APARTMENT FOR RENT FILE PHOTO

Apartments rents in Colorado Springs averaged a record high of just over $1,495 a month in the third quarter, according to a new report. Rents continue to rise because of strong demand, higher construction costs and newer, more expensive units coming on the market, among other factors. THE ASSOCIATED PRESS

Average Colorado Springs apartment rents have set another record high and are now pushing $1,500 a month after they only recently topped the $1,400 mark for the first time.

Monthly rents averaged $1,495.71 in the third quarter, exceeding the high-water mark of $1,429.58 set in the second quarter, according to a report this week by the University of Denver's Daniels College of Business and Colorado Economic and Management Associates, a Denver-area research firm. 

Third-quarter rents skyrocketed by nearly $220 a month — just over 17% — from $1,276.64 in the same period last year, the report showed.  

"We are seeing the largest yearly increase in the history of this report,” said Ron Throupe, associate professor of real estate at the Daniels College of Business. He authored the report, which is sponsored by the Colorado Division of Housing.

A combination of factors has sent rents soaring in Colorado Springs, he said. They include:

• An influx of newer, pricier and amenity-laden apartments have come on the market. New apartments command higher rents, which then pull up the citywide average, Throupe said.  In the third quarter, 784 apartments were added to the overall supply — the most for any quarter in at least 20 years, according to Throupe's current report and past documents that track the local market.  

• Higher labor and construction material prices have increased building and remodeling costs, and owners and landlords have adjusted rents higher to recover their investments, Throupe said.

• Once new apartments set the bar higher, existing properties fall in line and begin to hike their rents, too, he said. Their increases might not be as much, but they nevertheless contribute to a spike in the overall average rent. 

• A lack of single-family homes on the resale and new construction side of the Springs housing market means that many would-be buyers remain in apartments and contribute to the demand, which puts pressure on rents.

• Denver-area residents looking for cheaper housing costs also are renting in the Colorado Springs area, which adds to the demand and props up rents.

Rent increases typically slow in the fourth quarter from the third quarter, Throupe said. This time, however, it's possible rents could continue to climb during the last three months of this year as more new apartments come on line and establish higher rents, he said.

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"There's going to be some momentum to what's going on," Throupe said. "These new ones (apartments) come out with higher rents and then people (owners and landlords) tend to follow suit."

Though demand remained strong for apartments, more units were available for rent, Throupe's report showed. The third-quarter apartment vacancy rate rose to 6.1% — up from 4.4% in the second quarter and the highest since a 6.3% rate in the second quarter of 2018.

The 784 units that were added to the overall supply of apartments likely pushed up the third-quarter vacancy rate, Throupe said. Even if those units aren't fully occupied, he includes them and their asking rents in his report. 

The drumbeat of record high rents underscores concerns that Colorado Springs community leaders have expressed about higher housing costs, whether for apartments or single-family homes.

During a housing forum in April, Dirk Draper, president and CEO of the Colorado Springs Chamber & EDC, said the city faced a "housing crisis" that threatened the area's business community and economy.

Existing businesses might limit their expansions if their employees can't afford to live here, while new employers considering a move to Colorado Springs might bypass the city if they can't attract workers, Draper said.

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