Thursday, August 9, 2012

Slideshow: Vacancy rates across Colorado metros

Today we released the second quarter data on vacancies and rents in Colorado metro areas. A slideshow on rent growth can be found here.

The vacancy rate declined year over year in all metro areas. See the full report for details for each region.

The first graph shows the vacancy rate for Metro Denver, Ft. Collins/Loveland and Greeley since 2001. All three areas are seeing a generally tightening market, although Greeley has been volatile in recent quarters. Ft. Collins is the tightest with rates well below five percent (3.5 percent), and Metro Denver has not moved slightly below 5 percent to 4.8 percent. Greeley's vacancy rate was 5.4 percent during the second quarter.

The second graph shows the vacancy rates for Colorado Springs, Grand Junction and Pueblo since 2001. All of these areas are showing a general downward trend in vacancies as well, although we see some different patters at work here. Grand Junction, for example, follows a pattern very different from all other metro areas in Colorado. They experienced record-low vacancies from 2006-2008 during the most recent oil and gas boom, and have had a rather soft market since. The market is expected to slowly tighten there, however, and the vacancy rate was 5.5 percent during the second quarter - the lowest since 2008.

Colorado Springs's vacancy rate finally fell to 6 percent after a decade of vacancy rates that were often found in the 9 to 12 percent range. An unemployment rate of 9.8 percent during June illustrates that Colorado Springs is facing some headwinds in housing demand due to employment issues, however. Pueblo's vacancy rate is at a ten-year low and is clearly headed downward. This is helped by the fact that no new multifamily units have been built  in Pueblo in several years.

The third graph compares all metro areas and available submarkets during 2012's second quarter with the same period last year. The blue bars are last year's vacancy rate and the red bars are this year's rate. Note that in almost every market and submarket, the vacancy rate has fallen since last year. Of the 21 markets and submarkets reporting during the second quarter of this year, only 3 submarkets reported increases in the vacancy rate over last year: Northeast Colorado Springs Southwest Colorado Springs and Central Colorado Springs.

The overall evidence statewide is of a tightening market, and in metro Denver and northern Colorado especially, this looks to tighten more as new construction continues to be limited in the face of continued household formation. In some areas, such as Grand Junction and Colorado Springs, however, where employment is not strong, rent growth may be restrained somewhat by income factors.