Metro Denver apartment rents fall again, as new construction marches on (Wheat Ridge: real estate market, apartments)

[Vision67]

https://www.denverpost.com/2018/01/1...nt-rents-fall/

Vacancy rates haven’t been this high in about seven years and in markets with heavy new construction, the rate is much higher. Castle Rock reported a vacancy rate above 25 percent and in northwest Denver it was above 30 percent in the fourth quarter.

“The record-breaking levels of new construction has been pushing vacancy up and that, more than anything else, has been what’s keeping Denver’s rents in check,” said Teo Nicolais, a real estate Instructor at Harvard Extension School, in a statement.

Williams said builders completed 13,348 units, 38 percent more than the 9,692 built in 2016. The association estimates there are 131 apartment communities under construction with 31,000 units in the pipeline.

The expectation is that the market will see another 10,000 to 12,000 new apartments delivered this year, Williams said.

Rents continue to vary widely. Northwest Denver with lots of new high-end construction had an average rent of $1,848, but not far away in Wheat Ridge, an older market, rents averaged $974.


Perhaps we're near the end of the cycle. I've seen this several times before. Greed causes builders to overshoot and rents eventually weaken.

[Phil P]

Thank you Jesus!

I've been waiting for this to happen. Denver already is a better city to rent than buy in, and it looks like this trend is only going to grow.

A lot of the new apartments are north to northeast of downtown, but I wouldn't live there because of how polluted it is. IMO, east and southeast of downtown are the best bang for your buck. West of downtown is weird.

I wonder how the quality of the new builds are? The 2 units I've lived in have been constructed with subpar construction (cracks all over the concrete walls and foundation and leaky pipes in one, and no insulation from noise or heat in the other). I would pay more $$$ if I knew a newer place would be noise insulated, sanitary feeling, and have all appliances, plumbing, and alarms working correctly.

[Mike from back east]

Gee, the "laws" of supply and demand really do work; whoodda thunk it....

[Timmyy]

Originally Posted by Mike from back east

Gee, the "laws" of supply and demand really do work; whoodda thunk it....

It was all because of marijuana.

All kidding aside I am happy that rent is decreasing. I want the younger crowd to be able to live here comfortably and enjoy all that we have to offer.

[Mike from back east]

Originally Posted by Timmyy

It was all because of marijuana.

All kidding aside I am happy that rent is decreasing. I want the younger crowd to be able to live here comfortably and enjoy all that we have to offer.

Yes! That's it, it was the "MJ Effect" into which we factor the rotation of the earth versus the phase of the moon, divided by the square root of fake news and voila, people now head to California for MJ as well as the climate.


The home and apartment building industries went comatose during the Great Recession and foreclosure tsunami which meant they got a late start on building new stuff to meet the demand as we came out of the economic disaster. They're catching up now and a lot of new dwelling units are coming on-line. Prices should soften across the board.

[mhays25]

Do you mean homes including apartments?

The recession and mortgage issues directly supported rental construction especially early...people couldn't buy, so apartment demand boomed.

[illinoisphotographer]

No surprise really. All over the metro I see new apartments being built. Of course they're all "luxury" apartments.

I honestly wonder who thought building 500+ unit complexes in the suburbs was a great idea.

[Brianmedia]

I would assume the profit margin is higher building a luxury apartment building vs a "normal" one.

My prediction is you might see some of these luxury apartments convert to condos after 3-5yrs.

disclosure: I know nothing about real estate.

But I've never lived in a city with so many extremely nice luxury apartments. Lots of great choices out there if you're looking for a 1br in the $1600-$2000 sweet spot.

[Willy702]

What's the max rents on the whole go down? 5%? Not going to change the dynamics of the market really, just sends the signals to the builders that you're at peak pricing. But these luxury buildings will not drop their prices much, they will let units stay empty before dropping rates 20% to fill them. Meanwhile the more aged units still have low vacancies and don't have to lower rents at all.

I'd really consider living in one for a few years if the rents came down even though I already own. But alas it doesn't seem like the market is going to balance itself out at all.

[EastBoundandDownChick]

As someone moving to Denver in a few months I'm thrilled to hear about this. I just wish they would balance out the building of luxury rentals with regular ones as well. There are lots of people like me who can afford the higher-end places but would rather hold on to an extra grand a month and wait out the real estate market. What really matters most in my situation though is that once I move into a place the rent remains relatively stable, period. So it's great news no matter what they build in a sense, because at least the supply is going up.