Phil Castle, The Business Times
Apartment vacancy rates in Grand Junction have dropped to their lowest levels in nearly four years. But average monthly rents also have dropped in a market that can’t yet bear substantial increases.
While rental activity has slowed in recent months, the long-term trend continues toward a tighter market, said Cindy Hoppe, manager of Bray Property Management in Grand Junction. “I think that’s going to be tight. I don’t see anything changing.”
According to the latest results of a survey conducted for the Colorado Division of Housing, the average apartment vacancy rate for the Grand Junction market fell to 3.8 percent for third quarter. That’s the lowest level since the rate stood at 3.1 percent for the fourth quarter of 2008.
By comparison, the average apartment vacancy rate came in at 5.5 percent for the second quarter of 2012 and 7.7 percent for the third quarter of 2011.
A vacancy rate below 5 percent is generally regarded by industry observers as a sign of a tight market.
Hoppe said the third quarters is typically one of the busiest times of the year as part of a seasonal peak that occurs before the start of the school year. That was the case this year, she said.
Activity since has slowed. But without the substantial construction of new apartment buildings, Hoppe expects vacancy rates to remain low.
For the third quarter of 2012, vacancy rates ranged from 1.5 percent for one-bedroom apartments to 9.5 percent for three-bedroom apartments.
Large apartment buildings with more than 100 units experienced the lowest vacancy rate at 2.2 percent, while buildings with 51 to 99 units experienced the highest rate at 5.8 percent.
Even as apartment vacancy rates in Grand Junction dropped in the third quarter, so did average monthly rents — to $638.99.
According to survey results, the latest average monthly rent dropped $35.79 from the second quarter and $16.59 from the third quarter of last year.
Hoppe said rents usually go up as the market tightens. But economic conditions, including comparatively high unemployment rates, have made it more difficult for landlords to charge higher rents, she added.
For the third quarter, average monthly rents ranged from $525.01 for a one-bedroom unit to $874.29 for a three-bedroom unit.
Elsewhere on the Western Slope, apartment vacancy rates during the third quarter ranged from 0.5 percent in Aspen to 1.8 percent in Glenwood Springs and 11.7 percent in Gunnison.
Elsewhere in Colorado, apartment vacancy rates retreated on a year-over-year basis in many markets, falling to 6.1 percent in Colorado Springs, 4.3 percent in the Denver metro area and just 2.1 percent in the Fort Collins and Loveland market. The combined vacancy rate for the state fell to 4.6 percent, the lowest level since the first quarter of 2001.
As vacancy rates declined, rents increased. The statewide average monthly rent rose to a record-high $944, a 5.1 percent increase over the past year.
“The strong employment in the region is helping drive that. And, statewide, a lack of new construction is also an important factor,” said Ron Thorpe, a University of Denver professor who helped conduct the latest survey.