By Pat Ferrier
Fort Collins-Loveland might be falling victim to its own success.
A combination of the cities’ relatively healthy job market, diverse economy and positive national press is putting the squeeze on available apartments.
The vacancy rates in September plummeted to critically low levels, meaning rents are going up and will continue to do so until more apartments are built.
The combined Fort Collins-Loveland vacancy rate was 2.3 percent for the third quarter, according to a new report from the Colorado Division of Housing. The survey of 5,810 apartment managers, owners and property managers was conducted Sept. 10.
On that date, almost all of the region’s apartments were full.
A 5 percent vacancy rate is considered to be an even market.
“It’s been going on for years, and you’re seeing the cumulative effect. It’s not just the impressions of the region … you do have a better chance of getting a job there and wages will be better than many other regions as well,” said Ryan McMaken, spokesman for the state Division of Housing.
“It is clearly very tight,” McMaken said.
Meanwhile, in a simple supply-and-demand market, as
vacancies tighten, the median rent has soared from $856.53 a year ago to $932.58, a $76 jump. Just over the past six months – from the first quarter to third quarter – the median rent has gone up $53.
In Loveland, where developer McWhinney is building apartments by the hundreds, the vacancy rate is 3.4 percent. The median rent is the highest in the region, at $941.88.
McWhinney’s recently completed 303-unit Lake Vista project north of U.S. Highway 34 is about 75 percent leased, said Mike Hill, senior director of multifamily development and operations.
And on Friday, the company held an open house on its newest property, the 252-unit Greens at Van de Water, 2900 Mountain Lion Drive.
“Northern Colorado and Loveland have some of the lowest apartment vacancy rates in the state, and leasing at our Eagle Ridge and Lake Vista lifestyle communities has been strong, furthering the need for additional residential rental offerings in the region,” Hill said.
Rents at Van de Water range from $700 to $1,500 and at Lake Vista from $890 to $1,725.
Mike Easter, president of Rocky Mountain Property Management Inc. in Loveland, said the tight vacancy rates and increasing rents will foster investment in new rental units, which will benefit the overall market.
But for consumers trying to afford higher rents, the news is not as positive.
Stephanie Ludwigsen and her boyfriend signed a lease Thursday morning on a 1,500-square-foot condo in central Fort Collins.
They’re subletting the condo for $1,100 a month, about the same price they would pay for a much smaller unit at a large apartment complex, she said.
“I hadn’t had to look for a place for a couple years. We did notice the rents were higher than what we had seen, and I was surprised at the cost per square foot. It was higher than what I was used to seeing.”
Along with higher rents, Ludwigsen said there were fewer available units than what she expected.
“There was probably one-quarter of the availability” she’s seen at other times of year.
“We had far better luck looking at sublets this time of year,” she said.
If rents go too high, it will force some renters to look for cheaper apartments elsewhere in the market, but they’re not likely to find too much as rents are being pushed up across all types of rentals, Easter said.
With one of the stronger job markets in the state, McMaken said workers are saying put.
“People are not only staying there because of the job situation, people are relocating there because it’s seen as such a strong market and a place people want to live,” he said.
“Fort Collins has benefited from a lot of magazine articles and general talk about what a fine community it is,” McMaken said.
That reputation also is helping fuel a decline in Greeley’s vacancy rate, which is the lowest in the state at 1.8 percent.
Although Greeley’s job market is improving, as well, McMaken said Greeley has become a more affordable bedroom community to Fort Collins. “I don’t think it’s improving enough to drive the vacancy rate down that much. It’s very much related to the Fort Collins market.
“West Greeley is seeing the impact of people looking for an affordable place to live where they can drive to jobs in Fort Collins,” he said.
Statewide, the vacancy rate fell to its lowest rate since 2001, according to the report conducted by Gordon Von Stroh and Ron Throupe of the University of Denver and Jennifer Von Stroh of Von Stroh Housing Surveys.
Source: Loveland Connection