Apartment vacancy rate falls to 6.1 percent

Apartment vacancies in the Denver metro area fell to 6.1 percent in the second quarter, the lowest rate in two years, according to a report released Tuesday by the Apartment Association of Metro Denver and the Department of Local Affairs’ Division of Housing. The last time rates were lower was in the first quarter of 2008, when the overall vacancy rate for all apartments was 5.9 percent.  Rate,s are down 32 percent from the second quarter of 2009, when they stood at 9 percent. In the first quarter, they were 6.5 percent.

In recent years, vacancy rates have tracked closely with the unemployment rate, illustrating a close connection between job growth and demand for apartments. In recent quarters.  however,  vacancy rates have remained low in despite job losses and slow job creation.

Apartments filling up, despite few job creations

“Vacancy rates continue to tighten in spite of meager job growth,” said Gordon Von Stroh, professor of business at the University of Denver, and the report’s author. “There has been little new apartment development in recent years, so the tight supply we do have will become even tighter once we start to see some large-scale job creation.”

Vacancy rates had initially increased following the rapid increase in the unemployment rate in late 2008 and early 2009. But the vacancy rate quickly fell below eight percent by the end of 2009.

For 2010’s second quarter, the highest vacancy rates were found in Denver County where rates fell year-over-year from 9.8 percent to 7.4 percent. Rates were lowest in Douglas County where vacancies fell year-over-year from 5.8 percent to 3.9 percent. Vacancy rates fell in all metro Denver counties form the second quarter of 2009 to the same period this year. 2010’s first quarter vacancy rates by county were Adams, 5.2; Arapahoe, 6.4; Boulder/Broomfield, 4.9; Denver, 7.4; Douglas, 3.9; Jefferson, 5.4.

Rents rising

Rent growth was unusually strong. The metro-wide average rent increased year over year from $870.37 to $899.97 during the second quarter. For the first time in more than a year, all counties reported year-over-year increases in county-wide average rents.

“We’re starting to see signs of more significant increases in rents,” said Ryan McMaken, a spokesperson for the Division of Housing. “Rent growth, which hasn’t been adjusted for inflation in this survey, has been very moderate for several years now. But we’re likely to see more growth in the short- and medium-term as population grows and supply remains stable.”

Average rents for all counties were: Adams, $892.48; Arapahoe, $856.54; Boulder/Broomfield, $995.07; Denver, $909.46; Douglas, $1085.79; and Jefferson, $845.38.