Wednesday, November 6, 2013

Colorado Springs apartment vacancies hit 12-year low as rent hits all-time high

During the third quarter this year, the average apartment rent in the Colorado Springs metro area rose to an all-time high for the second quarter in a row while the apartment vacancy rate remained tied at the lowest rate reported since the third quarter of 2001.

According to a report released today by the Colorado Division of Housing and the Apartment Association of Southern Colorado, the average rent in the Colorado Springs metro area rose year over year for the fifteenth quarter in a row during the third quarter, climbing 5.4 percent to $830. The third-quarter average rent was up from $787 reported during the third quarter of 2012, and was up from this year’s second-quarter average rent of $807.  

The average rent increased year over year in all regions surveyed. The largest increase in the average rent for any region of the Colorado Springs area was found in the Central region where the average rent increased 12.2 percent from $746 during the third quarter of last year to $837 during the same period of this year.  The Far Northeast region also reported a sizable increase in the average rent, with an increase of 8.4 percent from $851 during the third quarter of last year to $923 during the third quarter of this year.

Average rents for all market areas during the third quarter of this year were: Northwest, $910; Northeast, $789; Far Northeast, $923, Southeast, $729; Security/Widefield/Fountain, $632; Southwest, $815; Central, $837.       

“Year-over-year rent growth hit an 18-month high during the third quarter reflecting some improvements in employment and general strength in demand for all types of housing," said Ryan McMaken, economist for the Colorado Division of Housing. 

The apartment vacancy rate in the Colorado Springs metro area fell year over year to 5.4 percent during the third quarter of 2013, falling from last year’s third-quarter rate of 6.1 percent. This year’s third quarter vacancy rate was unchanged from the second quarter to the third quarter.

"Some apartment investors are looking more closely at the Colorado Springs market as an alternative to the Denver market which some now see as overheated," said Kevin McKenna, a vice president with apartment brokerage firm ARA. "We're only now starting to see some of the low vacancy rates that have been seen in Denver for more than a year now." 

From the third quarter of 2012 to the third quarter of 2013, the vacancy rate fell in the Northwest, Northeast, Far Northeast, Southeast, and Southwest submarkets. During the same period, the vacancy rate rose in the Central region and the Secuirity/Widefield/Fountain region.  The region with the highest vacancy rate was Security/Widefield/Fountain at 10.1 percent, and the region with the lowest vacancy rate was the Southwest region at 3.8 percent.

"Last year was one of the best years in Colorado Springs in a long time, but things have slowed a little this year," McKenna said. "But there are still few signs of any overbuilding at this point, so rents and occupancy will likely continue to be strong from the owners' perspective, for the time being." 

Vacancy rates for all market areas during the third quarter were: Northwest, 5.4 percent; Northeast, 3.9 percent; Far Northeast, 7.0 percent, Southeast, 6.2 percent; Security/Widefield/Fountain, 10.1 percent; Southwest, 3.8 percent; Central, 5.3 percent.