OVERVIEW

The Denver metropolitan vacancy rate was 5.1 percent for the second quarter of 1997, the same as for the first quarter of 1997. For the fourth quarter of 1996, the vacancy rate was 4.9 percent. For the second quarter of 1996, the vacancy rate was 5.3 percent and 4.3 percent for the second quarter of 1995. Four counties showed an increase and two showed a decrease. Sixteen market areas increased, eighteen decreased, and two remained the same. Only one market area was above ten percent.

VACANCIES

Buildings with 100 and up units and 51 to 99 units have the highest vacancy (5.2 percent), while buildings with 2 to 8 units have the lowest vacancy (2.7 percent). Larger buildings generally have higher vacancy rates. Buildings constructed since 1990 have the highest vacancy rate, 8.5 percent; down from 9.3 percent for the first quarter. Apartment units with 100 and above square feet continue to have the highest vacancy (6.1 percent). Those below 500 square feet have the lowest (4.1 percent). Efficiencies have 4.0 percent vacant; one bedroom, 4.2 percent; two bedroom, one bath, 6.4; two bedroom, two bath, 5.8; and three bedroom, 5.8.

RENTAL RATES

The average rental rate for all apartment units increased to $637.66 for the second quarter of 1997. This is the largest quarterly increase since the current survey was started in September 1981. For the first quarter of 1997, it was $605.85. For the second quarter of 1996, it was $597.81 and for the second quarter of 1995 it was $560.05. Averages are based on units being unfurnished with residents paying electricity and gas. Average rents do not include the cost of tental discounts/ concessions, models, bad debts, and deliquencies. For the second quarter that amounted to 5.7 percent, down 0.2 percent. Units constructed since 1990 averaged $892.00, 1980-89, $689.20; 1970-79, $556.36; 1960-69, $530.79; and prior to 1960, $434.19. Highest rents continue to be in buildings with 100 and up units ($665.66); and lowest in buildings with 9 to 50 units ($488.35). Buildings with 2 to 8 units averaged $641.37. Rent per square feet increased to 78 cents, up from 76 cents for the first quarter of 1997. For the second quarter of 1996, rent per square foot was 75 cents and for the second quarter of 1995, it was 70 cents. The highest rent per square foot is for units with 500 and below square feet ($1.08) and the lowest for units with 749 to 999 units and 1000 and above square feet (75 cents).

NEW ADDITIONS AND RESIDENT TURNOVER

Approximately 1,084 new units were added to the multi-family inventory this quarter. There are about 232,901 apartment units in the six-county area. For the second quarter of 1997 about 1,029 units were absorbed. In the second quarter of 1996, there was negative absorption of 47 and in the second quarter of 1995, about 946 units were absorbed. Absorption os the net change in the number of total apartments units rented in the current quarter (or year) compared to the number of apartment units rented in the previous time period (quarter or year). For the second quarter of 1997, the monthly turnover of residents was 5.6 percents, down from 7.5 percent for the first quarter of 1997.

SUMMARY

Overall vacancy rates have been extremely stable. The twelve month average for the last four quarters has been 5.0 percent each quarter. The new apartment product continues to be absorbed relatively well. Market areas with high vacancies due to an oversupply of new product have seen their vacancy rates decrease drastically.

However, average rent increased significantly this quarter due to sharp increases in rents for the "1980-89" and "1990 and above" product. At the same time, rental losses decreased form 5.9 percent to 5.7 percent.

New additions to the inventory are increasing at a rate slower than for both 1995 and 1996. However, it is expected that the pace will increase in the third and fourth quarters.

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 June except for "resident turnover" and "rental losses from discounts and concessions, models, deliquents and bad debts" which is for the month of May. 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.

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