Metro Denver Apartment Vacancies Fall to a 13 Year Low

interesting Denver Post article

The apartment vacancy rate in metro Denver area fell to 4.2 percent during the second quarter of 2013, reaching the lowest vacancy rate recorded since the third quarter of 2000.

At the same time, the average rent for all apartment types in metro Denver rose to $1,022, increasing 4.3 percent from the previous year, according to a report released Wednesday by the Apartment Association of Metro Denver and the Colorado Division of Housing.

Average rent for a two-bedroom, one-bathroom apartment climbed to $952.66.

"It is really tight," Jim Lorenzen, president of Cornerstone Apartment Services, said of the market for renters. "As of today, we have 22 rent-ready apartments out of 2,100."

Rocky Sundling, immediate past president of the Apartment Association of Denver and regional manager of Greystar Real Estate Partners, said demand for rental units is coming from the influx of people moving to the metro area and job growth from a recovering economy.

Sundling said that on the supply side, there are a large number of apartments in the construction pipeline - between 12,000 and 15,000 which will be delivered in the next two years.

"Although it is coming, it is not here yet," said Sundling. "So you factor increasing demand with a constrained supply - that's leading to the increased rents."

Sundling said that although the rental market is "very healthy" with rents increasing and vacancies decreasing, there should be a noticeable moderation in the next couple of years.

Some of the factors that will lead to the moderation are the new apartments and the fact that rents are increasing faster than wages - a situation that can't be sustained.

Lorenzen of Cornerstone Apartment Services, said he has already seen "a little bit of flattening" in the company's ability to raise rents.

"Part of that is driven by the market in general, but part of it is that incomes have not kept pace," said Lorenzen.

"We meet every morning and discuss our availability, discuss our leasing activity for the prior day. If we can increase rents, we do that. If we think we have to back off rents, we do that also. We are re-pricing every day.'