Colorado Springs-area apartment rents have resumed their record climb.
Rents in the first quarter of this year averaged $1,171.62 a month, eclipsing the record of $1,156.76 set during the second quarter of 2018, according to a report by the Colorado Division of Housing and the Apartment Association of Southern Colorado.
After breaking last year’s record, rents stabilized somewhat; they were practically unchanged in the third quarter and fell by about $6 during the fourth quarter of last year.
But steady population growth and a strong local economy continue to stoke demand for multifamily living, and rents are responding, said Kevin McKenna, executive managing director at Newmark Knight Frank Multifamily in Denver. The brokerage co-sponsors the Housing Division and Apartment Association report.
New apartments are partly the cause of higher rents, too. They typically come with fitness centers, pools, fire pits and other amenities, and their high costs push up overall average rents. Few, if any, new projects include units set aside as affordable housing and instead are almost always market-rate projects — charging what the market will bear.
Colorado Springs’ lack of affordable housing also has been blamed in part for a rise in homelessness , with some low-income earners being unable to afford higher rents.
El Paso County’s population of nearly 714,000 in 2018 trailed that of Denver, but is increasing at a faster clip, according to U.S. Census Bureau figures released last month. The area’s unemployment rate, meanwhile, fell to 3.9% in February after having edged up beyond 4%.
Commercial development also is hot in several parts of town, such as the north and northeast sides, where new stores, shopping centers, restaurants and entertainment centers are taking shape.
“Outside of the apartment world, the economy is booming and population growth is really driving rent growth,” McKenna said. “And even as we’re at an all-time high, rents in Denver are still 40% higher.”
As the local economy makes strides, expect rents to continue their ascent, McKenna said.
Not only will demand remain strong, but newly built apartments are being snapped up quickly by renters, he said. At the same time, not as many apartments are being built as needed to satisfy demand because developers are faced with soaring construction and labor costs, he said.
In the first quarter, 532 apartments were added to the area’s supply, which totals 50,927, the report showed. By comparison, 1,135 units were added for all of 2018.
“The bottom line is, we’re in a healthy place,” McKenna said of the city’s apartment market.
“I don’t think we’re overbuilt. We’ve got solid rent growth. The economy has got a lot of good things going for it.”