Colorado Real Estate Journal - October 15, 2014
Colorado Springs has some catching up to do, at least in terms of multifamily rental rates, according to Apartment Insights latest Statistics/Trends Summary. “With local monthly rents currently 25 percent lower than its northerly neighbors, Colorado Springs has a lot of catching up to do,” explained Doug Carter of Sperry Van Ness/Doug Carter LLC, who co-authored the report with Cary Bruteig of Apartment Appraisers & Consultants. However, during the third quarter, rent for stabilized properties in Colorado Springs increased $24 to $825 per month, or $1.01 per square foot – the first time the metrowide average rent broke the $1 per sf barrier. The annual rental growth rate also increased, rising from 5.1 percent last quarter to 5.9 percent this quarter – the fastest growth in at least eight years, the report noted. The $46 annual increase also was the highest. Colorado Springs’ northern apartment submarket continues to have the highest rents of any submarket at $966, which increased $26 during the quarter. Effective rents also grew by $30 to $816 during the third quarter, representing the largest quarterly increase in the eight years of the survey, while concessions decreased by $6 to $9 per month or 1.1 percent of gross rent – a record low. Apartment Insights believes that based on performance by multifamily areas to the north of the Springs, which have had vacancy below 5 percent for some time, sustained rent growth can exceed 6 percent per year if vacancy remains low. Colorado Springs’ vacancy rate dropped to a more than 10-year low, with a 4.79 percent vacancy rate, marking the first time the city’s vacancy rate has dipped below 5 percent in 13 years. The trailing four-quarter average vacancy rate fell 28 basis points to 5.38 percent. Vacancy rates decreased across most age groups of properties, with only the 2000s product moving slightly higher to 4.74 percent. The three properties built since 2010 had the lowest rate of 4.02 percent while the 1960s and 1970s product had vacancy above 5 percent. The vacancy rate for tax credit properties decreased 31 bps to 3.71 percent, equal to the eightyear low reached at the end of 2013. This is only the second time that vacancy for tax credit properties has been below 4 percent in the last 32 quarters. Absorption was 306 units – the second highest in eight quarters – bringing annual absorption to 867 units. The report noted that four sales closed during the fourth quarter, averaging $69,889 per unit and $100.09 per sf. Despite the volume lower than last quarter, buyer interest remains strong, according to the report.