Apartment vacancies and average rents in metro Denver dropped again in the first quarter, year over year, according to a report released Friday by the Colorado Division of Housing.
The lower vacancy rate was helped along by landlords offering discounted rents to fill vacant units, according to Gordon Von Stroh, business professor at the University of Denver and author of the report. “The lower vacancy rate is good for apartment owners, but owners had to basically buy that lower vacancy rate by increasing rent discounts,” Von Stroh said.
The average apartment vacancy rate decreased to 6.5 percent in the first quarter, from 8.4 percent in the first quarter of 2009 and from 7.7 percent in last year’s fourth quarter. Vacancy rates fell in all the six metro-area counties tracked by the housing division; the division combines Boulder and Broomfield counties.
Average metro apartment rent fell to $877.16 per month in the first quarter, from $881.92 in 2009¹s initial quarter, but was up from $875.39 in last year’s fourth period.
Without job growth, and because of renters’ desire to cut costs, it’s been hard for landlords to raise rents, according to Ryan McMaken, the Colorado Division of Housing’s spokesman. But once the metro area starts to see more job growth, that should spark higher demand for apartments and significant rent increases.
“Our unemployment isn’t bad here, compared to other metro areas, and that’s what’s keeping apartment vacancies down. Another factor is there isn’t a lot of new apartment construction,” McMaken said.
From 2003 through 2009, metro Denver added fewer than 3,000 new apartment units each year, compared to 8,000 units in 2001 and more than 9,000 in 2002, according to Terrance Hunt, principal and broker at Apartment Realty Advisors Inc. in Denver. Because of that lack of new construction, Hunt believes the Denver area may be looking at a “pretty tight” apartment market in the near future.
Lauren Brockman, principal at apartment management company Orion Real Estate Services Inc. in Denver, pointed out that even in the current economic downturn, there’s strong demand for housing in metro Denver because many people are staying here, rather than moving to other markets for jobs. Even with limited job growth, “people want to be here” and need apartments, according to Brockman.
Other first-quarter apartment data from the housing division study includes:
- Arapahoe County had the highest average apartment vacancy rate, at 7.2 percent, down from 9.7 percent year over year.
- Douglas County had the lowest vacancy rate, at 4.4 percent, down from 7.1 percent.
- In between, were Adams (6.8 percent), Boulder/Broomfield (5 percent), Denver (6.9 percent) and Jefferson (5.8 percent) counties.
- Douglas County also had the highest average rent in the first quarter, at $1,055.12 a month.
- Arapahoe County reported the lowest average rent, at $833.94.
- Other rents, by county, included: Adams ($874.45), Boulder/Broomfield ($946.60), Denver ($883.87) and Jefferson ($833.94).
The housing division collaborates on its quarterly apartment market reports with the Apartment Association of Metro Denver. The full report is available on the apartment association’s website, at http://www.aamdhq.org.