Despite vacancy increase, metro Denver apartment rents rise

Feb 10, 2014, 2:54pm MST
Dennis Huspeni
Reporter-
Denver Business Journal
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While the vacancy rate for metro Denver apartments rose to its highest level in two years, it’s still considered a tight landlord’s market and rents across all Denver-area counties continued to rise, according to a vacancy and rent report released Monday.
The area’s vacancy rate rose to 5.2 percent in the fourth quarter, up from the 4.9 percent rate in Q4 2012 and also from the 4.4 percent vacancy rate in Q3, according to the report published by the Apartment Association of Metro Denver and the Colorado Division of Housing.
“Seasonally, an increase in vacancy is expected for the fourth quarter, but since vacancies are up year over year, that does show that new apartment construction, especially in downtown Denver, is starting to create a few more vacancies.” said Ryan McMaken, an economist with the state. “The rising vacancies have not been enough to immediately push the average rent down, however, and measured year-over-year, we find the average rent actually increased a little more in the fourth quarter than in the third quarter this year.”
The report notes vacancy rates rose in all counties of the study, except for the Boulder/Broomfield area where the vacancy rate dropped to 3.4 percent.
Rents, meanwhile, continued to rise above historic high-levels. Every metro Denver county in the study saw in increase in average rent rates. Denver and the Broomfield/Boulder areas saw the biggest rent growth at 8.1 and 8.6 percent increases, respectively.
“New units are arriving,” said Mark Williams, executive vice president of the Apartment Association of Metro Denver. “The industry still sees relevant pent-up demand out there, and in addition to new units, owners are also investing in remodels and new amenities for units.”
Existing landlords are also remodeling existing units to keep up with new product, spiking vacancy rates.
“The vacancy rate headed up over 7 percent in Glendale,” McMaken said. “But a big factor there is likely the turnover that happens as owners remodel and upgrade units. The new construction we’re seeing will help to moderate rents in 2014. On the other hand, upgrades to existing units will generally lead to average rent growth.”
Here’s the average vacancy rates and rents in Q4 for each of the areas surveyed:
• Adams: 5.3 percent; $948.
• Arapahoe: 5.2 percent; $995.
• Boulder/Broomfield: 3.4 percent; $1,198.
• Denver: 6.1 percent; $1,064.
• Douglas: 5 percent; $1,236.
• Jefferson. 4.6 percent; $994.

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