A Boston-area private equity firm paid $102.5 million for a Colorado Springs apartment complex, its second acquisition of a local apartment property this year, according to El Paso County land records.

The deal signals that out-of-town investors remain bullish on the long-term prospects of the Springs’ multifamily market, one commercial real estate expert said, even as local rents have declined over the past several quarters.

Northland Investment Corp., of Newton, Mass., last week bought the 360-unit Apex Apartments, southeast of Powers Boulevard and Woodmen Road; the property was sold by Thompson Thrift, a national real estate company and multifamily developer that built the complex and completed its construction in 2023.

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Neither the total nor per-unit price paid by Northland were records for Colorado Springs apartment purchases, according to Gazette archives and online research.

Land records also show Northland paid $67.7 million in March for the 10-year-old, 260-unit Estate at Woodmen Ridge complex, southwest of Powers and Woodmen, which was its first purchase of a multifamily property in the Springs.

On its website, Northland says it manages $8 billion in real estate assets; it specializes in the acquisition, development, management and long-term ownership of multifamily and mixed-use real estate in the U.S., its website says.

Northland declined to comment on its purchase of the Apex complex, though a news release it issued in March after its acquisition of the Estate at Woodmen Ridge highlighted its interest in Colorado Springs.

At that time, Northland pointed to U.S. News & World Report rankings of the Springs as one of the nation’s most desirable places to live, noting the “explosive growth” of the area where several familiar companies — including Amazon, Progressive Insurance, USAA, Hewlett Packard, Lockheed Martin and Northrop Grumman — have a strong presence.

“Colorado Springs continues to be a very attractive city for both employers and residents due to the market’s educated talent pool, low cost of living and high quality of life,” Everett Palozej, Northland’s director of investments, said in the March news release. “We see these factors as key drivers of long-term economic growth.”

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Though it sold Apex, Thompson Thrift continues to be active in Colorado Springs and the Pikes Peak region, and Apex is one of a half-dozen apartment projects it’s developed or is in the process of building.

Thompson Thrift also built and sold the 244-unit Watermark on Union, east of Powers and Union boulevards on the Springs’ northeast side, according to its website.

The company is leasing three projects it has developed — the 264-unit Alta25 complex in Monument, the 336-unit Garrison in Fountain and the 300-unit Upland Flats on Colorado Springs’ east edge, in unincorporated El Paso County, its website shows.

Thompson Thrift also began construction in September on the 276-unit Switch apartments in northern Colorado Springs, where the first move-ins are targeted for fall 2025.

Thompson Thrift says it focuses on development of what it calls “upscale, Class A multifamily communities,” which rent at market rates.

Northland’s apartment purchases in Colorado Springs come at a time when multifamily construction has slowed, apartment rents have slumped and vacancy rates remain solidly higher than a few years ago.

Through the first nine months of 2024, just 13 permits have been pulled for apartment construction in the Springs area, which would produce 507 new units, according to a recent Pikes Peak Regional Building Department report. By comparison, for the first nine months of 2023, 56 permits were pulled would produce 1,953 new apartments.

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Meanwhile, a report by 1876 Analytics, an affiliate of Denver-based Apartment Appraisers & Consultants, showed that Springs-area apartment rents averaged $1,437 a month in the second quarter of this year, the fourth consecutive quarterly decline and the lowest since $1,419 in the first quarter of 2022.

The local apartment vacancy rate of 7.3% in the second quarter was up from 5.8% during the same period two years ago and 3.8% in 2021.

Despite the market lull, Colorado Springs remains attractive to apartment developers and investors, in large part, because of its growth, said Matt Barnett, a managing director in the Denver office of Walker & Dunlop, a national commercial real estate finance and advisory services firm. He represented Thompson Thrift in the Apex sale along with colleagues Jake Young, Taylor Payne and Emilie Brady.

On the development side, the population of Colorado Springs and surrounding El Paso County stood at a little more than 740,000 two years ago, according to Colorado State Geography Office figures. But apartment construction didn’t keep pace with that growth during the last decade, some multifamily industry experts have told The Gazette.

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“The general insight into Colorado Springs is that it is a high-growth market that was underserved on a per capita basis for apartments,” Barnett said.

Some multifamily experts now say Colorado Springs’ apartment market might be overbuilt, which has led to the recent quarterly decline in rents and increase in vacancies.

Even so, market conditions won’t remain static, Barnett said. Investors will continue to watch for newer, high-quality apartments that they can purchase at attractive prices that would be below the replacement cost of older products, he said.

The Apex Apartments, for example, are well located in a strong demographic area on Colorado Springs’ north side, with nearby quality schools, Barnett said. Unlike apartments on the city’s south end that are more likely to serve Fort Carson soldiers and other members of the military, north-side properties aren’t as vulnerable to the sudden loss of tenants during deployments.

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In general, Colorado Springs is attractive because of its location just an hour south of Denver, Barnett said. On the heels of the COVID-19 pandemic, many people who could work remotely migrated to the Springs because of its quality of life, he said.

Those advantages will continue to appeal to investors, even as rents have slowed of late and the pace of building permit activity for apartments has declined, Barnett said.

“The investment thesis for a lot of groups is that, yes, we’re going to be in a period of slow to flat rent growth for, call it the next 18 months or so,” he said of Colorado Springs.

“But after that, the market will return to an undersupply situation and we’ll see rent growth from there.”