Thursday, January 31, 2013

Metro Denver apartment vacancies remain scarce despite new construction

The apartment vacancy rate in the Denver metro area fell to 4.9 percent in the fourth quarter of 2012, dropping from 5.4 percent reported during the fourth quarter of 2011. According to a report released Thursday by the Apartment Association of Metro Denver and the Colorado Division of Housing, 2012’s fourth-quarter vacancy rate was the lowest rate reported during the fourth quarter of any year since 2000. The vacancy rate was 4.7 percent during the fourth quarter of that year.

As expected, the vacancy rate increased from the third quarter to the fourth, rising from 2012's third-quarter rate of 4.3 percent, which was the lowest rate reported in any quarter since the year 2000. Seasonal factors usually result in a rising vacancy rate from the third quarter to the fourth.

For the past thirteen 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 2011 to the same period of 2012, the vacancy rate dropped in Adams, Arapahoe, Douglas, and Jefferson counties, and in the Boulder/Broomfield area. The vacancy rate rose in Denver County during the same period as new apartment communities were completed in the county.

“The only county that showed a year-over-year increase in the vacancy rate was Denver County, where there were some vacancies in brand new communities that haven’t completed the lease-up process,” 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. “Most new construction is taking place in only a few of the most in-demand submarkets right now, so low vacancy rates will continue to be the norm for many neighborhoods in the short term.”

As vacancy rates moved down, the area’s average rent increased. During the fourth quarter of 2012, the average rent in metro Denver rose to $978, increasing 4.9 percent, or $46, from 2011’s fourth-quarter average rent of $932.

The average rent rose in all counties measured except Adams County, with the largest increases found in Douglas County and in the Boulder/Broomfield area where the average rents grew year over year by 8.5 percent and 6.2 percent, respectively. The county areas with the highest average rents were Douglas County and the Boulder/Broomfield area where the average rents were $1,186 and $1,103, respectively. Adams County reported the lowest average rent at $893.

Not all types of units were equally in demand.

“The average rent in efficiency apartments outpaced other types of units, rising by more than ten percent in metro Denver," said Ryan McMaken, an economist for the Colorado Division of Housing. "This suggests that people are looking for the smallest, least expensive unit they can find in many cases, and that drives up rents for the smaller units too."

2012’s fourth-quarter vacancy rates by county were Adams, 4.5 percent; Arapahoe, 5.0 percent; Boulder/Broomfield, 3.7 percent; Denver, 6.1 percent; Douglas, 4.2 percent; Jefferson, 4.2 percent.

Average rents for all counties were: Adams, $893; Arapahoe, $950; Boulder/Broomfield, $1103; Denver, $985; Douglas, $1186; and Jefferson, $941.

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; and limited information is available online at the Division of Housing web site: