Report by Daniels College of Business real estate professor
The first quarter Denver Metro Apartment Vacancy and Rent report showed an increase in rent and an increase in vacancy. The first quarter of 2020 collects data as it was as of March 11 and thus does not reflect any substantial effects of COVID-19.
The Metro Denver apartment market showed an overall quarterly increase in vacancy to 5.9% from 5.3%, with a year-over-year increase of 0.5% from 5.4%. The overall average rent increased $33.06, from $1,502.64 to $1,535.70 from the fourth quarter results. The year-over-year change from the average rent in Q1 2019, $1,480.74, results in a yearly increase of $54.96.
“These first quarter results, as has been the scenario in recent years, have shown rent increases, but are typically aligned with a vacancy reduction. This year, we have an increase in both,” says report author Ron Throupe, associate professor of real estate at the Daniels College of Business. “We can’t say this is a turning point because it can be an aberration or may have had some COVID-19 leakage. But, with COVID-19, we expect rental markets to adjust during 2020 to a new economy.”
The Denver Metro apartment market added 2,240 new units with a negative absorption of 429 units for the first quarter.
“This may be explained by the fourth quarter 2019 having a positive absorption, when typically, there would be some give back late in the year,” Throupe says. “We would expect with ‘stay-in-place’ orders the absorption in the second quarter 2020 will be affected.”
The current economic conditions have, with the spread of COVID-19, certainly created cascading effects within the apartment industry.
“In this unique scenario, these effects rise ‘up’ the food chain,” Throupe says. “They start with the renter, to property management, to the owner, investor and then debt holder. All parties are affected and it becomes an issue of how long current conditions can be sustained.”
The Denver Metro Area Apartment Vacancy and Rent Survey is conducted by the University of Denver’s Daniels College of Business and Colorado Economic and Management Associates. It’s published by the Apartment Association of Metro Denver and sponsored by The Colorado Department of Housing.
For interviews with Ron Throupe, please contact Kristal Griffith at Kristal.Griffith@du.edu. To obtain a copy of the Denver Metro Area Apartment Vacancy and Rent Survey report, please contact Christopher Dean, vice president of communications for the Apartment Association of Metro Denver, at 303.329.3300, or visit www.aamdhq.org.