By Howard Pankratz
The Denver Post
Nearly 1,300 new apartments were added to the metro Denver rental inventory during the second quarter, but rents still edged up and vacancy rates declined.
Average monthly rents hit $1,117, up from $1,073 in the first quarter and $1,041 in the fourth quarter of 2013, according to the Denver Metro Vacancy & Rent Survey.
Pricey new units in some markets, plus the low vacancy rate — 4.7 percent, down from 5.1 percent in the first quarter — influenced the increase, according to the report by the Apartment Association of Metro Denver and the University of Denver.
Rental discounts and concessions used to lure tenants helped moderate the price increase, said apartment association vice president Mark Williams. Concessions averaged 9.3 percent in the second quarter, up from 6.9 percent in the first quarter.
He also noted that rents averaged about $800 in 2002, but when adjusted for inflation, “rents have been essentially flat over this period.”
The metro area added 1,261 new apartment units in the second quarter, bringing the total inventory to 298,461 units, according to the survey by Ron L. Throupe of the University of Denver’s Daniels College of Business and Jennifer Von Stroh of Colorado Economic and Management Associates.
But that’s not enough to meet demand, said Apartment Realty Advisors principal Jeff Hawks.
“The state of Colorado believes that we will create seven jobs every hour in 2014,” Hawks said in a statement. “Five Colorado residents turn 20 years old every hour, but we are only delivering one new apartment unit per hour.”
Earlier this year, analysts for the Colorado Division of Housing and the apartment association blamed the shortage on the migration of well-paid single people who want nice apartments, such as those being built around Union Station and elsewhere in downtown Denver.
Adam Lerner, center, was shown a fourth-floor corner unit during an open house at the upscale apartment building Verve at 1490 Delgany Street in Wednesday
Adam Lerner, center, was shown a fourth-floor corner unit during an open house at the upscale apartment building Verve at 1490 Delgany Street in Wednesday night, July 16, 2014. (Karl Gehring, The Denver Post)
Throupe estimated then that 10,000 to 12,000 apartments were currently being built in the metro area.
The new units are being rented at a pace that Multifamily Capital Advisors managing partner Jerry Kendall described as surprising.
“There were an additional 4,388 more units occupied, lowering the vacancy rate to 4.7 percent (from the 4.2 percent in the second quarter of 2013),” Kendall said in a statement. “That is 3,127 more occupied units net after absorbing the 1,261 new units that were delivered.
“This really shows the strength in our Denver apartment market. Our local economy is showing signs of job growth, combining a growing population and a strong demand for rental housing.