Apartment vacancy rates prompt differing analysis

The Colorado Division of Housing reported last week that Colorado Springs average rental rate hit an all-time high in the second quarter of 2011 at $759 a month.

But whether that’s really an all-time high and what that says about the market depends on whom you ask.

Division of housing spokesman Ryan McMaken said median rental rates also rose, indicating an across-the-board rise in rents.

A large difference between the growth in median rents and average rents typically suggests that the high-end complexes and new construction are driving up averages.

“So this small divide might imply that you’re seeing a more even growth,” McMaken said.

But that’s not what Doug Carter, a broker with Sperry Van Ness, said he’s seeing. He said rental rates on newer properties are rising but not on older ones, yet.

He said there are three types of properties in Colorado Springs — those built before 1980, those built during a surge of construction in the late 1980s and early 1990s and another chunk constructed in the late 1990s and early 2000s.

“The newest, nicest stuff is starting to see rents go up,” Carter said. “But this is just the first step of improvement. These are nowhere near record-high rents.”

In fact, Carter said rents still aren’t as high as they were in the late 1990s and early 2000s before they nosedived and then floated steadily through the last decade.

Lower-end properties will likely feel the benefits of the tightening rental market first, Carter said, but it will happen more slowly in those older and less desirable properties than it is happening in the newer and nicer complexes.

Carter might be right.

Dana Lowry, who owns some small, older C-class apartment buildings near Memorial Park and the Olympic Training Center, has not been able to raise rent yet, though his occupancy rate is the best it’s been in 10 years.

Meanwhile, Weidner Apartment Homes has upped rent 5 to 10 percent at its 17 properties and 2,600 units in Colorado Springs. Most of them are class B buildings built in the late 1980s and early 1990s.

Weidner Regional Vice President Robert Carr said he’s waited 10 years for the rental market to turn in favor of landlords.

“For us, this has been a long time coming,” Carr said.

While rents haven’t gone up yet at his smaller properties, Lowry said he’s still planning to raise rents soon and hopes to begin rebuilding his personal nest egg.

He plans to wait until people settle in a little more before he pushes rents.

“Even if we’re not raising rents, the occupancy rate certainly has provided us with much better income,” Lowry said. “I have not been able to do the kind of maintenance in the properties that I would have liked to have done — concrete work, painting, landscaping.”

He said he will put the fresh income he’s getting from going from a 70 percent occupancy rate to a 90 percent occupancy rate back into the property and back into his pocket, which he’s dug deeply into over the last several years.

“We’re a long way from truly smiling and lighting a cigar,” Lowry said. “But we’re certainly happy things are looking a whole lot better than they have been.”