OVERVIEW

The Denver metropolitan area vacancy rate was 4.6 percent for the third quarter of 1997, down from 5.1 percent for the second quarter of 1997. For the third quarter of 1996, it was 4.7 percent. For the third quarter of 1995, it was 4.1 percent. Four counties showed a decrease and two has an increase. Fifteen market areas increased and twenty-one decreased. No market area was above ten percent.

VACANCIES

Building with 200 and up units have the highest vacancy rate (5.0 percent) while buildings with 51 to 99 units have the lowest vacancy rate (2.5 percent). Buildings with 2 to 8 units have 4.6 percent vacant, the highest vacancy rate for this building size since the 1980's. Buildings constructed since 1990 have the highest vacancy rate 7.5 percent, down from 8.5 percent in the secondquarter. Generally, the older the building the lower the vacancy rate. Apartment units with 1000 and above square feet contnue to have the highest vacancy (5.7 percent). Those below 500 square feet have the lowest (2.8 percent). Efficiencies have 3.1 percent vacant; one bedroom, 4.0 percent; two bedroom, one bath, 4.7; two bedroom, two bath, 5.7; and three bedroom, 4.9.

RENTAL RATES

The average rental rate for all apartment units increased to $649.52 for the third quarter of 1997, up $11.86. This follows a $31.81 increase in the second quarter. For the third quarter of 1996, it was $596.47 and for the third quarter of 1995, it was $571.66. Averages are based on units being unfurnished with residents paying gas and electricity. Average rents do not include the cost of rental discounts/ concessions, models, bad debts, and deliquencies. For the third quarter that amounted to 5.6 percent, down 0.1 percent. Units constructed since 1990 averaged $903.63; 1980-89, $677.38; 1970-79, $570.69; 1960-69, $557.07; and prior to 1960, $456.11. Highest rents are in units with buildings having 200 and up units ($693.90) and lowest in buildings with 9 to 50 units ($489.08). Buildings with 2 to 8 units averaged $521.41, down from $641.37 (note vacancies for this group went up from historical lows). Rent per square foot increased to 80 cents, up from 78 cents for the second quarter. For the third quarter of 1996, it was 76 cents and for the third quarter for 1995, it was 72 cents. The highest rent is for those units with 500 and below square feet ($1.12) and the lowest for units with 1000 and up square feet (77 cents).

NEW ADDITIONS AND RESIDENT TURNOVER

Approximately 581 units were added to the multi-family inventory this quarter. There are about 233,482 apartment units in the six-county area. For the third quarter of 1997, about 1,719 units were abosrbed. Absorption is the net change in the number of apartment units rented in the current time period (quarter/ year) compared to the number of apartment units rented in the previous time period (quarter/ year). For the third quarter (month of August) of 1997, the monthly turnover of residents was 6.2 percent, up from 5.6 percent for the second quarter. For the third quarter of 1996, the turnover rate was 6.3 percent.

SUMMARY

The overall Denver metropolitan area apartment market continues to be very stable with occupancy very strong. The new apartment product is being absorbed at a relatively moderate rate. OVerall vacancy rates generally correlate with the price of the unit; as the unit price increases the vacancy rate increases in a somewhat corresponding manner.

Average rents increased significantly again this quarter, but not at the same pace as for the last quarter. All apartment age groups, except for the 1980-89 group, increased. With the last quarter, the 1980-89 group had much of the price increase.

New additions are at much lower level than for 1996. It is expected though that the number of new additions will increase in the fourth quarter and in 1998.

The Denver Area Apartment Vacancy and Rental Survey reports averages and, as a result, there are often differences in rental and vacancy by size, location and age of building. All information is based on data received for the month of September except for "resident turnover" and "rental losses from discounts and concessions, models, deliquents and bad debts" which is for the month of August. The survey is conducted by mail and included only those units with a certificate of occupancy.

The Survey is possible because of the strong support and commitment of the sponsors and the consistently outstanding cooperation of professionals on the apartment industry. Comments on the Survey are appreciated.

Click here for information on obtaining the complete Survey.