Denver’s Economy Is Growing, Along With The Need For Multifamily Housing

Driven by the abundance of job opportunities and a lower cost of living compared to many of the nation’s largest cities, Denver's population rose by more than 115,000 over the last decade. With population growth comes economic prosperity, and the local economy has become the sixth-fastest-growing in the country.

A thriving economy, however, also highlights the need for more housing.

“As of June 2023, the city’s median home price was over $600K, so getting into a home in the Denver area, and in the Front Range, is proving to be difficult,”  Catamount Constructors Division President Mark Barton said. “This is driving a lot of people toward renting and multifamily construction.”

Catamount Constructors is a 100% employee-owned general contracting and construction management company with offices in Colorado, Georgia, Florida and Texas. The firm has delivered more than 50 multifamily projects valued at more than $1.4B.

To learn more about the Denver multifamily market, Bisnow spoke with Barton about the growth the sector is witnessing, what projects the Catamount team is working on and the challenges that Denver faces in its quest to build more housing.

Barton will be speaking at Bisnow’s Multifamily Annual Conference Rockies Sept. 6 alongside other leading multifamily leaders and professionals. Register here.

Bisnow: Can you tell us about the growth that Colorado’s multifamily sector is seeing?

Barton: Colorado is a wonderful place to live, and there are a lot of people who want to live there. Denver and the Front Range in general are seeing an influx of people moving to the area. Homes in this area have become more expensive to buy, so this is forcing more people into multifamily rentals as opposed to homeownership.

Although there is increasing demand for rentals, those tenants still expect newer products. They want to see nice amenity packages and finishes in their facilities, which also adds cost.

Projects take 18 to 36 months to kick off due to long wait times during the entitlement process, which makes heightened costs a challenge. During that wait time, the demand for housing keeps growing. Simultaneously, the construction labor pool in the Denver area struggles to keep pace with development needs. It makes forecasting and estimating more challenging, but Catamount has a dedicated pre-construction and estimating team that goes above and beyond for our clients to provide accurate pricing, even up to two and a half years out. 

Bisnow: How does Catamount work with its clients in the multifamily space?

Barton: Our clients continue to come back to us because of our accurate pricing. We go about our estimations and budgeting with significant historical cost data and work through lots of detail. Clients come back to us because of our realistic pricing and pre-construction approach. 

Communication is key, and we make sure that we provide our clients with real-time information so they can keep making informed business decisions. Once we get to construction, we live up to our promises and complete high-quality projects on time and on budget. We want our clients to focus on getting their next deal, not worrying about their current project.

Bisnow: What multifamily projects has the team been working on this year in Denver, and what challenges have you noticed?

Barton: We have six projects right now in our pre-construction department in various stages. They're primarily in Aurora and Castle Rock, as well as one in the DTC area.

In Denver, the biggest challenge right now is construction costs. These costs are still high across Colorado, about 38% higher than pre-pandemic. In addition, there are heightened land costs, so our developers are struggling to make deals work given those two factors. Then you add in higher interest rates, and that just fuels the fire.

Our success hinges on how we can affect the budget on our side as little as possible while increasing revenue for our developers. We go above and beyond to stay on cost and are able to hold our cost even for 12 to 18 months. We approach budgeting challenges creatively to help our clients keep projects moving forward. One way we’ve been able to help clients find project success is increasing rentable square feet. Adding another floor of stick framing doesn’t significantly impact construction cost but adds a significant amount of additional rentable square feet.

Catamount regularly goes above and beyond for its clients and to help them succeed.

Bisnow: What do you think the future of Denver’s multifamily market will look like given today’s market obstacles? 

Barton: Due to the population influx, deals are still getting done regardless of the challenges. Denver has historically delivered somewhere between 10,000 and 12,000 multifamily units annually. Now, we need to have at least 17,000 units to keep with demand. 

I see the market continuing to grow for the rest of 2023 and into 2024 and 2025, but the market may be slower to deliver units during this time. The unfortunate thing is that our labor pool only has the capacity to deliver about 10,000 to 12,000 units right now. 

There's a long runway to where we want to be as a market. We're going to see a little dip in the number of units delivered in the short term, but then we're going to hopefully see a reset in the next few years that spurs explosive growth. 

Catamount is well-positioned to help clients take advantage of the future explosive multifamily growth.

This article was produced in collaboration between Catamount Constructors and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.