Tuesday, August 14, 2012

83 percent of new multifam permits in only four counties at mid-year 2012

Year-to-date through June of 2012, 83 percent of all new multifamily permits issued have been issued in Denver, Broomfield, El Paso and Douglas counties alone. 

According to new multifamily permit data for Colorado counties, 3,945 multifamily permits have been issued from January through June of 2012. 3,279 of them, or 83 percent, were issued in Denver, Broomfield, El Paso and Douglas counties. Adding in Boulder and Adams counties brings the total to 3,836, or 96 percent, of all multifamily permits through June.

Few other counties issued many multifamily permits as of June of this year.

Downtown Denver and the "northwest corridor" of the metro area have reported significant rent growth in recent years, and developers appear to be capitalizing on high demand in those markets. El Paso county has seen little development for the past decade, and although apartment vacancies have hovered around 6 percent in recent quarters, the long-time lack of new construction has encouraged new building of multifamily. A high median income and stable employment in Douglas County encourage new construction there.

Total multifamily permits issued, Jan-June 2012
Adams 220
Arapahoe 49
Boulder 327
Broomfield573
Denver 1,567
Douglas 542
El Paso 597
Jefferson 8
Larimer 50
Mesa 7
Pueblo 0
Weld 5

With so little demand for new condominiums right now, it is safe to assume that the lopsided majority of new multifamily permits being issued are for rental housing. We see most of this activity in areas where vacancy rates have been tight or look to be tight for the near to mid-term.

With apartment vacancy rates now below five percent in the metro Denver area, the markets appear to be responding to tight vacancies with plans for future construction. Larimer county has also been a very active county for new multifamily activity over the past 18 months, although 2012 is a moderate year for Larimer county so far. during the second quarter, the apartment vacancy rate in the University area was zero percent, which will encourage additional construction in Boulder.

Change since 2011

Some counties saw very large increases in the number of multifamily permits issued. From January-June of 2011 to the same period this year, in Douglas County, multifamily permits increased more than 5,300% from 10 to 542, while in Adams county they increased from 0 to 220. Boulder County also saw a big increase (861%) with a rise in multifamily permits from 34 to 327, year over year through June, and Broomfield saw the largest increase from 0 multifamily permits to 573 permits, year over year through June. 

There was no multifamily permit activity at all in Pueblo County over the period, and Weld County increased only slightly from 0 to 5.