.” The result is discrimination based on income at the very least. 

READ: New Approaches to Affordable Housing in Resort Communities

It is not just governments and NIMBYs that greatly constrain the housing supply. Great hindrances to the supply side come from insurance companies, fire professionals and environmental groups interested in protecting property, public safety and long-term sustainability, respectively.

Culturally and politically constraining our ability to increase the supply of traditional housing results in housing-costs indices rising much more rapidly than incomes over the last half-century. No wonder the corporate and investment sectors see nothing but long-term opportunity in housing and are funneling money into the market. 

The federal government’s effort to counter the supply constraints through low-income tax credits or direct investment through local housing authorities is absurd. Building enough housing to standard housing codes and socially acceptable sizes probably cannot be done without dramatic cutbacks to Medicare and Medicaid – assuming neighborhoods did not organize to oppose workforce or affordable housing. 

We need to re-engineer our societal constraints on the housing supply. Re-engineering requires radical redesign with targeted cost savings of at least 30%. Throw out the legacy models that hinder us and start over, using new technologies and emerging realities like climate change. Re-engineer building codes, public inspection processes, and land entitlement rules and regulations. There should be six objectives:

  1. Mitigate fire risks where fires are most likely to erupt.
  2. Pursue density.
  3. Allow development generally consistent with current zoning, and reallocate planned land uses to minimize NIMBYism
  4. Encourage existing small property owners to participate through the addition of mother-in-law apartments and accessory dwelling units.
  5. Keep residential areas residential as opposed to commercial tourist zones; 6) embrace new housing designs, materials and production approaches. 

Unfortunately, re-engineering requires we quit being our own worst enemy – something much easier said than done. It’s time to fight housing inflation in Colorado, once and for all.

 

Tom BinningsTom Binnings is a senior partner at Summit Economics in Colorado Springs. He has more than 30 years of experience in project management, economic and market research, real estate development, business analytics and strategic planning. He can be reached at (719) 471-0000 or [email protected].

4 Biggest Risks of Real Estate Investing in 2023 and How to Minimize Them

Real estate investing is one of the surest paths to building wealth, but it’s not without certain risks. And in 2023’s unsettled and hazy market, those risks could sneak up on you. 

With demand tanking, prices flattening, mortgage rates at historic highs, inventory increasing, and general inflation driving up costs across the board, this is a completely different market than the one that investors were operating in for the past decade. And the only thing the experts agree on is that no one knows where it’s going from here. 

READ — How Do Interest Rates Impact Real Estate Investing?

So what should a real estate investor do in 2023? There’s no easy answer to that question, but we can tell you how to tackle and minimize some of the biggest risks of real estate investing in 2023. 

If you’re flipping houses, you might want to consider becoming a landlord

Flipping houses has been extremely profitable for the past decade, but 2023 should see the market tightening up quite a bit. With demand sagging, rehab costs going up, and days on market doubling or even tripling, house-flippers have a little tougher path to profitability than before.

So why not try the landlord route? With mortgage rates at historic highs, many would-be home buyers are opting to rent. Going from “fix and flip” to “fix and hold” could be an easy way to wait out the market — while collecting some very nice rental income. Who knows, you might even prefer being a landlord to flipping houses.

Buying will be easy — maybe too easy

After years of maxed-out demand and escalating prices, the market has cooled. Put off by high mortgage rates, individual buyers are sitting out, and even iBuyers, stung by 2022’s flattened price curve, have largely paused their acquisitions. Inventory is inching up, projected to increase in 2023.

For individual investors, that means it’s going to be a lot easier to buy in the coming year. There are more properties to choose from, since competition is at a low ebb. For many investors, especially ones sitting on a lot of cash, this could present an irresistible opportunity to go on a buying spree.

But be careful! After so many years of steep competition, it’s easy to get caught up in the moment and snap up a property (or five) without doing your due diligence. Although it definitely makes sense to take advantage of a slow market, stay cautious, stick to your principles, keep an eye on your investment goals and resist the temptation to buy just because you can.

READ — Start Investing in Real Estate: 6 Tips for Millennials

Don’t forget to keep close track of your finances

No matter how solid your financial situation is, now is the time to keep a very close eye on your cash flow and your obligations. You’ve probably heard the expression, “death by a thousand cuts.” In 2023, you could very easily go broke by a thousand cuts. 

Why? Well, the simple answer is that some investors are getting squeezed on both sides. Prices have flattened or declined in many markets. Interest rates have skyrocketed. The price of materials and contractors have increased. Rental rates have sagged, meaning that your income projections might fall short. Homes are sitting on the market longer, leading to carrying costs piling up, which can eat into your profit margins. Not to mention the historic inflation across the rest of the economy.

All of these little cost increases can add up faster than you think and burn through your cash reserves. Avoid being taken by surprise by keeping a close eye on your cash flow and constantly updating your projections with the latest data.

The market will evolve (again)

The pandemic seriously disrupted the real estate market almost overnight, as many fled large urban markets to settle in the suburbs and more rural areas. This deflated several booming city markets and sent prices rising in formerly sleepy regional markets. Investors followed, and some of the top house-flipping markets in 2022 were smaller cities like Greensboro, North Carolina, Scranton, Pennsylvania, and Buffalo, New York.

However, that trend seems to be on the verge of reversing in 2023. With the pandemic waning, many big employers are looking at ending or curtailing work-from-home policies, which would lead to a huge migration back to cities. That could give investors a bit of whiplash just when they thought they were settling into a new normal.

Avoid getting caught on the wrong side of the curve by keeping a close eye on movements in smaller, regional markets, as well as on big-picture employment issues. Then, allocate your money accordingly. And as you shift your investments between markets, don’t overlook new money-saving measures, such as buying or selling with low-cost real estate agents. Those commission savings add up fast!

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times, and more. 

4 Tips for Rebranding Your Business – And What It Reminds Us About Entrepreneurship

As entrepreneurs, our businesses grow and evolve in ways we never expected. Our business plans, products and services, even the very identity of our ventures, are constantly changing — that’s why rebranding your business at the right time is so important.

So when was the last time you considered if your logo is still an accurate representation of your business? 

Your logo is the face of your business — but even the prettiest ones can do with a facelift. For example, 74% of the S&P 100 companies rebranded their business within their first seven years. If you haven’t turned a critical eye to your logo since you printed your first business cards, then it might be time to consider a rebrand. 

READ — What Are the Safest Industries to Start Your First Business in 2023?

And as it turns out, an experiment in rebranding can remind you of the fundamental principles that made your business successful in the first place. 

Why Rebrand? 

Growth and adaptation are the foundations of a successful business. Those that do it well thrive, while those that don’t struggle to survive. Think back to the early days of your business. How much has changed? 

Our real estate brokerage, LUX Denver, is celebrating its tenth birthday this year, and it got us thinking about how different our brand is today compared to when we started. We’ve expanded, our clientele has changed, and our vision for what we want to achieve has clarified and sharpened. 

Last year, we began to feel that our logo no longer reflected the business in its current form. So we embarked on a journey to bring it up to date, and along the way, we picked up a few valuable tips for anyone considering a refresh of their brand. 

Start With Your Vision 

Why do you do what you do? Why is it important? And how has that changed since the early days of your business? 

Rebranding is an abstract experience that requires us to reflect deeply on the core values of our business so we can be sure they remain at the forefront of everything we do. So before you start sketching and brainstorming, take some time to explore your vision for your company’s future, and let that be your compass throughout this journey and beyond. 

Know Your Audience 

Who is your audience now? What do they have in common? And what do they expect?

Over the last decade, our brokerage has refined our niche in the luxury homes market, so we needed to modernize our logo to meet those standards. In addition, we recently expanded to new markets, so our branding needed to symbolize that our services have grown beyond the Denver Metro area. 

Take the time to describe your ideal client. This will inform your design choices as you explore new concepts for your logo and cue you into what clients expect from you in everything you do. 

READ — Determining Your Business’s Target Market: Why It’s Necessary and How To Do It

Stick to What You’re Great At

If you’ve never worked with design software before, let us clue you in on something: it’s hard. Take our advice and hire a professional designer to help bring your ideas to life. 

When you were a new entrepreneur with razor-thin margins, you likely had to do much of the heavy lifting yourself. But now that you’ve “made it,” recognize that you can create the most value by sticking to what you’re exceptional at and delegating the rest. 

Trust Your Instincts

So, after all that brainstorming and a few dozen mock-ups of a new logo, how do you know when you’re done? The same way you knew it was time to rebrand in the first place: you trust your gut. When you feel like you’ve found the right design, the one that resonates with you, listen to that feeling. 

Our instincts are all we have as entrepreneurs. They tell us which risks to take and which to avoid, which deals feel right and which don’t. Listen to those feelings. 

To help you conceptualize all this, here’s where the process took us.

From this:

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To this:

Final Lux Logo Logo Denver Black

 

 

 

 

 

And ultimately to this:

Unnamed 1

 

 

 

 

 

The central, continuous line creating “LUX” conveys the forward momentum and growth we’re striving for, a theme reinforced by dropping the period that once followed the name. The ideai – for our company, our clients, and this new logo – is to create connections. Whether at home, at work or in the community, connecting with the people and places that create Inspired Living is the ultimate purpose of our brokerage, and we love how this logo conveys that.

Rebranding our business reminded us of the fundamental lessons of entrepreneurship that are all too easy to forget when you’re in the daily grind. A refresh of your logo is an opportunity to get out of a rut and explore new possibilities for you, your brand, and your business. So what are you waiting for?

 

A E PhotoIn 2014, Colorado native Aaron Cummins and Emily Duke founded LUX Denver Real Estate Company. As entrepreneurial-minded individuals with backgrounds in psychology, both were seeking a business that would enable them to create meaningful relationships, make a difference in an industry they loved and find Inspired Living in their lives and business. You can learn more at luxdenver.com.

Pinkard Completes Construction on Multi-Family Development in Platt Park Neighborhood  

Located just two blocks from the Louisiana/Pearl light rail station in Denver’s desirable Platt Park neighborhood, the 34,619-square-foot multi-family residential property offers 42 units with a focus on small unit sizes with lower monthly gross rents.

Denver-based investment and development firm Confluent Development, in partnership with Narrate Companies, is the project owner. Throughout construction, Pinkard worked closely with OZ Architecture.

Tony Burke, Pinkard’s president, says the project is a natural fit for Pinkard’s teams and partners at Confluent and Narrate as the collaborative development journey drew upon extensive experience building multi-family projects across Colorado.  Burke adds that, to date, Pinkard has completed nearly 200 multi-family projects, totaling almost $2.5 billion worth of construction.

READ — New Approaches to Affordable Housing in Resort Communities

“Confluent Development and our project partners have done a tremendous job delivering new and innovative multi-family spaces to Denver, and we’re very excited to be a part of the Carraway project,” Tony Burke, president of Pinkard Construction, said.

In December 2021, the project partners celebrated the groundbreaking and official start of construction.

“Thanks to the close collaboration with our project partners at Pinkard, Narrate, and OZ we remained on track to deliver a complex, high-quality multi-family product within the budget that will offer a boutique and sophisticated residential opportunity in Platt Park at an attainable price point,” said Nick Kitaeff, senior development director at Confluent Development. “Carraway on Penn is primed to seamlessly integrate into this community, one of Denver’s most beloved neighborhoods.” 

The property incorporates features that adapt to today’s changing workplace, such as shared workspaces and upscale finishes. It will appeal to those seeking an active yet simplistic lifestyle with convenient access to mass transit, parks and recreation and nearby shopping and dining. 

“Pinkard’s customer service and collaborative spirit are among the best in the industry. From groundbreaking to the grand opening, we are thankful to have Pinkard as a strong partner and celebrate their team for this notable milestone at Carraway on Penn,” said Dean Barber, executive vice president of development management at Confluent Development.          

“Pinkard, Confluent and the rest of the team did a great job executing and delivering this project in an extremely challenging construction environment. We are excited to bring high-quality units to an extremely supply-constrained market,” said Adam Fenton of Narrate Companies. 

 

Pinkard Construction is a construction company specializing in ground-up, renovation, construction manager/general contractor (CM/GC), and design-build projects. Our experience includes many senior living, affordable housing, multi-family, recreation, municipal and commercial projects. We focus on maximizing value while providing durable, life-cycle-tested materials and construction techniques that are management-friendly for owners and facilities. For more, visit www.PinkardBuilds.com  

How to Sell Your House in a Down Market — 6 Easy Tips

For the past two years, the real estate market has been moving at one of the quickest paces on record.  With houses coming and going from the market in hours and sales prices at record highs, selling your house was never easier than in 2022.  But as mortgage rates rise, home prices level, and houses have begun to remain on the market for a longer time. While this slowdown is really a return to normal, it is still more difficult for homeowners to sell their house in the slowing market. It may take more time and a bit more work, it is still very possible to sell your house in a down market with a few minor adjustments.  

READ — All-Electric Houses On the Rise: Colorado Homebuilders Embrace Alternatives to Natural Gas

How to Sell Your House in a Down Market — Hire a Top Real Estate Agent

You can try to sell your house in a down market by yourself, but that may end up costing you in the end.  For sale by owner homes typically sell for less than homes sold with a realtor and take longer to sell.  A real estate agent can market and show your home to a larger number of people.  He or she can also assist in negotiations that may lead to a higher sales price and a faster home sale.  

Price Your Home Correctly

Yes, your neighbor may have sold their home for $100,000 over asking price last year, but that is most likely not going to happen in a slower market.  Don’t try to overprice your home, this will only lead to it remaining on the market longer.  But don’t underprice your home either.  A drastically low price can make buyers suspicious and turn away those who may worry something is wrong with it.  

Know Your Home’s Value

Have a comparative market analysis or pre-listing appraisal done on your home.  Both of these will give you a good indicator of what your selling price should be.  A comparative market analysis (CMA) is used to compare your property with recently sold properties nearby.  A CMA will take into account comparable properties such as square footage, age of the home, location, upgrades, nearby amenities, and other data in order to calculate your home’s value. 

READ — 2022 Trends in Colorado Residential Homes

Maintain Curb Appeal

There is a good reason why 99% of real estate agents believe that curb appeal needs to be on point when you are selling your home and it is not because they love colorful flowers.  Curb appeal has been shown time and time again to draw in buyers and to increase the final sale price of a home.  To up your curb appeal game, start with a deep clean of the exterior of your home.  Next, upgrade your greenery.  Plant easy-to-care-for shrubs and bushes and colorful perennials, and add a fresh layer of mulch to your landscaping.  Finally, mow your lawn. A fresh-cut, weed-free lawn can increase your home’s sale price by more than $2,000.  Use a weed control product and add grass seed to any bare or thinning spots. 

Make Necessary Fixes

Certain repairs should be done before listing your home so that if a buyer is interested they won’t be deterred by small defects.  The main fixes to make are roof damage, old windows, outdated appliances, and chipped or dull paint.  Roof damage can be a big fix, but a new roof goes a long way to attract and persuade buyers to purchase your home.  The same is true of replacing old windows.  Now more than ever, buyers are looking for energy efficiency and windows are one of the best ways to improve it.  Chose Energy Start certified windows as replacements and seal up any air gaps around the windows.  Adding energy efficient appliances is also appealing to those looking for savings on their electric bill.  

READ — 10 Easy Ways to Upgrade Your Rental Property

Get Creative with Marketing

Your home is listed. You’re having open houses and showings, but no offers have been made.  It might be time to step up your marketing game. Tell everyone you know that your home is for sale.  You would be surprised how often word of mouth leads to a home sale. You should also use Facebook, Twitter, Instagram, and even TikTok to get the word out about your home.  

When selling your house in a down market, every aspect of selling your home needs to be considered and planned out.  Hire a knowledgeable real estate agent, market your home like a pro and have your home in perfect condition.  Implementing these strategies will lead to a faster home sale and a higher sales price even in a down market.  

 

Andrea KeeneyAndrea Keeney is a freelance writer with HomeLight. She holds a degree in Secondary Education and Language, LIterature, and Writing from Eastern Michigan University. When Andrea is not writing she is balancing her time as a mother, fitness enthusiast, and avid gardener.

10 Things You Should Check for in Home and Property Insurance Policies

Real estate investing is risky enough even before you consider the typical challenges of owning a property. If you are planning on adding to your investment portfolio, here are 10 things you should check for in your home and property insurance policies.

READ — 5 Tax Benefits for Real Estate Investors 

Landlord Insurance

Also referred to as rental property insurance, this is a quick way to bundle almost every type of insurance you need in one package. It covers:

  • Damage to your property by tenants 
  • Damage to any detached buildings or equipment 
  • Vandalism

Landlord insurance may not cover things like floods or construction expenses, and it does not always cover lost income due to gaps in renters. Read the fine print to see if your policy includes guaranteed rental coverage. In general, it provides fairly comprehensive coverage and is a good policy to start with if you only have one property.

Liability Insurance

This is a type of “slip-and-fall” coverage that pays for things like:

  • Theft
  • Injury on the property
  • Hospital or rehab bills for an injury that occurs at the property
  • Lawsuits against the landlord

Short-term rentals and commercial properties need this type of insurance to protect against issues that might arise should someone be injured on their property.

Fire and Hazard Insurance

Unless you purchased your property in cash, chances are good your mortgage requires fire and hazard insurance. This may also cover things like theft and storm damage, but make sure to insure your property for its replacement cost — not just its cash value at the time you purchase coverage.

Even if you’ve used cash toward a new property to offset capital gains tax from the sale of another home, it’s important to protect your investment.

READ — What To Do After Filing a Fire Insurance Claim

Water and Sewer Line

Investors with apartment rental properties, this one’s especially important for you. Most cities and towns cover water and sewer lines only to your property. The rest is the responsibility of the property owner. Damage to these can occur as a result of tree roots breaking pipes underground, or water and sewer lines may be blocked or broken by misuse on the part of tenants. 

Either way, the resulting water damage repairs and line replacement can easily reach tens of thousands of dollars.

Workers’ Compensation

If you have contractors or other people working at your property, workers’ comp covers any type of accident that happens while they are on the job. This differs from liability insurance in that it is specific to injuries that happen to employees while at work (and any lawsuits that might be brought as a result).

Builder’s Risk

If you are an investor who’s renovating and flipping or renting distressed properties, builder’s risk is helpful property insurance to have. It protects against property damage, injuries to workers, and vandalism at the site. This is best for projects that will take 60 days or longer, as these things are not generally covered by landlord insurance even if you plan on renting a rehab out.

READ — Construction Risks and 5 Insurance Policies You Need

General Contractor Insurance

If you’ve reached the point where you are managing your own construction jobs and hiring subcontractors for your property rehabs, consider general contractor insurance. This covers things like delays and other common emergency expenses.

Flood Insurance

Not all properties are located in a flood zone, but too many property owners assume their standard policy includes flood damage without even checking if they need it. Most policies don’t cover flood damage. Check with the Federal Emergency Management Agency (FEMA) flood zone maps to see if your investment is in a flood zone — then add flood insurance if necessary. 

Loss of Income

If you are unable to rent a property due to fire or other property damage, loss of income insurance can help. This does not generally cover normal lapses in rental periods. It is associated with a specific event or circumstance.

Umbrella Policy

When your coverage limits are not enough for you to feel comfortable, taking out an additional umbrella policy is a good move. This tax-deductible part of real estate investing helps close the gaps in coverage when a claim exceeds a standard insurance policy’s limits.

Home and Property Insurance Pitfalls

When looking for the best home and property insurance policies as a real estate investor, there’s a few things you should avoid, including:

  • Treating it like your own home insurance policy
  • Underinsuring your investment and crossing your fingers
  • Waiting to insure a rehab until it’s done
  • Setting a high deductible to save money

These actions can have catastrophic consequences if you find yourself short of cash with a damaged property that doesn’t have adequate insurance. Plan for insurance as part of your regular expenses as an investor, and you won’t be caught short if an emergency occurs.

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times, and more. 

How Life Sciences Are Fueling the Real Estate Demand in Colorado

Colorado is home to 720 life sciences companies and organizations that directly employ 32,089 people earning an average annual salary of $96,460 for a total annual payroll of $3.09 billion, according to the Colorado Bioscience Association. And at 33 facilities, it also has the largest concentration of federal laboratories in the United States. 

“We’ve seen the growth happening over the last five years,” said Elyse Blazevich, president and CEO of the Colorado Bioscience Association. “Colorado historically has been strong in medical devices and diagnostics, and we’re continuing to see growth in that segment. Now we’re starting to see more cell and gene therapy growth, and Fitzsimons is leading many of the efforts in this area.” 

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That growth has obvious implications for commercial real estate. Life science companies are searching for about 1.2 million square feet of space in a market that has just 87,821 square feet available.  

The vacancy rate for metro Denver’s approximately 4.8 million square feet of space is 4.3%. 

“In Boulder, up until the past few years, life science real estate transactions were more viewed as industrial,” said Erik Abrahamson, senior vice president with commercial real estate firm CBRE which focuses on life sciences. “They had low lease rates, low tenant improvement (TI) allowances, and the landlord expected tenants to put all the money into the space.” 

But that’s changed. Now, developers recognize the value of life science tenants and are sinking money into projects designed specifically for them.  

Developers are building projects in Denver’s north metro area specifically designed for life science companies.

Lincoln Property Co. is building a 450,000-square-foot life sciences campus at 235 Interlocken Blvd. in Broomfield. Three of the four buildings at CoRE — Colorado Research Exchange — will range from 110,000 to nearly 200,000 square feet. The fourth 15,960-square-foot building will house the campus’ amenities, including a fitness center, locker rooms, bike storage, a tenant lounge with fireplace, an outdoor terrace, state-of-the-art conference and training center and a food market.  

PMB and Montgomery Street Partners are building a $280 million life sciences campus in downtown Superior — the first purpose-built life sciences campus in Boulder County. Plans call for three office/lab buildings ranging in size from 85,000 square feet to 150,000 square feet and a fourth building with ground-floor retail and structured parking.  

Last year, Medtronic broke ground on a 42-acre campus in Lafayette that will be a hub for research and development. About 1,100 employees will work in two five-story buildings totaling more than 400,000 square feet. 

Others are converting existing properties into spaces life science companies can use.  

Koelbel and Co. is conducting an extensive renovation of a former 80,000-square-foot Kohl’s building at 191 W. Dillion in Louisville for Biodesix Inc., a data-driven diagnostic testing solutions company dedicated to improving medical care for patients with lung disease.  

Real estate company Blackstone Inc.’s BioMed Realty Trust unit paid more than $600 million for Flatiron Park, a 1 million-square-foot, 22-building life sciences campus in Boulder. It plans to invest about $200 million for capital improvements to the campus.  

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Companies are drawn to Boulder County because of its educated workforce and its burgeoning tech community, Abrahamson said.  

“Life science follows tech, and we’re seeing that firsthand,” he said. “Two years ago, we started seeing the first life science-focused real estate developers building out these facilities on spec and offering TI packages that were meaningful enough to reduce the cost. 

“Now they’re getting leases signed before the space delivers because there’s a lot of demand and not a lot of places for these companies to go.” 

Abrahamson said Colorado has the opportunity to build relationships with West Coast companies similar to how the Research Triangle Park in North Carolina — the largest research park in the United States — has attracted researchers and companies from the Boston and Cambridge areas of Massachusetts.  

“They’re doing the research, but they need the facilities,” Abrahamson said. “Fitzsimons and Boulder can accommodate this.” 

But who are the forces behind the growth?

Growth in Colorado’s life sciences industry is being fueled by its success in raising funds, access to an educated workforce and research coming out of the state’s universities.  

The state’s life sciences ecosystem raised $2.4 billion in 2021, a record for the fast-growing community and double the $1.2 billion that companies raised in 2020. The state has come a long way from the 2014 to 1016 period, when the eight-state mountain region struggled to hit the $1 billion mark. 

Funding comes in many forms. About $450 million of the 2021 funding came from venture capitalists, while federal grants accounted for more than $500 million with the largest recipients of the grants being the University of Colorado, Colorado State University and the companies that have spun out of the institutions, said Elyse Blazevich, president and CEO of the Colorado Bioscience Association.  

The state of Colorado also awarded $8 million in Advanced Industries Grants to 31 life sciences companies and university researchers in 2021. 

Life science companies also have raised money through initial public offerings and special purpose acquisition companies (SPACs).  Edgewise Therapeutics Inc., for example, raised $250 million in its IPO, and SomaLogic got $630 million through a SPAC. 

As Colorado’s life science industry continues to boom, companies are expanding and relocating here — and that’s resulting in demand for lab space and clean manufacturing space that developers are responding to.  

Cancer therapy company ViewRay announced Denver as its new headquarters in August, and Virta Health, a healthtech unicorn, announced in October that it would relocate from San Francisco to Denver. 

“There’s certainly a lot of discussion in the ecosystem about the growth and momentum and the need for lab space to grow at a comparable rate to make sure we can serve those companies’ needs,” Blazevich said. “We’re seeing a large number of investments to solve those challenges.” 

While the Boulder area and Fitzsimons Innovation Community have the largest concentration of life sciences companies, Blazevich said businesses are expanding across the Front Range.  

Terumo Blood and Cell Technologies, for example, recently opened a second manufacturing facility in Douglas County. Production at the $250 million, 170,000-square-foot plant will serve plasma collections customers with single-use collection sets for the recent Food and Drug Administration (FDA)-approved Rika Plasma Donation System.  

 

Margaret JacksonMargaret Jackson is an award-winning journalist who spent nearly 25 years in the newspaper industry, including seven years as a business reporter for The Denver Post covering residential and commercial real estate. She can be reached at [email protected].

Fitzsimons Innovation Community: Research, Tech Transfer and More 

With more than 50 acres of prime real estate on its campus, Fitzsimons Innovation Community is in the midst of a 10-year infrastructure facilities and expansion project that allows life science companies to plan and customize their workspace. 

The campus’ five existing buildings totaling 427,000 square feet of working laboratory and office space are home to 80 companies at all stages of commercialization. More than 800 people work at the companies, which collectively raised over $25 million in 2021.

Fitzsimons Innovation Community has a close partnership with the adjacent $5.8 billion University of Colorado Anschutz Medical Campus. The combined campuses are one of the largest bioscience developments in the nation, representing the second-largest economic engine in Colorado behind Denver International Airport.

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The Anschutz campus is home to UCHealth and The Children’s Hospital — two of the top hospitals in the nation.

“Our research institutions have gotten really smart about changing their strategy on tech transfer to be commercially relevant so when they spin it out it can attract angel dollars,” said April Giles, vice president of business development for Fitzsimons Innovation Campus. “The hospital systems started to get smart about how they look at innovation to treat their patients. They’re creating internal innovation systems that help them partner with companies to test out products and do co-development work. When they partner with a company to do that work, that company becomes more successful in the end.”

Four of the campus’ five buildings — Bioscience 1, 2 and 5 and Bioscience East— are 100% full, and Bioscience 3 is 75% occupied.  

Fitzsimons Innovation Community is taking steps to accelerate development of the campus as a world-class center dedicated to advancing life sciences innovation with the groundbreaking of Bioscience 4 in 2023. Bioscience 4 will deliver lab space to the market supporting startups, growth and commercial companies with space to expand – from half a bench to corporate headquarters. 

The development plan includes four phases to allow for quick expansion. Bioscience 4 will start at about 180,000 square feet. The vision is to develop up to 800,000 square feet.  

“We have a mission-driven purpose,” Giles said. “We are a real estate developer, but that’s not how we see ourselves. Developing a building is a means to an end. The goal is to provide an environment for our companies where they can accelerate their development and create a partnership with them. If a company needs to pivot in one direction or another, we can literally tear up their lease agreement and move them into the next footprint they need.” 

 

Margaret Jackson is an award-winning journalist who spent nearly 25 years in the newspaper industry, including seven years as a business reporter for The Denver Post covering residential and commercial real estate. She can be reached at [email protected].