Scout Rock Capital LLC

The job market is softening nationally, but the Denver area is hiring more often and paying better wages compared to?the rest of the country. Find out whats making the difference in Denver and how the rest of the country stacks up.

?? Cortland Expands Multifamily Footprint in Colorado Springs Amid Booming Growth ?? As Colorado Springs experiences rapid population growth and surging housing demand, Cortland is doubling down on the region with a new 294-unit multifamily project. ??? The Cortland Peterson development, located near Peterson Space Force Base, is the firm's second project in the city and part of a joint venture with Promus Realty, Iviron Capital, and BMO Bank. Set for completion by mid-2026, this project reflects Cortland's confidence in Colorado Springs as one of the nation’s fastest-growing and most desirable cities to live. ?? With over 6,200 units in the pipeline, the region is becoming a key target for multifamily investment. #MultifamilyDevelopment #ColoradoSprings #RealEstateGrowth #CortlandExpands

Over 600m (and counting!) of real estate acquired or under development in ~21 months! Sincerest thanks to our thousands of investors and wealth advisor partners who've come alongside us. I'm glad you all agreed it's a heck of a time to acquire as well as develop apartments here in the heartland! ??? #RealEstate #Investing #multifamilysyndication #realestatetprivateequity

This isn't getting enough attention outside of multifamily industry circles: Apartment starts are plummeting to 11-year lows. Multifamily completions are outpacing starts by the widest margin (-120k units) since 1975. I mention this because we keep hearing/reading how "housing construction is at all-time highs," but that's a dated like with a 2022 expiration date. We're seeing the fruit's of 2022's all-time high in construction activity here in 2024, where starts are morphing into completions. But housing construction (overall) is down 10% from the peak, and multifamily is down even more. In 2024 through July, we've completed 314k multifamily units and we've started just 193k units, according to Census data. That year-to-date start total is the nation's lowest since 2013. As I've noted here before, I think we're reverting back to early 2010s supply levels -- not late 2010s (pre-COVID) supply levels, and there's a big difference between the two eras. Additionally, a larger share of supply in this next cycle is likely to be income-restricted affordable housing because tax incentives are helping offset sticky costs + higher rates and flat/falling rents. This is why we're seeing so much renewed bullishness on the multifamily outlook for 2026 and beyond -- particularly for higher-demand markets getting pelted by lease-ups today. This data is central to the thesis among the big portfolio buyers we've seen in the news. Supply is the biggest headwind for apartment investors today, while it's an enormous tailwind for renters ... but those dynamics appear likely to shift again. It took a perfect storm of variables to push apartment construction to 50-year highs, and it's difficult to see a scenario where construction could re-accelerate back to those peaks. Some might point to the Harris campaign's housing supply plans, and those are very positive. But they focus almost entirely on low-income affordable housing and on for-sale starter homes. Barring a massive pivot that would dramatically reduce construction costs and introduce big new incentives, the plan would likely have minimal impact on conventional apartments. As I've written before (and I could be wrong), but my guess is today's completion levels will mark a generational high akin to the mid-1970s. Some of us may never see numbers like this again in our careers. #multifamily #housing #apartments

In April '24 the 10 yr treasury was at 4.70%. Today it is roughly at 3.70%. That is a -100 bps decline in less than five months. This combined with what will rapidly be a falling fed funds rate will lead to a material increase in commercial real estate deal flow.

?? Colorado Springs apartment market update: Rental concessions are on the rise, offering more incentives for tenants as the market adjusts. A key trend to watch for both renters and investors! #ColoradoRealEstate #ApartmentMarket #ColoradoSprings #RealEstateTrends #RentalIncentives #Multifamily

Skyline at Highlands, #Denver's newest luxury #multifamily complex, is donating a year's worth of free rent to Denver Public School teachers, a move that puts a spotlight on mounting affordability concerns as rates across the city climb to record highs.

Check out this graph put out by MSCI Inc. showing US multifamily transaction volume through May '24. Down approx. 75% from peak '21-'22 & down about 50% of pre-covid average. Bad news is that it has been a very rough 18 months for the multifamily capital markets space. Good news is I struggle to see how the volume stays this low for an extended period of time. In my humble opinion, a combination of lower rates, sellers accepting the new value reality and forced sales from debt maturities or distress will likely bring a return to pre-covid transaction volume at some point in the next 12-24 months, so hang in there!

Census data on multifamily starts is catching up to reality. Yesterday’s data release shows multifamily starts are not merely “normalizing,” but trending down, down, down towards early 2010s levels. In fact, multifamily starts (annualized and seasonally adjusted) are LESS THAN HALF what they were one year ago, according to the Census. That’s the biggest YoY drop since the Great Financial Crisis. And total starts in recent months are looking more like 2012-2013 than 2015-2019, registering below 300k. It’s just really, really, really difficult to start new conventional apartment projects right now. Why? 1) Rates are up, meaning debt is really expensive. 2) Lease-up rents are flat to down in most markets, meaning revenues can’t offset higher costs. 3) It’s cheaper to buy existing than build new right now, so development equity is harder to find right now. Meanwhile, probably every apartment developer in America is trying to raise capital off the story that anything starting now will complete into a much more favorable environment. Most investors likely buy that story, but they’re either not able or not willing to take that gamble into investment committee – especially if they think they can buy below replacement cost. (But will there be enough inventory buy at prices buyers want? That’s another question.) I always tell people that forecasting is an inexact science, but supply is the easiest variable to forecast. It’s just starts pushed forward 18-24 months. So there’s little doubt that supply in 2026-27 will be dramatically lower than 2023-24, and that could (barring a big change in the economy or black swan event) lead to a very different supply/demand environment than we see today. #multifamily #housing