Property manager disputes spike in apartment vacancy rate

Phil Castle, The Business Times: 

Cindy Hoppe

Cindy Hoppe disputes the latest results of a quarterly survey that pegs the average apartment vacancy rate in Grand Junction at more than 10 percent.

Hoppe, manager of Bray Property Management in Grand Junction, believes the apartment vacancy rate likely dropped below 7 percent during the first quarter of this year. With increasing rental activity since then, the rate probably has dropped even lower to around 5 percent, she said.

Moreover, average monthly rents in Grand Junction have held steady — and not decreased as the survey results indicated, Hoppe said. “I totally disagree with the results.”

Hoppe suspects a low response to the latest survey affected the outcome. “Something’s skewed the numbers,” she said.

A total of 771 responses from the Grand Junction market were received for the first quarter survey, less than half the 1,637 responses received for the survey conducted for the fourth quarter of 2011. Responses also were down from other Western Colorado cities included in the latest survey.

Ryan McMaken, a spokesman with the Colorado Division of Housing, acknowledged problems with the survey, which the division sponsors.

“Due to the untimely death of the lead researcher on this, data collection was a problem. …. The sample size dropped,” McMaken stated in an e-mail to the Business Times. McMaken referred to Gordon Von Stroh, a professor at the University of Denver Daniels College of Business.

“We hope to have it back up by next quarter, and in the future we’ll also build in minimum survey response rates into future research contracts,” McMaken said. “We’ll know more when the second quarter data comes in.”

Nonetheless, higher unemployment rates and smaller work forces in Mesa County have dampened rental demand, McMaken said. At the same time, there’s been an increase in the number of foreclosed single-family homes that have been purchased by investors and converted into rentals. That also serves to reduce demand for multi-family rentals.

According to the first quarter survey results reported by the division, the average apartment vacancy rate in Grand Junction surged to 10.4 percent. That’s an increase of more than three points from the fourth quarter of 2011 and more than four points from the first quarter of 2011. At 10.4 percent, the vacancy rate would have climbed to its highest since hitting 11.6 percent in the first quarter of 2010.

According to the survey results, vacancy rates during the first quarter of 2012 ranged from 6.1 percent for one-bedroom units to 29.4 percent for three-bedroom units.

Hoppe said it’s more likely the average apartment vacancy rate actually dropped below 7 percent and since has further retreated to between 6 percent and 5 percent.

Hoppe said she expects the company she manages to enter into 50 new leases in May. “We’re not slow at all.”

According to the survey results, the average monthly rent for Grand Junction fell to $625.26. That’s a decrease of nearly $15 from the fourth quarter of 2011 and almost $6 from the first quarter of 2011.

Hoppe said that to her knowledge, average monthly rents have held steady.

The latest survey results for nearby markets in Western Colorado varied wildly. While the average apartment vacancy rate tumbled nearly five points to 4.3 percent in Montrose, the rate surged more than five points to 10.8 percent in Glenwood Springs.

The overall apartment vacancy rate for Colorado fell to 5.2 percent, the lowest first-quarter rate in the state since 2001.