Colorado Springs-area apartment rents jumped to another record high in the third quarter, and more increases could be on the way as demand for rental properties remains steady.
Monthly rents averaged $787.22 from July through September, an increase from $776.85 in the second quarter and up from the previous record of $778.35 set during the third quarter of 2011, according to a report by the Colorado Division of Housing report and the Apartment Association of Southern Colorado.
Apartment rents have now risen for 11 consecutive quarters on a year-over-year basis.
Rents are rising, in part, because apartments have gotten tougher to find. The third-quarter vacancy rate for Springs-area units was 6.1 percent, a slight increase from 6 percent in the second quarter, but down from 6.2 percent in the third quarter of last year.
By comparison, vacancy rates were consistently near or above 10 percent for much of the period from late 2002 through mid-2009.
The overall supply of apartments for rent hasn’t increase significantly, despite several multifamily construction projects that are under way, said Ken Greene, a vice president of Apartment Realty Advisors in Denver, which co-sponsors the report.
In addition to a relatively stable supply of units for rent, demand has picked up — driven, in part, by young adults who are moving out of their parents’ homes or roommates who are seeking their own place to live, he said.
As a result, Greene said he expects vacancy rates to fall below 6 percent, which could lead to annual rent increases of 5 percent to 7 percent — perhaps as high as 10 percent a year.
A similar report recently by Apartment Insights, an online research company, showed similar trends: Third-quarter rents averaged $757 a month, up $10 from the second quarter of this year, while the third-quarter vacancy rate of 5.8 percent fell from 6.4 percent in the second quarter.
Doug Carter, a Springs commercial broker with national real estate firm Sperry Van Ness and an Apartment Insights partner, said he expects rent increases and declines in vacancy rates to continue, albeit at a slow, incremental pace.
Demand also will be driven by more troops coming to Fort Carson, Carter said. Also, construction workers who have returned to the area because of the improving homebuilding market are renting apartments, he said.
Greene and Carter agree the apartment market would take off even more if the area saw a big boost in employment; the area’s jobless rate for September was still a relatively high 9.3 percent.
“It’s job growth that really fuels demand in the multifamily market,” Carter said.
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