Thursday, May 9, 2013

Apartment market tightens statewide as demand stalls in southern and western Colorado

The vacancy rate in Colorado apartments was down during the first quarter of 2013, with the statewide composite vacancy rate falling year over year to 4.9 percent from 2012’s first-quarter vacancy rate of 5.2 percent. According to a report released todayby the Colorado Division of Housing, the statewide vacancy rate during the first quarter also fell from 2012’s fourth-quarter rate of 5.2 percent. During the first quarter, the vacancy rate was down, year over year, for the fourteenth quarter in a row.

Vacancy rates varied considerably in different metros of the state, however, with northern Colorado and metro Denver showing some of the state’s lowest rates, while vacancy rates increased in southern Colorado and western Colorado.

The vacancy rate in the Fort Collins-Loveland area rose to 5.1 percent during 2013’s first quarter, rising from 2012’s first-quarter rate of 3.0 percent. In Greeley over the same period, the vacancy rate dropped to 1.4 percent from 5.8 percent. Colorado Springs also showed a declining vacancy rate with a first-quarter rate of 5.6 percent, which was the lowest vacancy rate reported in that region since 2001.  The metro Denver vacancy rate, measured last month in a separate survey, fell year over year from 4.9 percent to 4.6 percent

A different trend appeared in southern and western Colorado where vacancy rates increased. In Pueblo, the vacancy rate rose to 14.9 percent during 2013’s first quarter from 2012’s first-quarter rate of 5.9 percent. Over the same period, the vacancy rate in Grand Junction vacancy rate increased from 10.4 percent to 11.8 percent.

“So much of this is driven by employment right now. Vacancy tends to increase with joblessness, and we see this in Grand Junction and Pueblo” said Ryan McMaken, an economist with the Colorado Division of Housing. “The Pueblo unemployment rate has been over ten percent for more than a year, while the labor force in Grand Junction just hit a six-year low for March, with total employment moving sideways.”

The situation in northern Colorado, McMaken noted, is quite different.

“Oil and gas growth has pushed the vacancy rate down to very low levels in Greeley, while the Ft. Colliins and Loveland areas continue to see low vacancies,” McMaken said. “Rates in Larimer County are only as high as they are because the county has seen a fair amount of new multifamily development in recent years.”

The average rent increased in all metros except Grand Junction from the first quarter of 2012 to the first quarter of 2013. The statewide composite average rent increased 4.1 percent from $952 during 2012’s first quarter to $992 during the first quarter of 2013. The largest increase was found in Colorado Springs where the average rent rose 4.2 percent, year over year. The average rent fell 11.4 percent in Grand Junction, year over year.

Average rents in all metropolitan areas measured for the first quarter of 2013 were Colorado Springs; $787, Ft. Collins/Loveland, $1036; Grand Junction, $554; Greeley, $704; Pueblo, $594. The average rent in metro Denver, measured last month in a separate survey, was $992. 

A vacancy rate of 5 percent or below suggests a tight market. The statewide composite vacancy rate and average rent includes metro Denver.