The apartment vacancy rate in the Denver metro area fell to 4.3 percent in the third quarter of 2012, dropping to the lowest vacancy rate recorded in any quarter since the third quarter of 2000. According to a report released Monday by the Apartment Association of Metro Denver and the Colorado Division of Housing, the apartment vacancy rate was down from 2011’s third-quarter rate of 4.9 percent, and was also down from this year’s second quarter rate of 4.8 percent.
For the past twelve quarters, the vacancy rate has fallen when compared to the same quarter one year earlier. The last time the quarterly vacancy rate rose year over year was during the third quarter of 2009.
From the third quarter of 2011 to the same period of 2012, the vacancy rate dropped in Adams, Arapahoe, and Jefferson counties, and in the Boulder/Broomfield area. The vacancy rate rose in Douglas County and was flat in Denver County during the same period.
“Considering that we were already under five-percent vacancy, this additional drop is significant,” said Ron Throupe, professor of Real Estate at the Burns School of Real Estate and Construction Management at the University of Denver, and the report’s author. “Rent growth hit an eleven-year high during the second quarter, but there is still enough demand out there to keep filling up units.”
Industry observers also noted that supply continues to be a factor.
“The real driver now is the lack of apartment supply, since in the last ten-year cycle, only 18,000 units were built,” said Mark Williams, Executive Vice President of the Apartment Association of Metro Denver. “In the two previous ten-year cycles, dating back to the eighties, 50,000 units were built in each cycle, and only 9,000 units are under construction now.”
As vacancy rates moved down, the area’s average rent increased. During the third quarter of 2012, the average rent in metro Denver rose to $986, increasing 5.2 percent, or $49, from 2011’s third-quarter average rent of $936.
The average rent rose in all counties measured except Adams County, with the largest increases found in Arapahoe County in the Boulder/Broomfield area where the average rents grew year over year by 7.1 percent and 8.1 percent, respectively. The county areas with the highest average rents were Douglas County and the Boulder/Broomfield area where the average rents were $1,140 and $1,115, respectively. Adams County reported the lowest average rent at $893.
“The average rent has grown year over year in every quarter for the past two and a half years, and it has recently begun to accelerate.” said Ryan McMaken a spokesman for the Colorado Division of Housing. “The rent growth we’re now seeing is starting to look like what we experienced in the days of the dot-com boom.”
2012’s third-quarter vacancy rates by county were Adams, 4.2 percent; Arapahoe, 4.8 percent; Boulder/Broomfield, 2.9 percent; Denver, 4.3 percent; Douglas, 4.1 percent; Jefferson, 3.7 percent.
Average rents for all counties were: Adams, $893; Arapahoe, $956; Boulder/Broomfield, $1115; Denver, $1015; Douglas, $1140; and Jefferson, $949.
The Vacancy and Rent Surveys are a service provided by the Apartment Association of Metro Denver and the Colorado Department of Local Affairs’ Division of Housing to renters and the multi-family housing industry on a quarterly basis. The Colorado Vacancy and Rent Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, age of building, and apartment type. The full report is available through the Apartment Association of Metro Denver at www.aamdhq.org; and limited information is available online at the Division of Housing web site: http://www.divisionofhousing.com.