Developers/property managers still bullish on apartments.
The most recent Denver Metro Apartment Vacancy and Rent report marks the sixth straight month of rising rents in the Denver metro area, making for an all-time high of $1,419.74 per month average. That's a $36.98 increase from last quarter's $1,382.76 average (or 2.7 percent), and people are apparently willing to pay it. The average vacancy rate decreased from 5.7 percent in Q1 to 5 percent, and that means it's good to be a crane operator.
So why is everyone so bullish on Denver? Ron Throupe, associate professor of real estate and construction management at the University of Denver's Daniels College of Business, and author of the report, points to job growth and location.
The rent growth trend for this market cycle continues to amaze some, but exemplifies the strength and magnet of the Denver market for relocation and job growth,” says Throupe. “The unemployment rate for Colorado is 2.3 percent, the lowest state in the U.S., with Denver at 2.4 percent. Employees need a place to live, and whether it is by choice, affordability, or happenstance, apartments remain a strong destination.”
And the absorption numbers -- the rate at which the real estate is sold -- only reaffirm the business professor's postulation. The net absorption rate of this quarter was 4,348 units and outpacing the 2,152 new units that were added. That makes for a robust 9,012 total for the year.
Yet, as explosive as Denver seems, its rate of growth isn't nearly as rapid as some of the other magnet cities. Seattle, for example, saw a rent hike of 5.5 percent in July alone, but there's nothing really stopping Denver from reaching those levels.
What are your thoughts? Do you feel like rents are out of control? Do you think that Denver could ever reach Seattle and San Fransisco levels? Let us know in the comments below!