Average apartment rents increased by 13 percent year-over-year in the second quarter to $1,265 per month across the Denver metro area, according to the latest apartment market survey released by the Apartment Association of Metro Denver.
Vacancy rates in the metro area were 4.5 percent on average in the quarter, a decrease from the same quarter in 2014, when the average vacancy rate was 4.7 percent, but and increase from the 4.2 percent vacancy rate in the second quarter of 2013.
The trends in both rent and vacancy rate were not surprising, according to the apartment association.
“Given an increase in the number of new additions to the inventory this quarter and over the last two-plus years, the recent trend in the Denver metro unemployment rate, normal seasonal vacancy changes, continued in-migration and an increase in metro area natural population, rent increase and a low vacancy rate are both expected, with some variation across certain submarkets,” the report said.
The number of new units added to the market increased in the second quarter as seasonal construction was completed, with 2,581 new apartment units delivered. In the second quarter, 4,550 units were absorbed, an unusually high number.
The metro area as a whole now has 309,849 apartment units, according to the study, which is completed by Ron L. Throupe of the University of Denver Daniels College of Business and Jennifer L. Von Stroh of Colorado Economic and Management Associates.
“This illustrates how demand is keeping up with the new developments,” said Mark Williams, executive vice president of the apartment association. “Absorption rates at this level have only occurred four times over the last 25 years.”Per-square-foot rents have reached $1.50, also up 13 percent from a year ago, when renters paid $1.32 per square foot, per month.
North Aurora remains the most affordable part of the metro, with average apartment rents there clocking in at $802 per month, while downtown Denver is the metro’s priciest submarket, with average rents hitting $1,695 per month.
Areas such as Northglenn, Westminster, Littleton, Lakewood and south Denver fall in the middle of the range with average rents hovering around $1,100 to $1,200.
Concessions, or discounts given to renters on rent, fees or other expenses, averaged 10 percent in the second quarter, up from 9.3 percent in the second quarter last year.
“The discounts and concessions offer relief to renters,” said Nancy Burke, vice president of the apartment association. “The bottom line is this increase in discounts is good news for renters.”