May 1, 2013
From The Denver Post http://www.denverpost.com/breakingnews/ci_23130172/apartment-rents-denver-metro-rise-an-all-time
By Howard Pankratz
Apartment rents in metro Denver have hit an all-time high, according to a report released Monday by the Apartment Association of Metro Denver and the Colorado Division of Housing.
The report said that as the apartment vacancy rate has continued to decline, the area's average rent increased to the highest level recorded in any quarter.
In the first quarter of 2013, the average rent in metro Denver rose to $992, increasing 4.2 percent, or $40, from 2012's first-quarter average of $952.
"The significance of it is really in the fact that here we are in the first quarter, which tends not to be the most active quarter for rents," said Ryan McMaken, an economist for the Division of Housing. "It wouldn't be totally unusual to see a first-quarter rent down below what you'd see a couple of quarters earlier."
According to the report, the apartment vacancy rate in the metro area fell to 4.6 percent in the first quarter, the second-lowest since the first quarter of 2001.
People in the industry say it is simply a case of supply and demand.
Lauren Brockman, a principal at Anbrock, which has 700 units under construction in the Denver area, said that for about five years no apartments were built, which created pent-up demand.
As a result, said Brockman, "we are in a market so tight there is going to be rent inflation." It's primarily caused by a lack of apartments and by "echo boomers" — children of baby boomers who rent by choice and move to Colorado, he said.
Nationally, he said, there is expected to be a shortfall of 984,000 apartment units through 2015.
But he said Denver is doing much better as far as apartment construction, with 13,000 units currently in the pipeline.
"We are ahead of other cities in the country. That will moderate these rents," said Brockman.
Within the next 18 to 24 months, the vacancy rate should rise to 6 to 7 percent, he said.
"When you get there, you will still see some rent inflation, but you won't see as much," said Brockman.
Mary Wessler, regional vice president for ConAm Colorado Inc., which has about 3,200 apartment units in metro Denver, said the low vacancy rate is caused by the number of people moving to Colorado and a limited number of new apartments.
She said apartment owners are "certainly in a better situation than we have been in. Our rates are better than they have been in a while."
Carol Luinstra, owner of Apartment Finders International in Denver, said it has become much harder for people to find apartments because they can't find apartments in the $500-to-$700 range and because apartment owners are becoming more selective in whom they accept as tenants.