Colorado Springs, Colo. may well become the poster child for the extraordinary growth of secondary cities in the Mountain West region, after significant increases in population and employment that are spurring high rental demand.
The population of the Colorado Springs metropolitan statistical area (MSA) has risen over 17% from 2010 to 2021, more than double the national growth rate, according to EASI Demographics. Additionally, the MSA’s workforce has grown approximately 14.8% to approximately 372,500 people over the past decade, three times the national growth rate of 5.4% during the same period, according to the U.S. Bureau of Labor Statistics.
The immense population growth and strong employment are the result of nationwide domestic migration to more affordable cities with greater access to the outdoors compared to more dense metros. This trend was accelerated by the COVID-19 pandemic as many people desired more privacy and spacious homes than urban centers can offer.
Many indications point to continued growth and healthy fundamentals in the Colorado Springs multifamily sector. Multifamily rents have increased 17% year-over-year in the third quarter of 2021, according to The Gazette, and vacancy rates were a low 5.5%, according to CoStar. Construction of new apartments increased dramatically this year to meet the demand, but the city is still in need of additional supply.
Many incoming residents are moving to cities on the Front Range like Colorado Springs from more expensive coastal markets, such as San Francisco, New York and Los Angeles, according to The Denver Post. There are even many Denver residents relocating to Colorado Springs for more affordable housing, The Economist observed.
As the pandemic caused an increase in remote working, it allowed more people to freely look for desirable housing in areas like Colorado Springs outside of the city where their employer is based. Also, a surge in for-sale home prices due to a rise in demand for houses because of the pandemic kept many would-be buyers in Colorado Springs on the sidelines.
Another result of the record home prices has been a rise in demand for single-family rentals (SFR) and build-to-rent (BTR) communities from residents who want to live in homes but aren’t ready for homeownership. However, the number of SFR and BTR assets in the Colorado Springs market are still scarce, making it an attractive sector for investment.
What Makes Colorado Springs Real Estate So Desirable
Colorado Springs is a thriving city that offers a balance of urban and suburban lifestyles.
There is ample opportunity for employment with more than 250 aerospace and defense firms in the area, according to the Colorado Springs Chamber of Commerce. Additionally, five military installations are settled in the city that make a combined $12 billion annual economic impact to Colorado Springs. The sports industry is strong as well, as the city is home to the U.S. Olympic & Paralympic Committee.
The economy looks poised to continue growing, and a major example is the Peak Innovation Park, a 900-acre master planned business park under development near the entrance of the Colorado Springs Airport. A 4 million-square-foot Amazon fulfillment and distribution center that is hiring 2,500 workers was recently completed at the business park. At completion, the business park will reportedly house 12 million square feet of office, industrial, retail, entertainment, recreation, and hospitality properties.
Colorado Springs has endless recreation possibilities for those who enjoy the outdoors, which helps the city draw more than 6 million visitors a year, according to Cushman & Wakefield.
With ample job opportunities, great quality of life and an abundance of outdoor recreational activities, the multifamily real estate industry in Colorado Springs has potential to continue its strong growth.