Vacancy rates on the rise in Boulder County
Boulder (excluding university area)
Current vacancy rate: 7.2 percent
12-month average: 6.4 percent
Boulder university area*
Current vacancy rate: 6.9 percent
12-month average: 4.4 percent
Boulder County (excludes Longmont, Boulder)
Current vacancy rate: 5 percent
12-month average: 8.7 percent
Current vacancy rate: 4.4 percent
12-month average: 4.6 percent
Source: Apartment Association of Metro Denver
*Defined as the area between Baseline and Pearl streets, north to south; and Fourth Street to Gilpin and Pleasant View Road, east to west
The tide might be turning in Boulder’s crazy rental market, as vacancy rates hit highs not seen since the Great Recession and property managers say apartments are sitting empty through several price drops.
Boulder’s vacancy rate (not including the university area) rose to 7.2 percent in the past three months in the city, according to the Apartment Association of Metro Denver (AAMD.)
The last time it was that high was 2009. In fact it’s only been over 7 percent twice in the past decade: third quarter ’09 and today.
Vacancy rates have been trending up all year, and rents dipped slightly in early 2016. But they rebounded to new and historic heights in the following months, and landlords reported no trouble filling high-priced units.
Now, though, the picture appears to have changed.
“We’ve started noticing properties sitting longer than usual, and actually needing some lower rental rates in order to attract tenants,” said Simon Heart, owner of All County Boulder Property Management.
“We target to lease properties within 30 days, but within the last month or two, there are properties that have been sitting for 30-60 days that we’ve had to lower the rent several times” to fill.
Heart said it’s “hard to tell” if the situation is indicative of a larger trend or more short-term, since vacancies always rise in the fall.
While that’s true, third-quarter vacancy rates have been in the three percent range historically for Boulder, according to Christopher Dean with the AAMD.
Dean said the rising rates are likely due to the addition of new apartments to the city’s housing stock. Boulder added 635 apartments last year, according to data from the city’s division of housing.
Vacancy rates of 6-7 percent (where Boulder has been all year) are considered to be indicative of a balance in supply and demand. How many more units would have to be added to start driving down rents is unclear.
The data is encouraging: Rents have fallen 8 percent since the beginning of the year, from $1,799 to $1,649 on average.
But a recent report from the Wall Street Journal found that major cities struggling with affordability — San Francisco and New York among them — would have to construct more new units than during the 2000-2010 national building boom to make a real dent in prices, due to the overwhelming demand.
In Boulder, new units have been absorbed rapidly.
In early 2014, for instance, the addition of 3,085 units the previous year pushed the vacancy rate to a temporary 22 percent. But the next quarter, the rate was back down to a more typical 4.2 percent.
Other parts of the county are even farther away from a balanced market. Boulder County (which includes everything but Boulder and Longmont) has a 5 percent vacancy and a $1,572 average rent. Longmont is at 4.4 percent vacancy, with rent averaging $1,285.
The 12-month average vacancy rate in the county is the highest its ever been, reflecting a surfeit of new development. Longmont, too, has a 12-month average (4.6 percent) not seen since 2010, though property managers there say the market remains brisk.
“None of my clients have had more than a couple-day vacancy,” said Chrissy Smiley, who owns rental agency Smiley & Associates. Of 50 units, she has no current openings.
But, like others in her industry, she did note having a “harder time” renting properties that, in the past few years, would have been snapped up immediately.
“I just feel there is some kind of sea change happening with the rental market,” she said. “Part of it is that rents are going up and people’s incomes aren’t going up at the same rate.
“I get this sense that’s something’s about to flip.”