Monday, February 10, 2014

Apartment Vacancies Rise With New Apartments in 2013's Fourth Quarter

The apartment vacancy rate in the Denver metro area rose to 5.2 percent during the fourth quarter of 2013, rising to a two-year high. According to a report released Monday by the Apartment Association of Metro Denver and the Colorado Division of Housing, the metro Denver apartment vacancy rate was up from 2012’s fourth-quarter rate of 4.9 percent, and was also up from 2013’s third-quarter rate of 4.4 percent.  

From the fourth quarter of 2012 to the same period of 2013, the vacancy rate increased in all county areas except the Boulder Broomfield area, where the vacancy rate fell further to 3.4 percent, and in Denver County, where it was flat.

“Seasonally, an increase in vacancy is expected for the fourth quarter, but since vacancies are up year over year, that does show that new apartment construction, especially in downtown Denver, is starting to create a few more vacancies.” said Ryan McMaken, an economist with the Colorado Division of Housing. “The rising vacancies have not been enough to immediately push the average rent down, however, and measured year-over-year, we find the average rent actually increased a little more in the fourth quarter than in the third quarter this year.”

During the fourth quarter of 2013, the average rent in metro Denver rose to $1,041, increasing 6.4 percent, or 63 dollars, from 2012’s fourth-quarter average rent of $978.

“New units are arriving,” noted Mark Williams, Executive Vice President of the Apartment Association of Metro Denver. “The industry still sees relevant pent up demand out there, and in addition to new units, owners are also investing in remodels and new amenities for units.”

Remodeling activity has also led to some additional vacancies. “The vacancy rate headed up over seven percent in Glendale,” McMaken said. “But a big factor there is likely the turnover that happens as owners remodel and upgrade units. The new construction we’re seeing will help to moderate rents in 2014. On the other hand, upgrades to existing units will generally lead to average rent growth.”

The average rent rose in all counties measured during the fourth quarter, with the largest increases found in Denver County and the Boulder/Broomfield area where the average rents grew year over year by 8.1 percent and 8.6 percent, respectively. The county areas with the highest average rents were Douglas County and the Boulder/Broomfield area where the average rents were $1,236 and $1,198, respectively. Adams County reported the lowest average rent at $948.

2013’s fourth-quarter vacancy rates by county were Adams, 5.3 percent; Arapahoe, 5.2 percent; Boulder/Broomfield, 3.4 percent; Denver, 6.1 percent; Douglas, 5.0 percent; Jefferson, 4.6 percent.

Average rents for all counties were: Adams, $948; Arapahoe, $995; Boulder/Broomfield, $1,198; Denver, $1,064; Douglas, $1,236; and Jefferson, $994.