The cost to rent a Colorado Springs apartment continues to skyrocket and shows no signs of slowing from its record-setting pace.
In the second quarter, Springs-area rents averaged $1,215.67 a month — a 5% increase from the same period last year and the first time rents have surpassed $1,200, according to a report from the Colorado Division of Housing and the Apartment Association of Southern Colorado. The latest figure also is the second consecutive quarter that rents have hit a record high.
Local apartment rents have soared over the last several years and set a series of records as the Pikes Peak region’s economy took off after the Great Recession.
More people who live, work and earn higher wages in Colorado Springs and El Paso County have created a steady demand for multifamily living and helped push up rents, said Kevin McKenna, executive managing director at Newmark Knight Frank Multifamily in Denver. The brokerage co-sponsors the Housing Division and Apartment Association report.
At the same time, rising labor and building material expenses have driven up apartment construction costs, which are reflected in higher rents, McKenna said. Costs to maintain and operate apartments — such as insurance premiums to protect against hail and other damage — also have increased and get passed along to renters, he said.
“Everything is getting more and more expensive, including rent, but also the expense of running a property,” McKenna said.
Newer apartments — which typically come with fitness centers, swimming pools, barbecue pits and other amenities — also command top dollar and pull up the Springs’ overall average rent, he added.
Even as several apartment projects are being built in suburban areas and increasingly in downtown, the supply isn’t necessarily keeping up with demand, said Gary Winegar, president of investment services for Griffis/Blessing of Colorado Springs. The company buys and upgrades apartment complexes and manages thousands of Front Range units.
Through the first half of 2019, 727 apartments were added to the overall supply, which now totals nearly 51,000 units, according to the Housing Division report. But apartments are being occupied at a relatively fast clip; the area’s second quarter vacancy rate fell to 5.4%, down from 6.3% a year ago, the report showed.
“While we’re adding some supply, it’s a small amount compared to our overall inventory,” Winegar said. “It’s not like we’re adding 10% more apartments to Colorado Springs. It’s a smaller number, and they come on slowly.”
Don’t expect rents to retreat anytime soon, Winegar and McKenna said.
Both predicted rents will continue to increase at an annual rate of 3% to 4% for the foreseeable future — modest gains that nevertheless probably will outpace inflation.
“As long as this economy keeps ticking along,” Winegar said Tuesday. “Just this morning, the consumer confidence index came out and it was better than they expected.
“When people feel good about their prospects for the future, they make decisions. And where they’re going to live (buying a home or renting an apartment) is one of the bigger decisions people make.”