What does a 32% vacancy rate for downtown Colorado Springs mean for the economy?

COLORADO SPRINGS, Colo. (KRDO) - Whether a 32% vacancy rate in downtown apartments in Colorado Springs is concerning depends on who you ask.

Integrity Matters, an organization that regularly lobbies concerning development in Colorado Springs sent a press release via email to many community members on Tuesday. The press release draws concern with a 34% vacancy rate in downtown Colorado Springs, citing data from the Downtown Development Authority. They call it "alarming" and say it "signals overbuilding." For this reason, the organization calls for a moratorium on all new residential building projects downtown.

City authorities and building experts disagree strongly with the group's assessment.

"To suggest that we should stop building is really not just erroneous -- It could really harm Colorado Springs," Jill Gaebler the Executive Director of the Pikes Peak Housing Network says.

Gaebler argues that the new apartment units, over 700 added just in the last two quarters, support overall growth. Furthermore, she says the apartment vacancy rate is because of these brand-new apartments that haven't been on the market long enough to be leased out.

"I can understand there are groups like in our community, like Integrity Matters, that don't want us to grow. They want us to never change. They want us to be frozen in amber and always stay the bedroom community that we once were," Gaebler said. "But if we know anything, change is the only constant. And so the only thing we can do as a city is try to change."

This year, two major apartment buildings opened: the Fiona, and the Experience at Epicenter right behind Weidner Field. The last time the vacancy rate in downtown Colorado Springs was this high was the beginning of 2023 when the last major housing unit opened downtown. By the end of the year, the housing was occupied.

The disagreement between groups like Colorado Springs Downtown Partnership and Integrity Matters comes into sharp focus when it comes to population growth projections.

People like Gaebler and the Downtown Colorado Springs partnership argue that the apartments will meet needs and help foster economic growth, while Dana Duggan, a leader of Integrity Matters, sharply disagrees on that point.

"We have a large tourism-based population, which means you don't have enough of that high wage workforce to fill a lot of these what are now very expensive luxury apartments," Duggan said.

The average price of renting an apartment in downtown Colorado Springs is $1,800, according to data from the Downtown Colorado Springs Partnership.

"We are very concerned that the projections are too aggressive and we think we're seeing signs of that," Duggan said of the current population growth predicted trends.

Duggan also drew parallels between high vacancy rates and sluggish economic performance, especially in the small business sector in the downtown area. She worries that high vacancy rates and unfilled apartments will lead to a downfall of the downtown area in general.

"We just don't want to go off the cliff because once you go too far it's better to be under-built than overbuilt. Overbuilding is bad for everybody," Duggan said.

But on the other side of the Colorado Springs economic Rubik's cube: the rising cost of housing. Gaebler says increasing the supply of housing will help decrease the overall pricing of housing, allowing for more young professionals to move into the city.

The economic director for the Colorado Springs Downtown Partnership agrees on that point.

"Demand is very high and that's what's driving up the prices of these units of these homes," Austin Wilson-Bradley, the director of Economic Development for the Downtown Partnership said. "Really, the only way to adequately address that is to simply build more units and address the supply side of that equation. And over time, if we do that, that will start to bring prices down a little bit for the community."