The average rent in Colorado Springs hit a record high during the third quarter of this year as vacancy rates dropped to their second-lowest in a decade, according to a report from the Colorado Division of Housing.
The Colorado Springs market was depressed longer and is now coming back stronger and more aggressively than any other market in the state, said division spokesman Ryan McMaken. And that dramatic comeback after a decade of stagnate rents and double-digit vacancy rates has interested out-of-state investors in our apartment market.
It has also allowed long-time property owners who have tightened their belts annually over the last 10 years to breathe deep sighs of relief as money starts to come back in.
The average rent in Colorado Springs rose 6.7 percent to $778 during the third quarter, according to the division’s report.
“I mean, 6.7 percent, that is substantial,” McMaken said. “Denver is getting growth, but it’s nowhere near that range, 2.5 to 4 percent.”
That’s up from a second-quarter average of $759.
He said the Loveland and Fort Collins areas are also seeing substantial rent growth, but not quarter after quarter the way it’s occurring here. And that area has seen more sustained, longer periods of moderate growth, where Colorado Springs just started surging upward.
The third-quarter vacancy rate was 6.2 percent, down slightly from the second quarter rate of 6.4 percent and from 6.6 percent during the third quarter of 2010. It is still higher than the first quarter vacancy rate of 5.7 percent, however.
Rents have gone up in all regions of the city.
“This pretty much follows the pattern we’ve already seen,” said Ken Greene, a broker with Apartment Realty Advisors. “The highest rent growth seems to be in the newer properties in the north and Northeast. Stuff down in the Southeast has also grown because it was so far down before.”
Greene and partner Kevin McKenna have been working with a lot of out-of-state investors this last year or so who see potential I the Colorado Springs market, where about half of the larger apartment properties are owned by investors from outside the area.
“There are people across the country looking at this market,” McKenna said. “They like secondary markets where there isn’t as much competition as in places like Denver.”
Greene said there are also a lot of investors who come to ARA because they want to invest in Denver before they realize prices there have gone up dramatically and a lot of the refurbishment costs have skyrocketed as demand has gone up there.
Greene said they bring a lot of investors down to Colorado Springs where there is not as much competition.
On top of that, Colorado Springs has been getting some national press in the real estate world, Greene said.
“A lot of that is probably just because we were so down for so long and everybody knew that couldn’t last forever,” Greene said.
Region average rents for the third quarter are: Northwest, $849; Northeast, $741; Far Northeast, $909; Southeast, $692; Security/Widefield/Fountain, $613; Southwest, $790; Central, $718.