Metro Denver apartments scarce as rents soar

rental rates and rentals are tougher to find....

 

Denver Post

1.31.2013

 

Metro Denver apartments remain scarce with the apartment vacancy rate in the area falling to 4.9 percent in the fourth quarter of 2012 compared to 5.4 percent in the fourth quarter of 2011.

According to a report released Thursday by the Apartment Association of Metro Denver and the Colorado Division of Housing, 2012's fourth quarter vacancy rate was the lowest reported during the fourth quarter of any year since 2000.

The vacancy rate was 4.7 percent in 2000.

However, the vacancy rate in the Denver metro area in the fourth quarter of 2012 was better than the third quarter when it was 4.3 percent.

With the lower vacancy rates, rents skyrocketed.

During the fourth quarter of 2012, the average rent in metro Denver rose to $978, increasing 4.9 percent, or $46, from 2011's fourth-quarter average rent of $932.

However, the average rent in the third quarter of 2012 was higher at $986.

Average rents for all counties were: Adams, $893; Arapahoe, $950; Boulder/Broomfield, $1,103; Denver, $985; Douglas, $1,186 and Jefferson, $941 .

Not all types of units were equally in demand.

"The average rent in efficiency apartments outpaced other types of units, rising by more than 10 percent in metro Denver," said Ryan McMaken, an economist for the Colorado Division of Housing. "This suggests that people are looking for the smallest, least expensive unit the can find in many cases, and that drives up rents for the smaller units too."

Ron Thorpe, professor of Real Estate at the Burns School of Real Estate and Construction Management at the University of Denver, said that for the past 13 quarters, the vacancy rate has fallen when compared to the same quarter a year earlier, The last time the quarterly vacancy rate rose year over year was during the third quarter of 2009, said Thorpe, the author of the report.

Vacancy rates dropped from the fourth quarter of 2011 to the fourth quarter of 2012 in Adams, Arapahoe, Douglas and Jefferson counties and the in the Boulder-Broomfield area.

However, in Denver, the vacancy rate rose in Denver where a large number of new apartment communities have been built.

As to Denver, Thorpe said there were some vacancies in "brand new communities that haven't completed the lease-up process.

"Most new construction is taking place in only a few of the most in-demand submarkets right now, so low vacancy rate will continue to be the norm for many neighborhoods in the short term," said Thorpe.

The report said that given the limited number of new additions to the apartment inventory in the last two years, and especially during the last year, the recent trend in Denver metro unemployment rate, normal seasonal vacancy changes, continued immigration and an increase in metro area population, a "continued historically low vacancy rate was expected."

"Historically, the vacancy rate is higher in the fourth and first quarters than the second and third quarters, which we see again this year."

The report noted that overall average rent for the last 10 years has increased from around $800 in 2002 to more than $978 in the fourth quarter of 2012.