Vail Valley rental market hits rough patch
VAIL VALLEY, Colorado – In the four years Andy Kohn has owned a rental unit in Arrowhead, he’s never had to advertise for tenants in Colorado’s Vail Valley. Until this year.
Kohn, who owns the Arrowhead unit and one in Riverwalk, has dropped the rent on both units. And, for the first time since he’s owned them, both are sitting vacant.
Tom Carlin opened a six-unit apartment complex in Gypsum in 2001. This spring, for the first time since it opened, he had two units for rent at the same time. One is still available.
For the first time in recent memory, Vail Valley renters have options. They can also get deals. The reason, of course, is the current economic slump.
“I’ve found that the number of rental units available is inversely proportional to the help-wanted ads,” Carlin said.
In short, when jobs are scarce, apartments are plentiful.
Carlin said he’s never had one of his apartments empty for more than a month. One has been vacant for going on 90 days now.
“I get a call every three or four days,” he said.
Carlin hasn’t backed off on what he’s asking for rent – $1,600 per month. “My property taxes continue to increase, so I haven’t reduced the rent,” he said.
But Carlin’s place is a rarity.
Kohn’s Arrowhead unit – which he rents to people who just want to lease a vacation home for a year while they’re looking for a place to buy – has dropped $200 a month. His Riverwalk unit has dropped by $500 per month.
Then there’s the high-end rental market. Tricia Gould said while her company – Property Boss – is cutting rates and offering incentives to people renting units for less than $3,000 per month, the high-end units are still moving.
“The units at $4,800 a month and higher are the first to go,” she said.
Corum Real Estate, which manages the Timber Ridge, Buffalo Ridge and Lake Creek Village apartment complexes in the valley, has been aggressive about cutting rates.
A three-bedroom unit at Lake Creek Village that rented for $1,575 a month recently has come down to $1,305 per month. That rate’s good for both new and existing tenants. The company is also backing off on what it’s requiring for deposits, and generally making it easier to move in, and stay.
“We’re seeing a lot of people moving out,” Corum director of operations Gayle Gahagan said. “There’s a low amount of construction jobs right now, so we’ve got to stay competitive with rents so people can stay.”
While Corum has empty units now, Gahagan said she hopes rentals pick back up before ski season. But, she said, it may be too soon to tell if the valley’s rental market is going back to the way it was, say, 20 years ago, when apartments filled to the brim during ski season and summer-only rentals were plentiful.
For now, Corum’s dropping its prices in hopes of keeping its complexes at least mostly full. And the valley’s bigger apartment complexes are still mostly full. County housing director Alex Potente said the current vacancy rate in the big complexes is between 8 percent and 12 percent.
But empty units are a hit to the bottom line.
Gahagan wouldn’t discuss Corum’s finances in detail. But she did say Corum’s units in the Vail Valley are operating within their budgets.
“We’re not going to offer a lower quality of living,” Gahagan said. “We still budget for grounds maintenance, roofing and so on, and we’re not cutting back on staffing.”
Although it’s easy to find a place to rent today, Potente says he knows the situation won’t last.
“We’re taking a long-term view,” Potente said. “Over time, whether it’s 24, 36 or 48 months, we’re going to see some recovery in the second-home market, and that will create demand in the rental market.”
Potente said while the rental market is relatively weak right now, there’s still “some strength” in the market for entry-level homes. Miller Ranch in Edwards still has a waiting list of buyers, and there have been nine closings so far at Stratton Flats in Gypsum.
Still, Potente acknowledged there are “near-term challenges” to making more rental housing available to the county’s workers.
“It takes several years for a policy to be implemented,” he said.
Until the economy recovers, though, Potente said he believes rental property owners will still have to work a little harder to get their units occupied.
“The next few years are going to be difficult,” he said.
Business Editor Scott N. Miller can be reached at 970-748-2930 or email@example.com.
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