Metro Denver’s apartment vacancy rate has reached its lowest level since 2001, as construction of new units continues to slow and rising interest rates discourage some potential homebuyers.
The second-quarter vacancy rate was 6.9 percent, according to data released today by the Apartment Association of Metro Denver. The vacancy rate was 8 percent in the second quarter of 2005.
“This signifies that the industry is moving to a more stable type of environment,” said Gordon Von Stroh, a University of Denver management professor who compiles the quarterly report for the Apartment Association.
Average rent for a two-bedroom, one-bathroom apartment was $813.30, up from $793.93 the previous year, according to the report.
While rental rates are up, many apartment owners continue to offer free rent, move-in discounts and other incentives. Such incentives will likely begin to taper off if vacancies decline further, Von Stroh predicted.
Builders have completed just 284 new apartment units so far this year, continuing what has been a steady decline since construction peaked at 9,123 new units in 2002. Builders last year completed 2,517 new apartments.
While new construction has slowed, experts said the decrease in the vacancy rate can also be attributed to trouble in the for-sale housing market.
“Due to increases in foreclosures and interest rates, for-sale housing is becoming less attractive to some people,” said Ryan McMaken, community relations coordinator for the Colorado Division of Housing.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
