Thursday, December 2, 2010

Colorado apartment vacancies fall across Front Range, rents rise

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Apartment vacancies fell across Colorado’s Front Range as rents rose during the third quarter of 2010, signaling a continued tightening of the rental market and suggesting future rent increases. According to a report released Thursday by the Colorado Division of Housing, from the third quarter of 2009 to the third quarter of this year, vacancies fell in all Front Range metro areas except Loveland, although vacancies increased in Grand Junction and in several mountain areas including Summit County, Eagle County and Glenwood Springs.

The statewide vacancy rate for 2010’s third quarter was 5.5 percent, falling from a rate of 6.6 percent a year earlier. In Colorado Springs, the vacancy rate fell to the lowest third-quarter rate in nine years, to 6.6 percent. The lowest metro-wide vacancy rate was found in Fort Collins where the rate dropped to 2.8 percent from 5.5 percent, year-over-year. In Fort Collins, vacancies are at the lowest levels reported since 2001 when the first-quarter vacancy rate was 2.6 percent. Vacancies rose from 7.5 percent to 7.9 percent in Grand Junction, year-over-year.

Vacancy rates dropped in many smaller communities such as Alamosa and Montrose, but rates also rose in Eagle County, rising from 3.5 percent to 8.9 percent, year-over-year, for the third quarter, and the rate also rose slightly in Summit county during the same period from 5.0 to 5.2 percent.

The metro Denver apartment vacancy rate, measured in a separate survey released last month, also fell year-over-year, dropping from 7.4 percent to 5.3 percent.

“Generally speaking, rental markets are continuing the trend toward tighter markets that we’ve seen in recent quarters,” said Gordon Von Stroh, a professor of business at the University of Denver and the report’s author. “This isn’t the case in every single market, but given how vacancies are declining significantly in Fort Collins, Greeley, Colorado Springs and other areas as well, it’s clear that empty units are now relatively scarce and that increases in rent levels are likely to follow.”

Median rents rose across the state as vacancies fell. With the exception of Pueblo, where median rents were flat, the median rent rose in all Front Range Metro areas. The median rents in Colorado Springs and in the Fort Collins/Loveland regions rose to new highs of $700.90 and $856.53, respectively.

Among Colorado’s metropolitan areas, only Grand Junction reported a decline in the median rent with a year-over-year drop from $680.37 to $674.08 for the third quarter. Median rents also fell in several Western Slope and mountain regions, although median rents increased in Eagle County and Summit County in spite of increases in vacancy rates.

The metro Denver median rent, measured in a separate survey, was $856.64 for the third quarter.