Even though apartments are being built across the Denver Metro, demand is still higher than supply
Finding it hard to find a colorado rental? You're not alone.
All of the cranes you're seeing around town still aren't enough. Despite the fact that about 500 new apartments are being built every two weeks in metro Denver, rents are up, vacancy is down and there's no sign of that trend changing any time soon.
Average monthly rent for the second quarter rose $36.98 to $1,419.74, hitting another rental high. Median rent rose $31.21 to $1,376.79, according to the Denver Metro Apartment Vacancy and Rent report from the University of Denver’s Daniels College of Business and Colorado Economic and Management Associates.
But the big takeaway from this report, said its author, Ron Throupe, is that 4,348 apartments were filled in the quarter, outpacing the 2,152 new units added. Since January, 9,012 net units have been filled, making it a strong year so far. In comparison, 11,056 net units were absorbed in all of 2016.
In layman’s terms: Demand is high — which, again, may make Denver renters groan. But on the bright side, Harvard Extension School real estate instructor Teo Nicolais said, high demand means you’re living in a desirable place.
“Denver has been discovered, but we should (feel) lucky,” said Nicolais, who lives in Denver. “A lot of cities are cheap to live in, but it’s cheap to live in because no one wants to live there.”
Denver’s vacancy rate dropped to 5 percent from 5.7 percent in the second quarter, according to the report. That’s not surprising considering the state has the nation’s lowest unemployment rate (2.3 percent) and millennials continue to flock here. The rate in Denver is 2.4 percent.
The market needs a degree of vacancy, allowing for people to move around. Nicolais said the magic number is 6 percent. If the vacancy rate is below 6 percent, rent prices typically go up. If it’s higher, rent typically drops.
But there may be a shining light on the horizon as more red ribbons are cut on apartments.
Although new construction dropped in the second quarter, adding 2,152 units compared with the previous quarter’s 3,246 units, the metro area is still on track for another record-breaking year of apartment construction. In 2010, Denver built 497 apartment units, he said. The metro area now builds that many in two weeks.