Denver, Colorado

The Denver Rental Market – Is it Strong?

Renters in Denver are not happy that apartment rent in the metro area of Denver has again increased. There have been so many rental increases. Monthly rent on average went up from $1,382.76 to $1,419.74.  This is an increase of $36.98 in just one month.

Another big factor affecting renters is that the quarter had 4,348 rentals with new occupants moving in, but there were only 2,152 new units built. Wow! That’s a lot of new occupants in Denver. It’s a very popular place to live. Cities that have many people desiring to live in them strongly tend to have high rent. Cities with low desirability for people to live in them tend to have significantly lower rent. Cities with much lower cost to live in them are low cost because not many people want to live in them.

Interestingly, in Denver quite a few more apartments are being filled this year than last year causing lowered supply. This strong need for apartments does not make those renting in Denver happy, again because of the increasing rents that tend to follow.

The state with the lowest percentage of unemployed people in the nation is Colorado. That percentage of unemployed is 2.3%. The flood gate of millennials coming to this popular state continues to be open, and Denver has only 2.4% of its people out of work. This contributes to a lower rental vacancy rate. Sure enough, the percentage of rental vacancy has declined to 5% from 5.7% in the second quarter.

What is occurring simultaneously in Denver is a very robust economy. The population growth that comes as a result causes a shortage of apartments to rent and homes to buy – especially living spaces everyday Americans can afford.

An important and interesting percentage – and that is 6%. If the percentage of rental vacancy is over 6% for an area, rent tends to decrease. If the percentage of rental vacancy for an area is under 6%, rent tends to increase. So with 5% rental vacancy there is the likelihood of rents increasing.

But there is some good news for renters – a counterforce that helps in the direction of pulling rents down – and that is, this year Metro Denver is headed for a record breaking amount of new multifamily construction, itself causing a higher vacancy rate. Again, this will tend to pull rents down.  However, the key has to do with how many people will be needing units. For example, if there is a huge flood of renters moving to Denver and it exceeds the supply of rentals, then rents would tend to go up. And there are a lot of people moving to Denver.

Well, at least at this time, as a renter you can count on excitement connected to the Denver Market.

Another factor that that pulls rents upward has to do with the amount of time it takes to complete new construction. Keep in mind that it’s the completed apartment construction unit that counts. There can be delays in construction like the current slowdown of construction due to the huge lack of number of construction workers in Denver.  This counter-balances the large supply of multifamily units. Lowered number of units (lowered supply), strongly tends to cause  higher rents.

To find multifamily complexes for sale in the Denver area, click on  http://www.loopnet.com/Apartment-Buildings-For-Sale/. Are you wanting to find commercial realtors? CCIM.com can help you find commercial realtors in the Denver area. Click on http://www.ccim.com/cire-magazine