Smart Capital Featured in Colorado Journal’s Multifamily Properties Quarterly
Smart Capital helps investors become better equipped in an unpredictable market, allowing them to invest confidently. SC dramatically speeds up underwriting and market analysis using its proprietary market data and AI-powered automation. Smart Capital Center provides bank-quality ultra-fast real estate property valuations and affordable financing through its AI-powered platform. Top institutional investors and lenders such as JLL, Keybank, and Pacific Life Insurance rely on our technology in their loan underwriting process.
Smart Capital offers comprehensive market insight (sales comps, rentals, cap rates, and valuation), AI-powered underwriting tools, and time-saving support services to assist investors in evaluating new investments faster than their competitors. Small and mid-sized investors can now utilize Smart Capital’s services to improve their investment decisions.
Recently, Smart Capital has piqued the interest of Colorado’s go-to-publication for commercial real estate industry professionals, the Colorado Real Estate Journal. Recently, Smart Capital was featured in Colorado Real Estate Journal’s Multifamily Properties Quarterly, where we discussed why cloud-based solutions are vital for research, especially in today’s fast-paced environment.
Generally, the US market has experienced steady growth over the past ten years; however, the pandemic and economic slowdown may negatively impact all industries. For many investors, this may be the first time they will experience working in a market with a downturn trend. As a result, investors must also be diligent and expand their arsenal of tools to give them a head start on how to prepare for a downturn trend.
Following the COVID-19 pandemic, Smart Capital found that there has been a significant change in how industries operate. Corporations are adopting a work-from-home or hybrid setup, enticing more people to move from centralized business areas to less expensive states and cities; in which Colorado was one of the top states people are moving to.
The number of people living in Colorado has grown quickly within the past decade and has only increased since the beginning of the pandemic. The high standard of living in Colorado has attracted many new residents. Americans have been drawn to the state for various reasons, such as job opportunities, lovely weather, breathtaking landscapes, and overall well-rounded culture. Because of this, Colorado has been an excellent destination for acquiring investment properties for years. In addition, there has been a significant surge of people relocating to Colorado, especially during the pandemic, as more people can work remotely.
Investing in real estate in Colorado is attractive for many reasons. Colorado landed the following rankings: The third-lowest state in terms of property taxes and the 8th-best state for high traditional rental income.
Additionally, Smart Capital found that Denver has been rebounding well following the COVID-19 pandemic, particularly in the multifamily, industrial, and retail markets.
Denver’s multifamily market saw a significant uptick in 2021 as robust demand drove vacancy rates to a decade-low. Additionally, Denver’s inventory will expand by 8.4% due to the record-breaking number of 23,000 units currently under construction.
Financial experts still prefer multifamily investments as an inflation hedge when allocating their assets. Buyers are continuing to purchase apartments in Denver despite the growing interest rates. Lifestyle cities like Denver are expected to continue seeing considerable rental rates growth.
Denver’s multifamily assets have been a popular investment target in recent years due to rising demand and rents in the city.
Despite significant supply-side pressure, landlords have been able to increase apartment rentals in response to record demand from tenants in the past year. As a result, Denver’s average asking rent of around $1,830 per month is significantly less expensive than in coastal regions.
On the other hand, Denver’s industrial market continues to grow due to a rise in employment and e-commerce following the pandemic. Within the last five years, the market has added 26 million SF, and another 10 million SF is expected to be added by 2022. Moreover, companies are still drawn to Denver’s industrial market because of its convenient location, a wide selection of available land, and robust infrastructure.
Investors are becoming increasingly interested in Denver’s industrial market because of the rising rents and sustained demand. Investors are prepared to pay top money for recently delivered industrial products without a tenant in place, enabling the buyers to take advantage of current market demand while avoiding any construction risks brought on by supply chain concerns.
Additionally, a rise in consumer spending over the past year has been a major factor in the retail sector’s recovery as retailers regain confidence in the market.
With the loosening of lockdowns and the easing of pandemic protocols, there has been an increase in foot traffic, leading to increased revenue for brick-and-mortar businesses. As a result of the vaccine’s successful rollout, Denver’s urban neighborhoods, including Downtown and Cherry Creek, once again saw an increase in foot traffic. As a result, the absorption rate has spiked to 970,000 SF over the past 12 months from 850,000 SF in vacancies in 2020.
As a result of its robust economic expansion, Colorado has become a great place to find jobs. Colorado’s job market is increasing faster and more consistently than it has in the past two decades, according to the Denver Post. Due to the abundance of available opportunities, Denver has been dubbed one of the “bright spots” of the country, attracting more companies to move to the mile-high city.
Palantir Technologies, a public American software company, specializing in big data analytics, has moved from Palo Alto, California, to Denver, Colorado. On the company’s website, Denver is now listed as the company’s headquarters. The relocation of Palantir from Palo Alto to Denver is one of the earliest indications of a long-anticipated exodus from Silicon Valley.
Other prominent digital businesses, such as Facebook, Amazon, and Google, already have offices in the Denver metropolitan area, recruiting talent synonymous with the Bay Area.
Due to the impact of COVID, more companies are now moving to a work-from-home or hybrid setup. Momentum for a mass return to the workplace has slowed, and many employers with higher-paid workers are giving up their efforts to have their employees return to the office. As a result, high-income earners are leaving for more desirable places like Colorado’s urban centers. Permanent remote work regulations should increase immigration as employees realize they are no longer tied to one location.
Although there may be a decline in COVID cases over the last two years, it is undeniable that its effects on how businesses work are still felt to this day. Fortunately, thanks to cloud-based software, hybrid, and work-from-home setups can now be easily implemented.
Alphabet, the parent company of Google, and Facebook made headlines by allowing its staff to work remotely until June and July of 2021, respectively, although San Francisco-based Twitter and Slack allow employees to “work from anywhere” permanently. As a result of the unexpected surge of remote workers, more people are moving from expensive areas like California to less expensive states like Colorado.
Just as companies turn to cloud-based solutions to increase productivity and enhance their employees’ performance, investors and brokers must also utilize them.
There are several benefits to using cloud-based software in Commercial Real Estate (CRE); lenders and investors can instantly compare properties to each other (compare vacancy, compare revenue, expectancy, and tenants), and the software can highlight significant inconsistencies so analysts can investigate issues deeper, the cloud can create a more accurate analysis and many more.
With the COVID-19 pandemic, traveling protocols and the emergence of the “new normal” has presented a new set of challenges for investors and brokers. Investors and brokers may have a tough time traveling and interacting with people with the COVID safety protocols.
Traditionally, for investors and brokers to get all the information they need, they would have to travel to the property and conduct manual research. However, with the emergence of cloud-based market analysis and underwriting solutions, investors and brokers do not necessarily have to go through the hassle of going on-site anymore.
Through cloud-based market analysis and underwriting solutions, investors now have data instantly presented to them through a visual, interactive, and intuitive interface simply by typing the address of a specific property. They don’t have to go through different databases or travel to the location to collect information about the property. Cloud-based market analysis platforms will help them grasp the pros and cons of a property located in the market.
Smart Capital platform, for example, in addition to standard data such as demographics and business statistics, also provides a lot of alternative data such as foot traffic, the popularity of the area, the quality of public transit, and how far from highways, among other things. This helps put the property into context and provides a comprehensive overview of its local market.
Cloud-based AI also provides automated valuation and risk assessment and can dramatically speed up and improve the underwriting process. Risk assessment is especially important during turbulent times like today. Investors need to be ready more than ever because of the unpredictable nature of the pandemic, growing interest rates, and the impending recession.
For example, Smart Capital’s cloud-based AI software can look through hyper-granular, local characteristics, and property characteristics and can extrapolate based on the performance of thousands of properties in similar locations and make a prediction for a specific property – e.g., the probability of the property declining in value and the extent of such decline during unfavorable market conditions. The software does the heavy lifting, empowering investors to make final underwriting judgment calls with all the data and supporting analysis at their fingertips.
The US market has experienced steady growth over the past ten years, so for many investors, this may be the first time they will experience working in a market with a downturn trend. As a result, investors must also be diligent and expand their arsenal of tools to give them a head start on preparing for a downturn.
Smart Capital helps investors become better equipped in an unpredictable market, allowing them to invest confidently. SC dramatically speeds up underwriting and market analysis using its proprietary market data and AI-powered automation. Join the platform today; it is free to sign up!
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