A record number of foreclosures combined with the need to house Gulf Coast evacuees pushed metro Denver’s apartment rental vacancy rate lower for the third quarter.
Average rental rates also edged up.
The vacancy rate dropped to 7.7 percent, compared with 8 percent for the second quarter, according to a survey released Thursday by the Apartment Association of Metro Denver.
“We had the same number of foreclosures through June of this year as we did through all of last year, and now people are exiting homeownership to rental,” said Kathi Williams, director of the Colorado Division of Housing.
Local experts predict the rate will drop again in the fourth quarter as more of the estimated 2,500 evacuees from Hurricane Katrina who are in the Denver area rent apartments.
“Most were still in shelters when this survey was done,” said Williams, who predicts about 40 percent of the evacuees will stay in Denver permanently.
Typically the vacancy rate rises in the fourth quarter because people don’t want to move during the winter months.
The average rental rate rose from $833.51 to $845.83.
“We’re attracting more higher-paid people to Denver,” said Gordon Von Stroh, professor of management at the University of Denver Daniels College of Business who conducted the study.
Light rail also is having a positive effect on the apartment market, said Tom Luinstra, president of Apartment Finders International.
People between 25 and 35 years old who want to live downtown are ending up in Littleton near a light-rail station, he said.
Light rail also is changing the type of apartments being developed, from large complexes to units above retail.
Examples are projects at the former Stapleton Airport in east Denver and in the Belmar neighborhood in Lakewood, which developers anticipate will eventually be served by commuter lines.
Staff writer Margaret Jackson can be reached at 303-820-1473 or mjackson@denverpost.com.
