Apartment vacancies in the state increased to 8.8 percent in the second quarter versus a 7.5 percent vacancy rate in the first, according to a report Tuesday from the Colorado Division of Housing.
Despite that, limited construction, stronger in-migration and more demand for rental units from people losing their homes to foreclosure should bolster the apartment markets in coming months, analysts predicted.
The apartment vacancy rate varies across the state, with Colorado Springs at 9.6 percent; Fort Collins at 9.1 percent; Grand Junction at 2.1 percent; Greeley at 8.3 percent; and Pueblo at 8.4 percent, according to the survey, compiled by University of Denver professor Gordon Von Stroh.
Tuesday’s report did not include a separate vacancy rate for Denver, but the metro area was included in the statewide total.
An apartment vacancy rate of 5 percent is typically considered the equilibrium point between supply and demand.
Most apartment markets in the state still can’t justify new construction, but they are attractive to outside investors, said Terrance Hunt, a principal with Apartment Realty Advisors in Denver.
“To justify the construction costs, you need to see significant rent growth,” he said. And that requires higher incomes.
A more likely scenario has investors fixing up existing buildings to generate higher rents.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
