Thursday, February 2, 2012

Metro Denver apartment vacancies fall to twelve-year low, rents rise

The apartment vacancy rate in the Denver metro area fell to 5.4 percent in the fourth quarter of 2011, dropping to the lowest fourth-quarter vacancy rate recorded since 2000. According to a report released Thursday by the Apartment Association of Metro Denver and the Colorado Division of Housing, apartment vacancy rates were down from 2010’s fourth-quarter rate of 5.5 percent. 2011’s fourth-quarter rate was up from the third-quarter rate of 4.9 percent.

For the past nine quarters, the vacancy rate has fallen when compared to the same quarter one year earlier. The last time the quarterly vacancy rate rose year over year was during the third quarter of 2009.

From the fourth quarter of 2010 to the same period of 2011, the vacancy rates dropped in Adams, Denver, Douglas and Jefferson counties. Vacancies rose in Arapahoe County and in the Boulder/Broomfield area.

“Vacancies continue to decline year over year as demand grows faster than the production of new rental product,” said Ron Throupe, professor of Real Estate at the Burns School of Real Estate and Construction Management at the University of Denver, and the report’s author. “However, since the third quarter of 2011 we’re seeing some additional frictional vacancy as tenants move around in response to rising rents.”

As vacancy rates moved down, the area’s median rent increased. During the fourth quarter of 2011, the median rent in metro Denver rose to $870, increasing 2.8 percent from 2010’s fourth-quarter median rent of $846.

The median rent rose in all counties measured, with the largest increases found in Denver County and in the Boulder/Broomfield area where the median rent grew year over year by 3.4 percent and 3.7 percent, respectively. The county areas with the highest median rents were the Boulder/Broomfield Area and Douglas County where the median rents were $993 and $1,046, respectively. Denver County reported the lowest median rent at $834.

“The overall median rent in the Denver area has now increased year over year for eight quarters in a row, and the median rent has increased by almost 60 dollars over that time,” said Ryan McMaken a spokesman for the Colorado Division of Housing. “The rent growth we’re now seeing is more robust than what we saw during the last expansion between 2002 and 2008.”

Rental losses due to concessions, discounts and delinquencies fell to a ten-year low, dropping to 8.8 percent during the fourth quarter of 2011 from 2010’s fourth-quarter rate of 9.8 percent. Fourth-quarter rental losses have not been lower since 2002.

2011’s second-quarter vacancy rates by county were Adams, 5.3 percent; Arapahoe, 6.8 percent; Boulder/Broomfield, 4.4 percent; Denver, 4.8 percent; Douglas, 4.7 percent; Jefferson, 4.4 percent.

Median rents for all counties were: Adams, $873; Arapahoe, $840; Boulder/Broomfield, $993; Denver, $834; Douglas, $1046; and Jefferson, $836.

The Vacancy and Rent Surveys are a service provided by the Apartment Association of Metro Denver and the Colorado Department of Local Affairs’ Division of Housing to renters and the multi-family housing industry on a quarterly basis. The Colorado Vacancy and Rent Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, age of building, and apartment type. The full report is available through the Apartment Association of Metro Denver at www.aamdhq.org; and limited information is available online at the Division of Housing web site: http://www.divisionofhousing.com.