After the historic wildfire that destroyed 347 homes and burned over 18,000 acres of land, the Colorado Springs MSA is still reeling from the impact. Hendricks-Berkadia reports that the private sector shed 3,200 jobs in the third quarter of 2012 alone, with an annual net loss of 2,500 positions.
One of the main reasons for the drop in employment was a precipitous decline in tourism, a sector upon which the metro heavily relies. Yet, in spite of this, demand for both single-family and multifamily housing rose year over year. The apartment sector recorded 360 net move-ins, bringing the overall vacancy rate to 4.3 percent by the end of 2012—the lowest it’s been in 11 years.
One factor contributing to the departure between employment growth and occupancy is the lack of new supply delivered to the market since the onset of the recession. 2012 was the first year to see deliveries since 2009—with a little over 200 new units completed. However, 2013 will see nearly 700 new units completed, possibly translating to a retraction in occupancy levels.
Overall employment will likely grow one percent this year, recovering a few of the positions that were lost in the last year. However, a full recovery and expansion of the job market will likely not occur until 2014. Hendricks-Berkadia notes that a large amount of the new jobs will come in the form of construction positions—as communities begin to rebuild from the Waldo Canyon Fire.
Another boon for the construction sector will come from the expansion of Interstate 25 into an interchange with U.S. Route 24, likely creating a powerful corridor for economic development.
As far as specific predictions go, overall vacancy is expected to tick up slightly to 4.5 percent by the end of the year, while asking rents will climb 1.3 percent to $754 during the same time. However, this performance is nothing compared to what’s predicted for 2014—when vacancy is expected to plummet to 3.3 percent.
This level of occupancy will rival the record low recorded in 2000, a time of significant economic expansion for the region and nation overall.