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Denver Apt. Rents Up in 2017, More New Construction Expected

Average Monthly Rents Climbed 3.7 Percent From Last Year
January 23, 2018
The average apartment rent in metro Denver ended 2017 higher than in 2016, with monthly rents rising to $1,396 per month year-over-year.

The 3.7 percent increase from the average monthly rent recorded in the fourth quarter of 2016 of $1,346 represents a slowing of price appreciation for apartments in metro Denver, according to the latest report from the Apartment Association of Metro Denver.

That comes after more than a year of 8 and 9 percent average rent growth through 2014 and 2015, and is good news for renters in Denver, but is a sign of a market that has seen some 13,300 new units delivered in the last year, according to AAMD.

New inventory in the market has slowed down the growth of rates while bumping the vacancy rate up to 6.4 percent, according to the AAMD study, which is researched by the Daniels College of Business at the University of Denver. But simultaneously, the rent growth has been sustained by the fact that most of the new units on the market are high-end, with upscale amenities and finishes located in desirable areas.

From third quarter to fourth quarter 2017, rents decreased slightly, which reflects seasonal changes usually seen in rents and vacancies.

"Historically, the vacancy rate is higher in the fourth and first quarters than the second and third quarters, which we have seen again this year," the report states.

The 6.4 percent vacancy rate represents a small increase from the same period in the previous year, but is up from 5.4 percent in the third quarter of 2017.

"Denver has virtually gone seven straight years with vacancy rates below 6 percent. That put upward pressure on rents," said Mark Williams, executive vice president of the AAMD. "Now vacancies are creeping up in several areas, which is creating new opportunities for renters, especially downtown."

Downtown Denver has a vacancy rate of 9.4 percent, according to AAMD, but the fact that most of the properties in that area are new and built as luxury properties has made the rents in that area some of the highest in the metro, surpassing those found near the University of Colorado campus in Boulder.

Other parts of the metro are significantly cheaper, said Teo Nicolais, a real estate instructor at Harvard Extension School.
"Denver is not a single housing market, but rather a diverse collection of communities," Nicolais said. "(The) northwest Denver area saw average rents reach $1,848, the highest in the report. In contrast, average rents in Wheat Ridge were nearly 50 percent less at $974 per month, the lowest in the report."

More construction is expected as 2018 dawns, according to the report.

"With over 13,000 units delivered in 2017, supply is catching up with demand," Williams said. "There are another 131 different apartment communities under construction right now, so we’re expecting at least 10,000 to 12,000 units to be delivered in 2018."

Molly Armbrister, Denver Market Reporter  CoStar Group   
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