Colorado’s struggling economy affects many aspects of people’s lives in Fort Collins – it even impacts where people live.
Vacancy rates in Fort Collins have increased after years of low numbers. In September 2002, the vacancy rate in Fort Collins was around 10 percent, which means 10 percent of the city’s houses and apartments were empty. Ten percent is an increase from March 2002, when the vacancy rate reached 7.3 percent. A normal vacancy rate is 5 percent.
Fort Collins’ lowest vacancy rate came in September 2000, when it was 1.9 percent.
The higher vacancy rates indicate, and are caused by, the declining economy, said Gordon Von Stroh, a business professor at the University of Denver.
“The economy has simply slowed down,” Stroh said. “There are less jobs and wages have decreased, and with people having less money, it is no surprise the vacancy rates are increasing.”
Stroh collects surveys and interprets results that reveal the vacancy rates throughout Colorado’s Front Range. Stroh gives his findings to the state so it can offer the information to residents, owners and managers of rental property, local and state government officials, and investors and developers. The information allows people to make informed decisions about actions taken in the housing market.
Stroh attributes the increased vacancy rates to a lower demand for housing.
“When Colorado had a lot of growth, the demand in housing went up and developers responded by planning and building,” Stroh said. “But now the demand has decreased and the houses that were planned while the economy was strong are remaining empty because of lower demand.”
Stephan Weiler, an economics professor at CSU, agrees with Stroh and calls the phenomenon a “lag.”
“During the economic growth we had a lot of building going on,” Weiler said. “But the economy changed and there is a lag when projects start and when they finish. A few years ago it was harder to find a house, so the builders responded.”
Weiler said 50,000 to 70,000 people migrated to Colorado every year in the late 1980s and early 1990s. He said that number has since dropped, which explains the higher vacancy rates and lower demand.
Stroh said the higher vacancy rates should level out when demand catches up with development.
“This should be temporary,” he said, “but (the vacancy rates) will probably not go back to what (they were) three years ago.”
Weiler said housing is “one sector that has actually kept the economy afloat,” despite the higher vacancy rates. He said home ownership is the “highest it has been in history,” with home ownership at 68 percent.
“When the market tanks,” Weiler said, “people invest a lot in real estate because it is more attractive than paying rent.”
Impact on students
Both Stroh and Weiler say the impact on CSU students is minimal and could even have a positive effect.
“High vacancy rates impact mainly investors and realtors,” Stroh said. “These people panic a little because it shows the economy is slowing down a little and they want to maintain their business at high levels.”
For the student renter it could be good, “because the resident has more options today than ever before,” Stroh said.
More options means students can shop for a better deal because there are more vacancies, rather than accept a lesser deal because there aren’t many housing options.
“It’s definitely a renters market,” Weiler said.
Some apartment managers and owners around Fort Collins are aware of the “renter’s market” and have adapted to make their property appealing to prospective renters.
Ed Stoner, president of Old Town Square Properties, said his company, which owns eight apartment complexes in Fort Collins, has done well by lowering rents and using promotions.
“We are better off compared to the market,” he said. “We are working to keep ahead of the curve.”
To gain a competitive edge over other apartments and keep the vacancy rates lower than the city’s, Stoner said managers at his complexes have done everything from waiving application fees to eliminating deposits, reducing overall rent prices by $30 to $70, and making the third month free.
“That’s why we’re still leasing a couple units a week,” Stoner said. “That’s why we’re staying competitive.”
Rams Pointe, a popular destination for many CSU students, boasts a 2 percent vacancy rate.
Polli Cisneros, property manager at Rams Pointe, said the low vacancy rate is due to good property management.
“We do a good job with our property and (the higher vacancy rates in Fort Collins) hasn’t impacted us,” Cisneros said. “We have a lot of amenities and we strive to meet the needs of students.”
While students may benefit from the higher vacancy rates – to the detriment of some property owners and developers – Stroh said the rates should soon level off at 5 percent, the normal rate.
“Right now we are just in a part of the cycle where things slow down,” Stroh said. “The vacancy rates should get back to normal soon.”