Apartment vacancy rates across metro Denver rose in the third quarter and rent increases moderated as more new units came onto the market, according to the Apartment Association of Metro Denver’s quarterly Vacancy and Rent Report.
Vacancy rates jumped from 4.5 percent in the second quarter to 5 percent in the third and are up from 3.9 percent in third quarter last year.
While 5 percent is still a low rate, vacancies typically dip in the third quarter. That didn’t happen this year.
“The increase is somewhat surprising but understandable due to all the new units being delivered,” said Mark Williams, executive vice president of the Apartment Association, in a statement.
There were 2,022 new apartments that hit the market in the third quarter, part of 19,400 new units in the past three years.
So far, the market has absorbed the new supply, but rent increases are starting to slow as landlords compete with the new inventory.
The average apartment rent in metro Denver was $1,292 in the third quarter, up $27 from the $1,265 average in the second quarter. That quarter-over-quarter increase was down from the $61 increase between the first and second quarters.
“This is the first sign of slowing rent growth since late 2013,” Williams said.
Although developers continue to add inventory, much of it comes with higher rents, reflecting the preference given to building in urban areas with higher construction costs.
Back in 2001, it cost $100,000 per unit to build an apartment building. That cost is now closer to $250,000 per unit, according to the report.
Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or @aldosvaldi
