Apartments filling up, rents on the rise, new report shows

Finding an apartment continued to be difficult over the past few months in the Pikes Peak region. Now, rents are on the rise, too.

The vacancy rate for apartments in Colorado Springs and surrounding areas was 6.6 percent in the third quarter of this year — up from 5.8 percent in the second quarter, but down sharply from 8.7 percent during the third quarter of 2009 and down from double-digits several years ago, according to a report released Thursday by the Colorado Division of Housing.

When the economy nose-dived in late 2001, and Fort Carson soldiers were deployed to Iraq two years later, the area’s single-digit apartment vacancy rate began a steady increase — reaching 13.4 percent in the fourth quarter of 2004 and regularly hovering in the low double digits.

But the vacancy began drifting downward 18 months ago as more troops returned from deployments or were transferred to Fort Carson from other posts. Also, few apartments have been constructed in recent years, and many homeowners have become renters after losing their properties to foreclosure.

Expect the vacancy rate to drift even lower, said Ken Greene, a broker with Apartment Realty Advisors in Denver whose company co-sponsors the Housing Division report.

Not only are more Fort Carson troops expected to return from overseas, but apartment developers can’t obtain financing for new projects — keeping a lid on supply for at least the next three years, Greene said.

Around the region, northwest Colorado Springs was the toughest place to find an apartment in the third quarter; vacancies dropped to 4.3 percent in that part of town.

In contrast, the third-quarter vacancy rate was 18.4 percent in areas around Fort Carson — higher by far than anywhere else in the Pikes Peak region, although down significantly from a few years ago, when more than one-third of apartments were vacant near the post.

As the apartment market has tightened, rents have begun to spike, the Housing Division report shows.

In the third quarter of this year, apartment rents averaged $729.47 a month, a $10.25 increase from the second quarter and a $34.07 jump from the third quarter of last year.

Third-quarter average rents were highest in far northeastern Colorado Springs — $838.51 a month. Average rents of $596.85 a month around Fort Carson were the area’s lowest.

Rents will continue to rise as vacancies fall, while incentives — such as free rent and utilities — have all but vanished, Greene said.

“Renters have been living in an absolute bargain environment for the past eight years,” Green said.

“This is the real world they’re going to be facing from now on.”

Meanwhile, the statewide vacancy rate was 5.5 percent in the third quarter, down from 6.6 percent in the second quarter and 7.4 percent in the third quarter of last year.

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Contact the writer at 636-0228