Friday, February 28, 2014

Colorado Springs apartment vacancies fall, but rent growth slows

During the fourth quarter this year, the average apartment rent in the Colorado Springs metro area rose, year over year, for the sixteenth quarter in a row. According to a report released Friday by the Colorado Division of Housing and the Apartment Association of Southern Colorado, the average rent in the Colorado Springs metro area rose to $799, up 1 percent from 2012’s fourth-quarter average rent of $790. The fourth quarter’s average rent was down, however, from 2013’s third quarter average rent of $830.

The average rent increased year over year in all regions of metropolitan Colorado Springs surveyed except the Southwest region. The largest increase in the average rent for any region was found in the Northeast where the average rent increased 5.4 percent from $721 during the fourth quarter of 2012 to $760 during the same period of 2013.  The Security/Widefield/Fountain region reported the second-largest increase in the average rent, with an increase of 4.6 percent from $598 during the fourth quarter of 2012 to $626 during the fourth quarter of 2013.

Average rents for all market areas during the fourth quarter of this year were: Northwest, $850; Northeast, $760; Far Northeast, $917, Southeast, $727; Security/Widefield/Fountain, $626; Southwest, $805; Central, $745.

“Demand for apartments softened during the fourth quarter as it usually does, but overall, 2013 saw some solid increases in average rents," said Ryan McMaken, an economist with the Colorado Division of Housing. "The rate of increase in rents during the fourth quarter was the smallest we've seen in a couple of years, though, reflecting the effects of new apartment construction and a flat employment situation." 

The apartment vacancy rate in the Colorado Springs metro area fell year over year to 6.0 percent during the fourth quarter of 2013, falling from last year’s fourth-quarter rate of 7.1 percent. This year’s fourth quarter vacancy rate was up from the third quarter rate of 5.4 percent.

From the fourth quarter of 2012 to the fourth quarter of 2013, the vacancy rate fell in the Northeast, Southeast, and Central submarkets. During the same period, the vacancy rate rose in the Northwest, Far Northeast, and  the Secuirity/Widefield/Fountain region.  The vacancy rate was flat in the Southwest region. The region with the highest vacancy rate was the Far-Northeast region at 7.7 percent, and the region with the lowest vacancy rate was the Southwest region at 4.8 percent.

"New apartment unit construction does have an impact. If we include brand new projects that are leasing up in the region, the vacancy rate metro-wide is actually 7.1 percent, and it's 13 percent in the Far-Northeast where many new units are," McMaken said. "El Paso County was also the number one county for new single-family homes permitted in 2013, and new homes in the area do have an impact on apartment occupancy." 

Vacancy rates for all market areas during the fourth quarter were: Northwest, 5.1 percent; Northeast, 5.2 percent; Far Northeast, 7.7 percent, Southeast, 6.9 percent; Security/Widefield/Fountain, 5.3 percent; Southwest, 4.8 percent; Central, 5.6 percent.