APARTMENT RENT IN METRO AREA SOARS IN THE LAST DECADE

This area ranks fourth nationally, behind three Bay Area metros

After the San Francisco Bay Area, metro Denver experienced the largest apartment rent increases this decade. But plenty of new supply should put future rent gains closer to the national average, according to a new report from RealPage, a real estate research firm.

Between 2010 to 2017, metro Denver apartment rents rose 46.9 percent, the fourth-highest increase in the country after three northern California metros: San Jose at 51.3 percent, Oakland at 51 percent and San Francisco at 48.6 percent.

But Denver’s effective rent, at $1,401, remains substantially below those cities. San Francisco apartment rents, for example, now average $3,288 a month and Oakland’s $2,259.

“You can legitimately make the case that Denver’s outperformance for rent growth in this cycle was influenced by the fact that the metro came into the cycle with rents that were unusually low,” said Greg Willett, chief economist with RealPage.

Rent gains in metro Denver averaged 7.6 percent a year in the first half of the decade. But in the second half they are averaging 3.4 percent a year. Those numbers represent the changes from quarter to quarter in the same properties, which neutralizes the impact from new and expensive luxury apartments entering the market.

Willett said Denver-area landlords spent much of the last decade trying to work off a glut of apartments from the tech boom. From late 2001 to late 2004, rents fell 17 percent and didn’t regain their 2001 highs until 2011.

As more supply continues to hit the market, expect more discounts and concessions in the newest buildings. That will push rents down on the existing highend properties, and so on down the chain.

“Over time, that competitive leasing environment at the top of the product spectrum usually trickles down to the middlemarket and lower-tier properties as well,” he said.

RealPage is forecasting metro Denver apartment rent increases will average about 3 percent a year for the next five years.