by Jill Jamieson-Nichols The vacancy rate for apartments in the Denver metro and Fort Col- lins areas remained under 6% in the first quarter, while Colorado Springs stood at 7.19% vacancy – amid record annual absorption for that market. According to Apartment Insights’ Apartment Trends Summary, which analyzes apartment properties over 50 units, stabilized conventionally operated apartments in the Den- ver metro market averaged 5.78% vacancy in the first quarter, com- pared with 5.52% in the first quarter a year ago. The Boulder south submarket had the lowest vacancy rate, 3.27%, while Thornton had the highest vacancy at 6.94%, followed closely by the central business district at 6.92%. Parker achieved the larg- est decrease in vacancy, landing at 5.53% at the end of the first quarter. Metro Denver’s average monthly rent stood at $1,898, or $2.18 per square foot, a quarterly increase of $4 and $26 higher than a year ago, according to Apartment Insights. The rate of increase has been slow- ing steadily from its peak of 17% eight quarters ago. Areas with the highest average monthly rents in the first quarter included Boulder North at $2,268, Washington Park at $2,252 and Golden at $2,245. The CBD fell to fourth place at $2,136. Absorption of units in convention- ally operated properties increased by 805 units to 1,910 in the first quarter, slightly higher than the same quarter a year ago, which saw 1,821 units absorbed. The CBD had the strongest performance in the first quarter with 590 units absorbed. The pipeline for new construction in the Denver market in the first quarter continued to decrease, with 42,855 units under construction and 62,486 in various stages of plan- ning, for a combined decrease of approximately 3,260 units from the previous quarter, according to the Apartment Trends Summary “The construction pipeline is shrinking, and absorption has almost been keeping up with deliv- eries of new apartments,” Apart- ment Insights partner Cary Bruteig wrote in the Apartment Trends Summary. He added that, “Although vacancy has been trending higher for the past two years, it remains below 6%, and rents are still eking out small annual gains. Many major markets across the country have experi- enced annual declines in rents, including Colorado Springs.” The average rent for apartments in Colorado Springs dropped $9 to $1,460 in the first quarter, leading to an annual decline of $23, or 1.6%. The largest decrease, $42, occurred in the Springs’ airport market, where vacancy surpassed 8%. The Rustic Hills and the west Colorado Springs markets dropped $27 and $24, respectively, during the quarter, while Palmer Park rebound- ed from a previous quarterly drop of $32 and gained $21. Colorado Springs’ apartment vacancy rate, while above 7%, decreased 31 basis points during the first quarter and was down from a 58-quarter high of 7.58% reached in the second quarter of 2023. Absorption of conventional apart- ment units reached a first-quarter record of 582, bringing annual absorption to an all-time-high 2,667 units. By comparison, first-quarter absorption over the previous 17 years in Colorado Springs was 62 units, according to the Apartment Trends Summary. As of the first quarter, there were 11,059 apartments under construc- tion and 8,753 in planning in the Springs, for a total of 19,812. That is down slightly from 21,228 units during the previous quarter, which was a record high for the market. “The sizable construction pipeline will continue to deliver an above- average supply of new apartments over the next few years. Despite record absorption, new unit deliver- ies have been pushing up the over- all vacancy rate in the market, now a record high above 14%,” Bruteig stated in the report, referring to the rate for both stabilized properties and those in lease-up. While vacancy in stabilized prop- erties decreased, benefitting from record first-quarter and annual absorption, Apartment Insights said, “With vacancy remaining above 7%, competition resulted in rents decreasing for the third quar- ter in a row. So far the damage has been minimal, with an annual rent INSIDE Waiting for a definitive bottom could mean missing out on opportunities Seize the moment Modular construction may be the key to affordable workforce housing Affordable PAGES 24-28 Engage the five senses, embrace service to deliver elevated experience ‘Wow’ factor PAGE 14 May 2024 PAGE 3 Apartment rents up in Denver, down in Springs Please see Jamieson-Nichols, Page 20