Denver Metro Rental Housing Report
Metro Denver average apartment rents up — but increases are cooling
Average apartment rents in metro Denver hit $1,315 per month in the first quarter, according to the latest report from the Apartment Association of Metro Denver.
That number represents a 9 percent increase over the same quarter in 2015, when the average rent metro-wide was $1,203. From fourth-quarter 2015, the increase is smaller: about 1.8 percent.
Vacancies in the metro area increased to 6.1 percent in the first quarter, up from 4.9 percent in the same period last year, but down from 6.8 percent in the fourth quarter of 2015. Vacancy rates in the fourth and first quarters tend to be higher than the other half of the year.
'The first and fourth quarters are usually soft. We have seen many of our clients' properties see a significant pick-up at the end of the first quarter,' said Jeff Hawks, vice chairman with ARA, A Newmark Company. 'The second quarter is usually the strongest for absorption and rent growth. We are still one of the most desirable metro areas for acquisition of apartment communities by national investors.'
While a 9 percent increase in average rent year-over-year is still too high for the comfort of many renters in the metro area, it is a smaller increase than apartments experienced from 2014 to 2015. In the first quarter of 2014, the average apartment rate was $1,073 per month, then jumped 12 percent by first-quarter 2015.
In the first-quarter, 1,809 new apartment units were delivered to the metro area, according to AAMD's report.
'As expected, there were jumps in sub-markets' vacancy while new units were absorbed, but net absorption for the quarter was surprising with a reduction in vacancy in comparison to the prior quarter,' the report said.
Projections show that between 8,000 and 10,000 units will be built in metro Denver in 2016, not including any properties with fewer than 50 units, according to AAMD.
'Construction time may lag, as it did last year, due to labor shortages, which further helps stabilize the supply-and-demand equation for apartments,' said Jerry Kendall of Multifamily Capital Advisors. 'Per the report, in the first quarter, 4,633 units were absorbed. At that pace, the market should absorb new units being delivered and even draw down on the availability of existing rental units throughout the Denver metro area. Renters will be looking for affordable alternatives to the newly constructed higher-rent properties in the older existing properties. This will continue to put upward pressure on existing apartment rentals throughout the metro area.'
Boulder carried the highest average rent in the metro area at $1,799 per month, while north Aurora was most affordable at $809 per month on average. However, north Aurora also had the lowest vacancy rate in the metro area at 0.9 percent, so rents there could be on their way up in quarters to come.
Molly Armbrister covers real estate, retail and construction for the Denver Business Journal and writes for the 'Real Deals' blog. Phone: 303-803-9232.
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