Tuesday, May 1, 2012

Rents in metro Denver surge 4.5 percent, post largest growth rate in ten years

The average rent for apartments in metro Denver rose 4.5 percent from the first quarter of last year to the same period this year. According to a report released today by the Apartment Association of metro Denver and the Colorado Division of Housing, the first quarter’s year-over-year growth rate of 4.5 percent was the largest rate of growth reported during any quarter over the past ten years.

During the first quarter of this year, the average rent in metro Denver rose to $952 from last year’s first-quarter average rent of $911. The average rent has not grown by more than 4.5 percent, year over year, since the third quarter of 2001 when it grew by 8.7 percent.

“Rents continue to increase as demand grows faster than the production of new units,” said Ron Throupe, professor of Real Estate at the Burns School of Real Estate and Construction Management at the University of Denver, and the report’s author. “Rents often tend to moderate a bit during the first quarter, but this year, the rent rose to an all-time high instead.”

The average rent rose in all counties measured, with the largest increases found in Denver County and in the Boulder/Broomfield area where the average rent grew year over year by 6.3 percent and 6.7 percent, respectively. The county areas with the highest average rents were Douglas County and the Boulder/Broomfield area where the average rents were $1,109 and $1,070, respectively. Jefferson County reported the lowest average rent at $897.

Rents rose as property owners responded to falling vacancy rates across the metro area. The apartment vacancy rate in the Denver metro area fell to 4.9 percent in the first quarter of 2012, falling from 2011’s first quarter rate of 5.5 percent, and dropping to the second-lowest vacancy rate recorded in any quarter since 2001.

The vacancy rate also fell from 2011’s fourth quarter rate of 5.4 percent. Since 2011, the vacancy rate in metro Denver was only lower during the second quarter of last year when it hit 4.8 percent. For the past ten quarters, the vacancy rate has fallen when compared to the same quarter one year earlier.

The metro Denver vacancy rate has not risen year over year since the third quarter of 2009. From the first quarter of 2011 to the same period this year, the vacancy rates dropped in all county areas surveyed including Adams, Arapahoe, Denver, Douglas, Jefferson and in the Boulder/Broomfield area.

“Vacancies are falling both metro-wide and in most neighborhoods we survey, said Ryan McMaken, spokesman for the Colorado Division of Housing. “We still find some high vacancy rates out in eastern and southeastern parts of the metro area, but everywhere else we’re looking at rates in the three to four-percent range, which is low.”

 2011’s second-quarter vacancy rates by county were Adams, 4.5 percent; Arapahoe, 6.3 percent; Boulder/Broomfield, 3.9 percent; Denver, 4.2 percent; Douglas, 4.9 percent; Jefferson, 3.8 percent. Average rents for all counties were: Adams, $934; Arapahoe, $909; Boulder/Broomfield, $1070; Denver, $973; Douglas, $1109; and Jefferson, $897.

 The Vacancy and Rent Surveys are a service provided by the Apartment Association of Metro Denver and the Colorado Department of Local Affairs’ Division of Housing to renters and the multi-family housing industry on a quarterly basis. The Colorado Vacancy and Rent Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, age of building, and apartment type. The full report is available through the Apartment Association of Metro Denver at www.aamdhq.org; and limited information is available online at the Division of Housing web site: http://www.divisionofhousing.com.