Colorado-Real-Estate-Journal_429145

INSIDE Are Colorado multifamily sales starting to rebound, or are they still declining? Market update Maintain, preserve and upgrade Existing affordable housing stock Affordable housing PAGES 31-35 “Great Tightening” may be over, but challenges come with new Fed phase Navigating cuts PAGE 12 November 2024 PAGE 7 Apartment absorption hits record highs in Q3 by Jill Jamieson-Nichols There was surprisingly good news for the apartment market in the third quarter as absorption reached record highs along the Front Range. “As with Colorado Springs and Northern Colorado, the most strik- ing statistic this quarter was the record high quarterly absorption achieved in all three regions. And not by just a little bit,” partner Cary Bruteig wrote in Apartment Insights’ report on the Denver metro apart- ment market. “Denver beat its previous high absorption by 7%, Northern Colo- rado exceeded its previous record by 20%, and Colorado Springs rock- eted past its last high by a stunning 66%,” Bruteig said. The number of new renters in the Denver metro area in particular is surprising given “essentially zero” job growth over the last 12 months, he noted. “Although the lease-up inventory increased by almost 12% (3,300 units) during the quarter to over 31,000 units as many new properties opened their doors, the supply of vacant units in this lease- up inventory actually decreased by 600 units because of the jump in absorption to almost 5,300 apart- ments. Rather than seeing vacancy rise in the face of large new supply, both overall and stabilized vacancy rates fell this quarter,” Bruteig reported. “We have been completing a record number of apartments over the last few quarters, so there are a lot of properties aggressively com- peting for new renters,” Bruteig said when questioned about the strong absorption numbers. “These properties have been very success- ful in attracting new renters, which means absorption has been very strong for quite a few quarters.” The Apartment Trends Summary for metro Denver centers on con- ventionally operated apartments of 50 or more units in Denver, Adams, Arapahoe, Douglas, Boulder, Broom- field and Jefferson counties. The 5,286 apartment units absorbed in metro Denver dur- ing the quarter bested the previ- ous record of 4,952 units absorbed in second-quarter 2021. Denver’s central business district had 2,683 more occupied apartments than a year ago. DIA and Highlands Ranch followed with 919 and 899 units, respectively, absorbed over the last 12 months, the survey found. Research showed the apartment vacancy rate decreased 27 basis points during the quarter to 5.28%, with the overall rate (for both sta- bilized properties and those in lease-up) dropping from 11.37% last quarter to 10.79% at the end of the third quarter. The largest decrease in stabilized vacancy was in the Lowry submar- ket, which stood at 4.73%, while vacancy in Wheat Ridge was 4.33%, the fourth-lowest in the Denver metro area. The lowest vacancy rate continued to be Boulder south, with a mere 2.95%, and the high- est vacancy rate was in the Den- ver northwest submarket, which decreased 52 basis points to 6.62%, according to Apartment Insights. Metro Denver’s average monthly rent increased by $7 during the third quarter to $1,935, or $2.23 per square foot. That’s $7 higher than a year ago; the report noted annual rent growth has been slowing steadily over the last 10 quarters. Of 33 statistical districts surveyed, 20 has rent increases, rent declined in 12 others, and there was no change in Commerce City. Rents increased the most in the Denver southeast submarket, which moved up $34 to $1,629, and Westminster, which improved by $30 to $1,820. The largest decrease was in Wash- ington Park, which dropped $61 to $2,234. Effective, or net, rent increased by $24 during the quarter to $1,911, or $3 less than a year ago. The average concession was down $45 to $24. Sales of apartments during the third quarter totaled $1.23 billion across 19 properties, which Apart- ment Insights noted is nearly as high as the previous two quarters combined. s A record 5,286 conventionally operated apartments were absorbed in the Denver area in the third quarter, bringing the trailing 12-month absorption total to 11,870, the highest level in 10 quarters, according to Apartment Insights research. Metro Denver apartment rents remained relatively flat.