Caption + Construction continues at the Elevation Apartments, which opened its first building to renters last fall northwest of Powers Boulevard and Barnes Road in Colorado Springs. Apartment rents citywide dipped in the fourth quarter of 2017, but experts don’t expect declining rents to become a trend. RICH LADEN, THE GAZETTE
Those declines followed nine straight quarters in which apartment rents skyrocketed to record highs – topping out at $1,141.40 in the second quarter of last year, Housing Division reports show.
Based on historical trends, it’s not unusual for monthly rents to fall late in the year as the demand for apartments cools, according to Housing Division reports.
But don’t get used to lower rents; they’re likely to resume their steady upward climb in 2018, said Kevin McKenna, executive managing director of the Denver office of ARA Newmark, which co-sponsors the Housing Division/Apartment Association report.
"I don’t see this trend over the last couple of quarters translating into a longer-term trend," he said.
Overall, the Springs’ multifamily market remains strong, McKenna said. An improved economy, growing numbers of jobs and population gains are among factors driving the demand for apartments, multifamily experts have said. Millennials who want to be mobile and empty nesters who like maintenance-free living are among those who rent.
Also, in spite of low mortgage rates, not every apartment dweller can qualify for a loan to buy a home and many continue to rent, experts say.
While the number of new apartments is growing in the Springs area – 1,521 were added in 2017, the Housing Division says – they’re being rented quickly.
The result: supply-and-demand forces could send rents higher again in 2018.
"It’s a healthy market," McKenna said. "We’ll see what 2018 brings. But I don’t see it changing dramatically from the trend that we’ve seen over the last 24 months."
The fourth-quarter Housing Division/Apartment Association report also shows:
– Rents were highest on the northwest side – averaging $1,253.36 a month. Southeast side rents were lowest at $998.53 a month.
– Newer apartments commanded the highest rents – an average of $1,397.30 for units built since 2010. Apartments from the 1960s fetched nearly $924 a month, the cheapest in the area.
– The Springs’ overall apartment vacancy rate of 5.4 percent was unchanged from the third quarter; it was down from 6.8 percent in the fourth quarter of 2016.
– The market was tightest in the Security-Widefield-Fountain area south of the Springs, where the vacancy rate was just 1.9 percent. The highest vacancy rate of 7.9 percent was on the northeast side.