Yesterday the Apartment Association of Metro Denver and the Division of Housing released the Metro Denver Apartment Vacancy and Rent Survey for the fourth quarter of 2012. The report showed that the vacancy rate in the metro Denver area continues to decline year over year as rent growth remains solid.
The first graph shows that the vacancy rate (4.9 percent) in the metro Denver area during the fourth quarter was at the lowest 4th-quarter rate reported since 2000. It is up slightly from the third quarter's rate of 4.3 percent which was the lowest vacancy rate of any quarter since 2000. The 4th quarter rate was down year over year, dropping from 5.4 percent during the fourth quarter of 2011.
As the metro-wide vacancy rate declined, the vacancy rates in all metro counties continued to decline, with the exception of Denver County. Note in the graph that the vacancy rate in Denver County ticked upward. This was due to a large amount of new multifamily product being added to the market in the fourth quarter. In fact, in the downtown Denver submarket, where much of the new product was added, the vacancy rate hit 11.1 percent. This is a temporary phenomenon as new buildings engage in lease-ups. The third graph shows year-over-year changes in all the metro Denver submarkets. The downtown Denver market shows a marked increase. Also notable are significant declines in the vacancy rates in many submarkets of Aurora. Aurora was one of the last areas to see lingering high vacancy rates. most of those rates have now come down.
The average and median rents moderated somewhat during the third and fourth quarter, but remains at fairly robust levels of growth. The growth rate has been above four percent now for the past year. Rent growth is solid, but does not rival the late 90s, however, when the average rent grew by more than 5 percent from 1996 to 2001. From the 4th Q of 2011 to the 4th Q of 2012, the average rent grew 4.9 percent from $932 to $978.
The trend in year-over-year change in rent per square foot was largely similar with rent per square foot increasing 4.1 percent from the fourth quarter of 2011 to the same period of 2012. Over the period, rent per square foot increased from $1.09 to $1.14.
A look at everage rent per square foot shows that it is up significantly from the beginning of the 2008-2009 recession: