First, let's look at the vacancy rate for the region. During the third quarter of 2019, the Colorado Springs vacancy rate fell to 5.0 percent. That's down from 5.4 percent during the second quarter, and it was down from 5.2 percent as recorded during the third quarter of 2018, one year earlier.
2019's third quarter rate was the lowest vacancy rate recorded since the third quarter of 2016, when the rate was 4.0 percent.
This suggests vacancies are in a downward trend at the moment, but there rate isn't exactly at historical lows. Five percent suggests mostly full units, but I wouldn't describe it as an especially "tight" market.
Not surprisingly, though, this decline in vacancy in the last two years has come with rent growth — but not a lot of rent growth.
From the third quarter of 2017 to the third quarter of 2019, the average rent grew 8.6 percent (or 98 dollars) from $1,113 to $1,231.
This is an average, so is skewed upward by new construction. As noted in October in the Gazette:
Most Colorado Springs-area apartment projects built in recent years have been upscale, amenity-filled communities that command top dollar for rents, said Laura Nelson, the Apartment Association’s executive director.
“The only supply we’re adding is high end,” she said. “So when you add high-end units, then it pulls your average up. That doesn’t necessarily mean than everything is going up that high. But when that’s all that you’re adding in, it throws off the average.”
Though several apartment projects have been built in recent years, the overall supply might not be keeping up with demand.
In the third quarter, only about 2,600 of the area’s supply of 51,142 apartments were available for rent — a 5 percent vacancy rate that was the lowest in three years, the Housing Division and Apartment Association report shows.
Nearly 750 units have been added to the area’s supply in the first three quarters of the year, which is about the same number as during the same period in 2018, according to the report. Even so, an additional 1,178 apartments have been occupied since the start of the year.
If we looked at growth in median rent, the increased would like be smaller, since median numbers are less skewed by new product. I don't have the median numbers yet for the third quarter, but the growth in median rent from the third quarter of 2017 to the second quarter of 2019 actually went down by 10.9 percent. This may have been driven by declines in rents in older and less desirable units.
Year-over-year growth in average rent has slowed over the past two years compared to 2016-2017 when YOY growth frequently topped ten percent.