Apartment vacancies expected to balloon

Extensive building and shifting demographics have combined to boost apartment vacancies in Northern Colorado, with vacancy rates pushing the double-digit barrier.Real estate experts predict double-digit vacancies in Fort Collins by late summer, and vacancy rates have risen from a low of about 2 percent to almost 11 percent in Greeley, said Two Rivers Investment owner Don Eliott.
“It’s been slow now for about three months,” Eliott said. He attributed the slack market to the appearance of a lot of new four-plexes and small buildings, totaling perhaps 200 new units. Fewer students at the University of Northern Colorado, and a general upward trend in home buying have also contributed, he said, with former tenants moving into starter homes.
“Rents are down,” Eliott added. “You can have a nice, decent two-bedroom for $500 to $550.” Studios can be had for $285, and three-bedroom “condos” go for about $800 in Greeley, said Ray Pfalzgraff of Scott Realty Co.
The vacancy rate is up in Fort Collins, too. A December 1996 survey undertaken by the Danter Co. of Ohio reported a 5.3 percent vacancy rate for medium- to high-priced apartments. That compares with a vacancy rate of 2.7 percent this time last year.
Dave Veldman, president of Veldman Morgan Commercial in Fort Collins, predicted double-digit vacancies in the market by late summer.
Contributing to the increase in vacancies were three major projects finished in Fort Collins in 1996. They were Pine Cone Apartments and Miramont in the southeast and the Preserve in the western part of town, said Chris Wells, a broker associate at Veldman Morgan Commercial. Together, they contributed about 700 rental units to the market.
“The larger complexes all have vacancies, and they’re not filling up,” Wells said. Besides new units, another trend helped increase the number of vacancies. Of the people moving into larger houses last year, many rented their old houses rather than selling, Wells said.
Rents, which the Danter report stated have been rising about 3 percent a year in Fort Collins, have softened in recent months, Wells said. He noted several apartment owners who have had to reduce advertised rents by $20 to get responses to ads.Projects planned for 1997 completion include Jefferson Commons, a 600-bedroom student-housing complex, and a 100-plus unit complex at Harmony Road and South Shields Street, Wells said. These, he predicted, will keep prices flat for the coming year.
The low-rent market is still extremely tight in Fort Collins, with a vacancy rate running at about 1 percent. A 116-unit project is under construction, and Brisben Cos. has proposed another 170-unit complex.
In Loveland, the Meadows, a 50-unit low-income project that opened in April, and the Wexford, a 94-unit senior citizen apartment complex that opened in September, have had an impact on overall vacancies, although precise figures are not available.
The greater availability of apartments in Fort Collins also may affect the Loveland vacancy rate. A project planned for 550 acres at Rocky Mountain Village has been longer in the proposal process than expected and will probably not be completed before fall 1997, according to the developer, McWhinney Colorado Enterprises.ÿ