Thursday, November 3, 2011

Metro Denver apartment vacancies fall to ten-year low, rents rise

The apartment vacancy rate in the Denver metro area fell to 4.9 percent in the third quarter, dropping to the lowest third-quarter vacancy rate recorded since 2000. According to a report released Thursday by the Apartment Association of Metro Denver and the Colorado Division of Housing, apartment vacancy rates fell year-over-year from last year’s third-quarter rate of 5.3 percent. The vacancy rate was up from this year’s second-quarter rate of 4.8 percent.

“Vacancy rates remain near ten-year lows and the vacancy rate has dropped year-over-year for the past eight quarters in a row,” said Ron Throupe, Assistant Professor of business at the University of Denver, and the report’s author. “This is the second-lowest vacancy rate we’ve seen in any quarter since 2001.”

As vacancy rates moved down, the area’s median rent increased. During the third quarter of 2011, the median rent in metro Denver rose to $881, increasing 2.9 percent from 2010’s third-quarter median rent of $856. In Adams, Arapahoe, Denver, and Jefferson counties, and in the Boulder-Broomfield area, median rents increased. The county with the largest year-over-year increase in median rent was Denver County with an increase of 5.4 percent from $809 to $853. Among county-level markets, only Douglas County reported a decline in the median rent with a third-quarter year-over-year drop of 3.6 percent from $1,111 to $1,071.

“At 2.9 percent, annual growth in metro-wide median rents is still not reflecting large rent growth everywhere,” said Gordon Von Stroh, an advisor on the report at a professor of business at the University of Denver. “In some markets, of course, rent growth is very solid right now, but in some other less-desirable locations, and in areas with many B and C properties, a lack of rent growth is keeping that metro-wide median rent from really taking off.”

Rental losses due to concessions, discounts and delinquencies fell from 2010’s third-quarter rate of 13.6 percent down to 10.4 percent during the third quarter of this year.

“We’re starting to see concessions go away and all those offers for free rent are becoming rare as vacancies fall,” said Ryan McMaken, a spokesman for the Colorado Division of Housing. “Delinquencies are still an issue, though, as renters confront unemployment and declining wages.”

2011’s second-quarter vacancy rates by county were Adams, 5.3 percent; Arapahoe, 5.6 percent; Boulder/Broomfield, 4.7 percent; Denver, 4.3 percent; Douglas, 3.8 percent; Jefferson, 4.4 percent.

Median rents for all counties were: Adams, $886; Arapahoe, $844; Boulder/Broomfield, $991; Denver, $853; Douglas, $1071; and Jefferson, $837.

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