Downward trend in Denver rents snapped

Downward trend in Denver rents snapped

Denver Post Feb 23, 2017
by Aldo Svaldi

Metro Denver apartment rents rose in January, snapping a five month streak of month-over-month declines, according to a new report from Axiometrics, a Dallas-based multi-family research firm.

The increase wasn’t huge, just $6 a month, bringing the average effective rent, which includes discounts, to $1,365 a month in metro Denver. Rents were rising at 2.7 percent annual pace in January, an increase from December’s 2.3 percent pace. Nationally, apartment rents rose 2.2 percent last month.

The apartment occupancy rate in metro Denver remained unchanged at 94 percent, the same level seen in December, but down from the 94.3 percent pace in January 2016.

Stephanie McCleskey, vice president of data acquisition for Axiometrics, said in the monthly report that employment gains continued to run strong in metro Denver last year at 44,800, allowing the market to absorb the new apartments being added. But apartment construction is expected to ramp up even more this year, as is the pressure on landlords to fill their units.

“Rent growth will continue to moderate throughout the year as owners and managers compete to fill new units,” she said.

A separate report from RealPage, which recently acquired Axiometrics, estimates downtown Denver will see an 8 percent surge in new apartments in the fourth quarter, reaching the high water mark of the current multi-family boom. The rest of metro Denver will see its apartment construction peak come in the first quarter of 2018, with an increase at just under 4 percent.

Out of metro Denver’s 22 largest apartment submarkets, the fastest rent gains occurred in north Aurora, at 6.3 percent. Denver County rent gains averaged 5.3 percent, while Arapahoe County is at 4.8 percent and south Aurora at 4.8 percent.

Besides the influx of young adults moving to Denver to take jobs, a source of support for the apartment market in Denver, as well as in other cities, has been a transition from ownership to renting.

Metro Denver’s homeownership rate last year was at 61.6 percent, the same as it was in 2015, which suggests the trend towards renting may be bottoming out. Denver ranked 47th among metro areas. Back in 2006, about 70 percent of Denver households rented.