Strong demand fuels record high apartment rents
Rich Laden
The Gazzette
Colorado Springs-area apartment rents soared to a record high in the third quarter and are expected to continue climbing as demand for multi-family living remains strong.
The average monthly rent reached $778.35 for the three-month period ending Sept. 30 — nearly $50, or 6.7 percent, higher than a year ago at the same time, according to a report released Thursday by the Colorado Division of Housing and the Apartment Association of Southern Colorado.
The third-quarter rent hike was the biggest year-over-year increase in the Springs in the last decade, said Ron Throupe, an assistant business professor at the University of Denver and the report’s author. It also marked the seventh straight, year-over-year increase in quarterly rents. Year-over-year rents last fell in the fourth quarter of 2009
The biggest third-quarter rent increase came in apartments on the Springs’ southeast side — jumping $87 a month to an average $692.55 from the same period last year, the report showed.
Southeast side apartments typically have some of the lowest rents in the area, but landlords and property owners now are playing catch-up, in part to pay for maintenance they’ve been putting off for years, said Housing Division spokesman Ryan McMaken.
Rents are rising across the area as apartments are filling up; the local vacancy rate fell to 6.2 percent in the third quarter, down from 6.4 percent in the second quarter and 6.6 percent in the third quarter of 2010.
Vacancies have fallen as more troops have arrived at Fort Carson, the local population has increased, more people have moved to the Springs, the number of households is expanding and more jobs have been added, albeit at a slow pace, said Ken Greene of Apartment Realty Advisors in Denver, one of the report’s sponsors.
“Rents will continue to rise,” Greene said. And, he said, it’s possible vacancies will fall to 5 percent or below, which “will certainly spur more rent growth.”
The combination of rising rents and lower vacancies has triggered a wave of apartment construction planned for the Springs area; few new projects have been built in recent years, which also contributed to falling vacancies.
Two projects are under way in northern Colorado Springs and Monument, while Nor’wood Development Group of Colorado Springs has announced plans to build four apartment projects — one in Fountain south of town and three in the Springs with a California-based partner.
All told, those projects would add nearly 1,500 apartments in the Springs area, which currently has about 44,000 units.
The Springs market, which has been absorbing 700 to 800 apartments a year, should have no trouble filling those units, Greene said.
“That really is not enough to overwhelm the market, even in these tough times,” he said.
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