Wednesday, January 19, 2011

Colorado Springs apartment vacancies fall to lowest level since 2001

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The apartment vacancy rate in the Colorado Springs metro area fell to 7.2 percent during the fourth quarter of 2010, falling to the lowest fourth-quarter rate reported since 2001. According to a report released today by the Apartment Association of Southern Colorado and the Colorado Division of Housing, the vacancy rate in the Colorado Springs area fell 17 percent year-over-year from 2009’s fourth-quarter rate of 8.7 percent. Compared to the third quarter of 2010, however, rates rose from 6.6 percent as expected. Seasonal factors generally lead to a rising vacancy rate during the fourth quarter of the year.

The fourth quarter’s drop in the vacancy rate is the seventh quarter in a row in which the vacancy rate has fallen, year-over-year, signaling strengthening demand for multifamily rentals in the region.

Year-over-year, vacancy rates fell the most in the “Southeast” market area of Colorado Springs where vacancy rates fell 32 percent from 14.6 percent to 9.9 percent. Vacancy rates were lowest in the Far Northeast and Southwest market areas with vacancy rates of 6.0 percent and 5.4 percent, respectively.

Vacancy rates for all market areas were: Northwest, 6.3 percent; Northeast, 6.0 percent; Far Northeast, 6.9 percent, Southeast, 9.9 percent; Security/Widefield/Fountain, 19.3 percent; Southwest, 5.4 percent; Central, 6.8 percent.

As vacancy rates moved down, the area’s median rent increased. 2010’s fourth-quarter median rent rose to $711.12 from 2009’s fourth-quarter median rent of $700.17. In individual market areas, the median rent rose year-over-year in all areas except the Northwest and the Far Northeast. By far, the area with the largest year-over-year increase in the median rent was the Central region with an increase of 25 percent from $524.86 to $658.30. All other areas reported year-over-year increases in median rent ranging from one percent to four percent.

“From 2005 to 2009, the median rent wasn’t keeping up with inflation in Colorado Springs, so rents were effectively going down” said Gordon Von Stroh, professor of Business at the University of Denver, and the report’s author. “Over the past couple of years, we’ve started to see some sustained increases in rents, however, and multifamily owners will undoubtedly now need to push rents in hopes of making up for those years of falling rents.”

Median rents for all market areas were: Northwest, $831.87; Northeast, $722.50; Far Northeast, $791.46, Southeast, $614.15; Security/Widefield/Fountain, $627.45; Southwest, $722.66; Central, $658.30.