Apartment dwellers dug deeper in their pocketbooks during the second quarter as Colorado Springs-area rents climbed to a record high and the demand for multifamily living remained strong, despite local financial pressures caused by the COVID-19 pandemic.
Monthly rents averaged $1,246.47 in the April-June period, eclipsing the previous record of $1,231.24 set in the third quarter of 2019, according to a report from the Apartment Association of Southern Colorado and the Colorado Division of Housing.
The monthly rents were up $27.53 from the first quarter and increased almost $31 over the same time last year.
Higher-end apartments that have been added to the area’s overall supply in the past few years probably are pushing up the overall average, said Laura Nelson, the Apartment Association’s executive director.
Such apartments are built in fast-growing parts of town and usually have a clubhouse, fitness center, swimming pool, barbecue pits, dog runs, bike storage and other amenities that command higher rents.
Because Colorado Springs’ supply of apartments totals only about 52,000, the addition of pricier units can easily drive up the overall average, Nelson said.
Rents at apartments built since 2010 averaged $1,520.07 a month in the second quarter, the Apartment Association and Housing Division report shows.
“The only thing we’re adding are really high end,” Nelson said of newly constructed apartments. “Because we’re a smaller market, it doesn’t take as much to affect that total. ... We don’t have the 400,000 units Denver has. Denver can add a few hundred units at a higher end and it really doesn’t affect the price much.”
At the same time, the area’s apartment vacancy rate slipped to 4.5% in the second quarter, the lowest since 4% in the third quarter of 2016.
Apartments are in demand among young people who don’t want to be tied to a mortgage and empty nesters who desire maintenance-free living, industry experts have said.
Nelson also speculated that out-of-towners relocating to the Springs took advantage of their kids being out of school because of the pandemic and made their moves in April and May instead of waiting for the summer. Those newcomers also added to the demand for apartments in the second quarter, she said.
No matter who’s renting, the supply of apartments was almost unchanged in the second quarter and renters had to scramble for available units.
Only 11 units were added in the second quarter, compared with 195 during the same time last year, according to the Apartment Association and Colorado Division of Housing report.
The combination of tight supply and strong demand also contributed to higher rents.
Even as average rents rose, and with layoffs stemming from temporary and permanent pandemic-related business closures, a news release accompanying the report said only about 5% of area renters were delinquent on payments — an “amazingly low” figure, Nelson said.
But multifamily industry members worry that the delinquency rate could soar as fallout from the pandemic continues and the federal government’s $600-a-week unemployment benefit expires, she said.
The industry hopes that local, state and federal assistance programs will help renters fill the gap if they need financial help, Nelson said.
Up to now, an executive order by Gov. Jared Polis had prohibited evictions through mid-June. While that prohibition has expired, Polis now has ordered that apartment owners and landlords give renters a 30-day notice before evictions take place, up from 10 days.
The Apartment Association and Housing Division report is based on a survey of property managers and apartment managers and owners, whose multifamily properties represent nearly 23,000 units. The survey was conducted by the University of Denver’s Daniels College of Business and research firm Colorado Economic and Management Associates.