OVERVIEW

The Denver metropolitan area apartment vacancy rate for the second quarter of 1999 decreased to 4.5 percent. For the first quarter of 1999 the vacancy rate was 4.6 percent. For the second quarter of 1998, it was 4.6 percent. The vacancy rate for the second quarter of 1997 was 5.1 and for the second quarter of 1996, it was 5.3. Four counties showed a decrease and two counties showed an increase. Eighteen market areas showed an increase while nineteen showed a decrease.

VACANCIES

Buildings with 200 to 349 units have the highest vacancy rate, 5.2 percent. Buildings with 350 and up units have 4.7 percent vacant. Lowest vacancies are in units with 2 to 8 units, 1.9 percent, and 51 to 99 units, 2.8 percent. Historically, larger buildings have the highest vacancy rate with smaller buildings having the lowest vacancy rates. Buildings constructed after 1995 had the highest vacancy rate at 7.7 percent, down from 8.7 percent for the previous quarter. Those constructed between 1990 and 1994 had a vacancy rate of 5.0 percent. Buildings constructed between 1960 and 1969 had the lowest vacancy rate, 3.0 percent. Apartment units with 1000 or more square feet have the highest vacancy rate, 5.6 percent, down from 6.1 percent in the first quarter. Units with 500 to 749 square feet have the lowest vacancy at 3.9 percent. Efficiencies have 4.5 percent vacant; one bedroom, 4.0 percent; two bedroom, one bath, 4.5 percent; two bedroom, two bath, 5.3 percent; and three bedroom, 5.7.

RENTAL RATES

The average rental rate increased to $712.50 for the second quarter of 1999, an increase of $17.03 from the first quarter. For the second quarter of 1998, it was $659.74 and $637.66 for the second quarter of 1997. Average rents are based on units being unfurnished with residents paying electricity and gas. Average rents do not include the cost of rental discounts/concessions, models, bad debts, and delinquencies. For the second quarter of 1999, that averaged 5.1 percent, down 1 cent from the previous quarter. Units constructed between 1990 and 1994 averaged $946.44 while those constructed since 1995 averaged $940.16. Units constructed between 1980-89 averaged $723.18; 1970-79, $619.67; 1960-69, $578.27; and prior to 1959, $514.65. Highest rents are in buildings/complexes with 200 to 349 units, $799.74, and lowest in buildings with 9 to 50 units, $541.50. Buildings with 2 to 8 units averaged $675.39. Rent per square foot increased to 87 per square foot. For the second quarter of 1998, it was 82 cents and 78 cents for the second quarter of 1997. The highest rent per square foot is for those units below 500 feet, $1.11, and lowest for units with 1000 and above square feet, 83 cents.

NEW ADDITIONS AND RESIDENT TURNOVER

Approximately 2,221 units were added to the multi-family rental inventory in the second quarter of 1999. There are about 245,528 apartment units in the six-county area. For the first quarter of 1999, 2,364 were absorbed. Absorption is the net change in the number of apartment units rented in the current time period (quarter/year) compared to the previous time period (quarter/year). For the second quarter (month of May), the monthly resident turnover was 5.5 percent. For the second quarter of 1998, it was also 5.5 percent.

OVERALL COMMENTS

The Denver metropolitan area apartment market continues to be in a relatively strong position. The vacancy rate decrease seen this quarter is typical for second quarter rates. Likewise, rent levels generally increase during the second quarter as seen this quarter. The vacancy rate for units below the average rent rate continues to be very tight. For units that have rental rates above the average rent rate, the vacancy rate is varies significantly.

The Denver Area Apartment Vacancy and Rent Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, age of building/complex and apartment type. All information is based on data received for the month of June, except resident turnover and rental losses, which are for May. The Survey is conducted by mail and includes only those units with a certificate of occupancy. The Second Quarter 1999 Survey includes information on 80,297 apartment units.

The Survey is possible because of the excellent participation of professionals in the apartment industry and the continued strong support of the sponsors. Comments on the Survey are appreciated.

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