Chances are likely you’ve recently seen an article or two (or 200) that speaks to rental rates in Denver. Depending upon the day and the publication, the Denver market is either hot, hot, hot or lukewarm or downright cold. Maybe. But here’s what we are seeing in the Cherry Creek market.
Anyone who lives, works or visits the Cherry Creek neighborhood is aware of the unprecedented amount of “high-end luxury rentals” currently under construction. Some communities are completed and many more are slated to debut in Spring of 2018. The construction trend has resulted in downward pressure on the rental market in Cherry Creek. Some people don’t want to live amidst all the construction traffic, debris and noise. Others are holding off committing to a rental property because they want to move into a new-construction property.
To combat the pressures of indecision and construction commotion, our owners are having to adjust to more days on the market and make concessions for renters. For example, owners are foregoing luxuries, such as “no pet” clauses. Owners are also faced with having to accept roommate situations. Both of these concessions are something owners would typically not consider. However, owners who are willing to accept roommate agreements are finding themselves with more options, as more and more young professionals graduate college and decide to make Denver their home.
Owners realize concessions must be made to remain competitive as tenants find themselves with more choices. New construction luxury communities are luring tenants with incentives, such as free rent, flexible lease terms and fabulous amenities. Tenants are very savvy these days and continually use these “perks” to negotiate the pricing that privately held properties have been getting for years.
One example: We represent a beautiful townhome in Cherry Creek North. Great location, nicely updated and flexible owners who understand the current market conditions. For the past two years, we leased this property at $4,250.00 per month. The previous tenants moved out in July and since then, the property has sat vacant, listed at $3,250.00 per month. We’ve had numerous showings and zero negative feedback on this beautiful property.
This situation is puzzling but by no means unusual. Instead, we know it to be a trend happening throughout Cherry Creek and beyond into other, highly desirable neighborhoods. We are constantly counseling our owners and investors on what to expect in this ever-changing market of rental properties, construction and changing tenant profiles and preferences.