Denver Area Apartment Rental Report

Denver-area apartment vacancies rise

By John Rebchook, Rocky Mountain News

Published October 28, 2008 at 7:54 a.m.

Apartment vacancy rates in the Denver Metro area increased to 6.5 percent during the third quarter of 2008, rising from 5.3 percent during the same period last year, according to a report released this morning.

The third-quarter vacancy rate also rose from 6.2 percent in the second quarter and is the highest vacancy rate in six quarters, according to the report by by the Apartment Association of Metro Denver and the Colorado Department of Local Affairs' Division of Housing.

The vacancy rate has not dropped below 5 percent since the first quarter of 2001, and they peaked at 13.1 percent during the first half of 2003.

Adams County reported the highest vacancy rate of 7.5 percent, and the Boulder/Broomfield area reported the lowest rate at 4.7 percent. All areas except Boulder/Broomfield and Douglas County reported increases in vacancies since the second quarter. Vacancy rates for all counties surveyed were: Adams, 7.5 percent; Arapahoe, 6.9 percent; Boulder/Broomfield, 4.7 percent; Denver, 6.0 percent; Douglas, 5.9 percent; and Jefferson, 6.5 percent.

In general, a vacancy rate of 5 percent is considered the "equilibrium" rate. Rates below 5 percent indicate tight markets.

The third quarter's increase marks the second quarter in a row during which vacancy rates have increased, although vacancies have historically declined during the second and third quarters.

"There's clearly some softness in the market given the increases in concessions and vacancies," Gordon Von Stroh, a professor of Business at the University of Denver, and the vacancy report's author. "It remains to be seen how much the national economy will affect the local markets."

Average rents during the third quarter hit a new high of $892.22, increasing 33 dollars since the third quarter of last year. Although rents have been increasing, rental losses from discounts and concessions have also been increasing since the third quarter of last year.

The highest average rent was reported in Douglas County at $1051.05, and the lowest was reported in Jefferson County at $847.43. Average rents for all counties were: Adams, $882.52; Arapahoe, $850.72; Boulder/Broomfield, $974.68; Denver, $906.12; Douglas, $1051.05; and Jefferson, $847.43.

Although vacancies are increasing, few predict substantial declines in occupancies in the metro area.

"It's much more difficult to buy a home today than it was a couple of years ago, so people are looking to rental housing," said Kathi Williams, Director of the Colorado Division of Housing. "That's good news for apartment owners."

The Vacancy and Rent Surveys are a service provided by the Colorado Department of Local Affairs' Colorado Division of Housing and the Apartment Association of Metro Denver to renters and the multi-family housing industry on a quarterly basis.