DENVER -- Rent prices in metro Denver have gone through the roof and the demand for apartment properties is higher than ever.
“We are building more apartments now than we have in 40 years,” said Cary Bruteig, president of Apartment Appraisers & Consultants.
The Denver skyline is filled with construction cranes and most contractors have turned their focus to apartment properties.
“People that used to develop office buildings, retail centers, there’s even a group that used to develop golf courses that builds apartments now,” Bruteig said. “They see the profit potential, they see the success everybody has and they see the absorption and everybody wants to get into apartment development.”
Experts agree that Denver is the place to be for contractors. The vacancy rate is very low.
“Right now we’re 95 percent leased,” said Nelson Laux from the Seasons of Cherry Creek. “We have people coming in everyday looking for apartments, so it’s been great.”
And the price is soaring, but people are still renting.
“I know the cost of living is slightly higher in Denver than Pittsburgh, but I did think the rent was a little high,” said Alex Scott, who just moved to Denver. “But you pay for a good location.”
This trend started at the end of 2009, and since then, rent is up 48 percent in the Denver metro area.
“Really across the country, the home ownership rate has been shrinking again. A percent or two a year, it’s been trending downward and the trend continues downward so more people are choosing to rent now,” Bruteig said.
The proof is in the numbers: Vacancy rate is currently at 4.16 percent in Denver, but it is on the rise because of all the building. Historically, at a 7 percent vacancy rate, that’s when rents could start to drop.
“It ends when the vacancy soars, rent softens and it’s no longer feasible to build,” Bruteig said. “And that may not be in the too distant future because we are building so many apartments. It looks like vacancy rate is going to head up from this point.”
There are 86 apartment properties under construction in the Denver metro area, with plenty more on the way, as the supply tries to keep up with the demand.