Thursday, October 24, 2013

Metro Denver apartment vacancies inch up during third quarter

The apartment vacancy rate in the Denver metro area rose to 4.4 percent during the third quarter of 2013, but remained near 13-year lows. According to a report released Thursday by the Apartment Association of Metro Denver and the Colorado Division of Housing, the metro Denver apartment vacancy rate was up from 2012’s third-quarter rate of 4.3 percent, and was also up from 2013’s second-quarter rate of 4.2 percent.  

From the third quarter of 2012 to the same period of 2013, the vacancy rate dropped in Arapahoe, Douglas, and Jefferson counties, and in the Boulder/Broomfield area.  During the same period, however, the vacancy rate rose in Denver and Adams Counties.

“Overall rates remain quite low, but new supply in the market is beginning to push up vacancy rates a little bit,” said Ryan McMaken, an economist with the Colorado Division of Housing. “We’re also finding that some apartment units are sitting vacant longer than normal due to many of them being updated, repaired, and renovated.”

During the third quarter of 2013, the average rent in metro Denver rose to $1,048, increasing 6.3 percent, or 62 dollars, from 2012’s third-quarter average rent of $986.

Industry experts, however, expect moderation in rent growth as new units are completed.

“We could see as many as 10,000 new units delivered in 2014 across 25 different submarkets in the metro area,” said Mark Williams, Executive Vice President of the Apartment Association of Metro Denver. “With over 17,000 units under construction and an additional 20,000 being considered, current levels of rent growth won’t continue if most of those units are delivered.”

The average rent rose in all counties measured, with the largest increases found in Douglas County and Jefferson County where the average rents grew year over year by 9.0 percent and 8.3 percent, respectively. The county areas with the highest average rents were Douglas County and the Boulder/Broomfield area where the average rents were $1,235 and $1,194, respectively. Adams County reported the lowest average rent at $962.

“We’ll start to feel the impact of new units on rent in 2014,” said Rocky Sundling, Regional Manager for Greystar Partners. “But even then, vacancies will generally continue to be hard to find because we’ll still have the population growth to fill the units.”  

2013’s third-quarter vacancy rates by county were Adams, 5.7 percent; Arapahoe, 4.8 percent; Boulder/Broomfield, 2.8 percent; Denver, 4.6 percent; Douglas, 3.5 percent; Jefferson, 3.6 percent.

Average rents for all counties were: Adams, $962; Arapahoe, $1,007; Boulder/Broomfield, $1,194; Denver, $1,055; Douglas, $1,235; and Jefferson, $1,035.