For most of last year, apartment rents moved lower and vacancy rates rose as thousands of new apartments hit the market in metro Denver.
But the streak, which ran three quarters, was snapped in the first three months of this year after average apartment rent in metro Denver rose 1.7 percent, or $24, from the fourth quarter to $1,420, and the vacancy rate fell to 6.1 percent from 6.4 percent, according to the Metro Denver Vacancy & Rent Report published by the Apartment Association of Metro Denver.
The rent gains and tighter vacancy came despite the addition of 2,443 new apartments in the first three months of the year, which is down from the 3,246 added in the first quarter of 2017.
“Rents almost always increase in the first quarter of the year,” Mark Williams, executive vice president of the association, said in a statement accompanying the quarterly report. The last time average rents fell in a first quarter was at the start of 2009, following the financial crisis.
Despite the rent increase, other signs pointed to landlords having to bargain harder to keep their units filled. The concession offered by landlords shaved $81 off the typical monthly lease in the first quarter, up from concessions that averaged $64 per month in the fourth quarter.
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Factor in higher concessions and first quarter “effective” rents were up $7, or just 0.5 percent, to $1,339 a month from the fourth quarter. For the past year, effective rents are up 3.2 percent, which is about the pace of inflation.
Williams notes that there were 13,348 apartments completed last year and a similar number are expected to hit the market this year, which should continue to put downward pressure on rents.
