(To read more on the multifamily market, click here.)
DENVER-Statewide, the overall vacancy rates for apartments dropped to 8.6% from 9.8% a year earlier, and 10.4% in February, according to a recent third-quarter report sponsored by the Colorado Division of Housing. The report, authored by Gordon Von Stroh, a University of Denver business professor and principal of Colorado Economic and Management Associates, is conducted twice a year for the housing division.
By far the biggest drop occurred in Aspen. At a 1.6% vacancy rate, it had the lowest rate in the state. Perhaps even more remarkable, the overall vacancy rate in Aspen a year earlier was 11.1%. And even at the end of the February report, its vacancy rate stood at 7.8%.
Von Stroh says an increase in construction activity in the Aspen area is one contributing factor to the huge drop in the vacancy rate. Also, Aspen is starting to attract more year-round employees, who must rent, because they can't afford to buy a home where the median price is well above $1 million.
In addition, there is the question of supply, notes Kathi Williams, director of the Colorado Division Housing. Owners of small apartment buildings, duplexes, and townhomes, are tempted to sell them because home prices are so expensive, she says. And in such a small market only a handful of properties are removed, especially at a time when demand is increasing. It doesn't take much to drive down the vacancy rate, she explains.
Aspen also has the highest overall rents in the state at an average of $1,026.31 per month. That, however, is slightly lower than the $1,041.94 per month a year earlier, despite the substantial drop in the vacancy rate. Williams tells GlobeSt.com that with such a low vacancy rate in Aspen, the pressure could be now on raising monthly rates. Von Stroh tells GlobeSt.com that landlords tend to be cautious. They tend not to spike rates quickly, knowing that will force many renters to look at alternative housing if rates go up too fast.
A spokesman for the Aspen Skiing Co. tells GlobeSt.com that the 200-unit housing it has for seasonal employees filled quickly. He says he has not heard of any big housing shortage in Aspen at this time.
The highest vacancy rates in the state were in Lake County, at 39.3%, up from 26.2% a year earlier. In the first quarter, the vacancy rate stood at 26.6% in rural Lake County. Leadville is the largest city in Lake County, which is about 100 miles west of Denver in the center of the state.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
