OVERVIEW

The Denver metropolitan area apartment vacancy rate for the third quarter of 1999 decreased to 3.7 percent. For the second quarter of 1999 it was 4.5 percent. For the third quarter of 1998 it was 3.9 percent. The vacancy rate for the third quarter of 1997 was 4.6 percent and for the third quarter of 1996, it was 4.7. Four counties showed a decrease and two showed an increase. Twenty-one market areas showed a decrease, two remained the same, and fourteen showed an increase.

VACANCIES

Buildings with 350 and up units have the highest vacancy rate, 4.3 percent. Buildings with 200 to 349 units have 4.2 percent vacant. Lowest vacancies are in units with 2 to 8 units, 2.1 percent. Historically, larger buildings have the highest vacancy rates. Buildings constructed after 1995 had the highest vacancy rate at 5.6 percent, down from 7.7 percent for the second quarter. Those constructed between 1990 and 1994 had a vacancy rate of 3.9 percent. Buildings constructed between 1940 and 1949 had the lowest vacancy rate, 1.3 percent and those constructed between 1960 and 1969 had 2.5 percent vacant. Apartment units with 750 to 999 square feet have the highest vacancy rate, 4.1 percent. Units with 500 to 749 units have the lowest vacancy rate, 3.0 percent. Efficiencies have 3.6 percent vacant; one bedroom, 3.1 percent; two bedroom, one bath, 3.7 percent; two bedroom, two bath, 4.4 percent; and three bedrooms, 5.9 percent.

RENTAL RATES

The average rental rate increased to $725.00 for the third quarter of 1999, an increase of $12.50 from the second quarter. For the third quarter of 1998, it was $685.48, and $649.52 for the third quarter of 1997. Average rents do not include the cost of rental discounts/concessions, models, bad debts, and delinquencies. For the third quarter of 1999, that averaged 5.0 percent, down 0.1 percent from the previous quarter. Units constructed since 1995 average $951.52; 1990 to 1994, $937.19; 1980-89, $748.71; 1970-79, $619.25; 1960-69, $560.66; and 1959 and prior, $531.04. Highest rents are in buildings/complexes with 200 to 349 units, $803.31 and lowest in buildings with 9 to 50 units, $541.99. Buildings with 2 to 8 units averaged $694.96. Rent per square feet increased to 89 cents per square feet. For the third quarter of 1998, it was 84 cents, and 80 cents for the third quarter of 1997. The highest rent per square foot is for those units below 500 square feet, $1.10, and lowest for units with 1000 and above square feet, 85 cents.

NEW ADDITIONS AND RESIDENT TURNOVER

Approximately 970 net units were added to the multi-family rental inventory in the third quarter of 1999. There are about 246,498 apartment units in the six-county area. For the third quarter of 1999, 2,899 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 third quarter (month of August), the monthly resident turnover was 5.9 percent. For the third quarter of 1998, it was 5.9 percent.

OVERALL COMMENTS

The Denver metropolitan area apartment market continues to be very healthy. There is generally a decrease in the vacancy rate during the third quarter. The vacancy rate since the third quarter of 1992 has been extremely stable, average 5.0 percent or below. The vacancy rate for units below the average rent levels continues to be very tight. For units that have rental rates above the average rent rate, the vacancy rate varies significantly.

Rental rates have climbed by $39.52 since the third quarter of 1998. For the past twelve months, this is an increase of 5.8 percent. However, this is less than the increase for personal income for 1998 and the reported personal income increases for 1999. In addition, the rent increases support significantly more amenities and services that apartment communities are providing to their residents.

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 September, except resident turnover and rental losses, which are for August. The Survey is conducted by mail and includes only those units with a certificate of occupancy. The Third Quarter 1999 Survey includes information on 79,490 apartment units.

The Survey is possible because of the great participation of professionals in the apartment industry and the consistent support of the Survey sponsors. Comments on the Survey are welcomed.

Click here for information on obtaining the complete Survey.