Last week, we updated our list of the ten Denver neighborhoods with the most-expensive rent for a two-bedroom apartment, based on data from ApartmentList.com.
However, the post didn't address a more fundamental question: Why are rents currently so expensive?
ApartmentList.com compiled eight theories in a post about the soaring figures.
Irony alert: The majority of the explanations constitute good news about booming businesses and the rise of what the piece's authors characterize as the "Dot Bong era."
Talk about the law of unintended consequences.
See all eight reasons below, featuring photo illustrations and excerpts from ApartmentList.com text. To see the original post, with additional info, graphics and more, click here.
REASON #1: A ROBUST BUSINESS ENVIRONMENT
The bustling Denver economy has been a major draw for many out-of-state residents looking for jobs. Colorado ranked among the top states for employment growth in 2013, and that growth is expected to continue throughout 2014.
By mid 2013, Colorado was one of only 15 states in the U.S. that had achieved a full recovery from the recession and Denver saw many of the benefits of the state's healthy bounceback....
REASON #2: NEW BUSINESSES LAUNCHING IN DENVER
According to several recent studies, Denver is also frequently cited as one of the best cities in the U.S. to start a business. In its annual analysis of the "The Best Small Business Cities in America" Biz2Credit ranks Denver as the 3rd best small-business city in the nation, and several other publications - including Forbes and VentureBeat — have noted Denver's business-friendly environment and healthy startup ecosystem....
REASON #3: BUSINESSES ARE RELOCATING TO DENVER
Given the business-friendly environment and concentration of skilled talent, a number of businesses are setting up satellite offices, or relocating their corporate headquarters to Denver. A recent example is Layer3 TV. The company's choice to relocate its headquarters from Boston to Denver will add over 300 skilled jobs to the Mile-High City....
REASON #4: OIL AND GAS BOOM HAS CREATED ADDITIONAL JOBS
The local Denver economy has also been strengthened by an oil and gas boom. The production growth, as well as the increase in the prices of these commodities, has created additional jobs in Colorado, leading to more migration into the state and Denver....
REASON #5: SPIKES IN MIGRATION
Due to the robust job creation, Colorado has seen a huge surge in new, younger, residents. This influx of younger professionals is more likely to be renters than homeowners, which further increases demand for apartments....
REASON #6: INCREASING HOME PRICES
Rental prices are not the only thing rising in the Mile-High City. The cost of buying a home is also increasing at a faster clip than the national average. Surging home prices make it even more challenging for Denver locals to buy a home, so they remain renters for longer. This in turn feeds the demand for rental units....
REASON #7: LACK OF HOUSING OPTIONS
Typically, rents increase in environments where vacancy rates are extremely low. In Denver, the vacancy rate is currently 4.8% (as of Q1 2014). Anything under 5% is considered an "extremely low" vacancy rate. Rates this low are typically seen in extremely supply-constrained markets like Manhattan or San Francisco....
REASON #8: THE DOT BONG ERA
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No analysis of the economic boom that Denver has witnessed in recent years would be complete without an investigation of the impact of the recent passing of Amendment 64: the legalization of recreational marijuana usage in Colorado. While tourism has experienced a bump due to the new regulations, we have not yet been able to capture the full impact as it relates to rental prices....