Apartment rents rise minimal amount in metro Denver as a wave of new supply hits market
Condo rents and emptiness charges in metro Denver stayed largely flat because the market absorbed an unexpectedly massive variety of new models within the first quarter.
Builders delivered 5,144 residences within the first three months. And regardless of experiences from the U.S. Census Bureau of slowing migration to Colorado, tenants absorbed 5,034 of these models, in response to the 2024 First Quarter Emptiness & Hire Report for Metro Denver from the Condo Affiliation of Metro Denver.
The Denver market has delivered 27,000 residences prior to now two years, outstripping the historic common of 10,000 deliveries over two years. Over the past 4 years, some of the sturdy stretches on document, builders have delivered 2,900 models 1 / 4.
Even by latest requirements, the primary quarter was sturdy.
“It was a very good quarter,” mentioned Cary Bruteig, founding father of Condo Insights and creator of the report.
The absorption of so many models in what usually isn’t a busy season for leasing had Bruteig complimenting landlords on their advertising and marketing efforts and questioning the accuracy of experiences that fewer individuals are relocating to the area.
A few of that new provide displays conversions of outdated lodge rooms in Denver into studio residences to accommodate individuals experiencing homelessness. These models include a prepared base of tenants. However the bulk of the brand new provide displays market-rate initiatives put into movement properly earlier than rates of interest spiked.
The condominium emptiness price in metro Denver stayed at 5.8%, the place it was within the fourth quarter, whereas common rents rose from $1,870 to $1,875 a month between the fourth and first quarters and median or mid-point rents rose from $1,785 to $1,798 in the identical interval.
Over the previous 18 months, rents have risen solely 0.3%, properly beneath the general tempo of inflation, the report mentioned. Measured in “actual” or inflation-adjusted phrases, condominium rents are falling in metro Denver.
Trying again over the 44 years the report has been compiled, the typical progress in rents over an 18-month interval was 5.7%, mentioned Mark Williams, govt vp for the AAMD.
However the balanced state could not final lengthy. Bruteig mentioned a emptiness price above 6% is often related to lease declines and people are showing on the horizon. His forecast requires the general emptiness price to achieve 7.5% within the subsequent couple of years as much more new provide comes onto the market.
If a recession hits, the emptiness price might spike a lot increased, he warned.
The best emptiness price got here within the Thornton and Northglenn submarket at 7%, and Denver was proper there with a 6.9% price.
Whereas the variety of models underneath development is falling regularly, builders are pulling again sharply on deliberate models, reflecting increased capital prices and an rising variety of native and state rules, Bruteig mentioned.
There have been 76,800 residences within the planning levels, not counting these underneath development, a 12 months in the past in metro Denver however nearer to 65,700 now, he mentioned.
Newer buildings, these constructed after 2020, had the very best common emptiness price at 6.7%, whereas buildings constructed previous to 1970 have the bottom emptiness price at 4.5%, Bruteig mentioned.
Studios had the very best emptiness price at 7.3%, whereas one-bedroom residences have been at 5.7% and two-bedroom and one-bath models have been at 5.4%. Three-bedroom models have been at 5.9% emptiness.
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