OVERVIEW

The Denver metropolian area vacancy rate for the fourth quarter was 4.6 percent, the same rate as for the third quarter of 1997. For the second quarter of 1997, it was 5.1 percent. For the fourth quarter of 1996, it was 4.9 percent, for the fourth quarter of 1995 it was 5.0 percent and for thefourth quarter of 1994, 3.8 percent. Three counties increased and three decreased. Eighteen market areas increased and eighteen decreased. No market area was above ten percent.

VACANCIES

Buildings with 200 and up units continue to have the highest vacancy (5.0 percent) while buildings with 2 to 8 units have the lowest vacancy rate (1.6 percent). Buildings with 2 to 8 units historically have the lowest vacancy rate. Buildings constructed since 1990 have the highest vacacny rate at 7.8 percent, up from 7.5 percent in the third quarter. Generally, the older the building the lower the vacancy rate. Apartment units with 1000 and above square feet continue to have the highest vacancy (6.0 percent). Those below 500 also continue to have the lowest (3.2 percent). Efficiencies have 3.1 percent; one bedrooms, 4.1 percent; two bedroom, one bath, 4.9; two bedroom, two bath, 5.6; and three bedroom, 5.2.

RENTAL RATES

The average rental rate for all apartment units increased to $649.61 for the fourth quarter of 1997, up 9 cents. This follows an $11.86 increase in the third quarter of 1997 and $31.81 increase in the second quarter of 1997. For the fourth quarter of 1996, the average rental rate was $607.28 and for the fourth quarter of 1995, it was $575.12. 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 fourth quarter that amounted to 5.5 percent, down 0.1 percent. Units constructed since 1990 averaged $910.60; 1980-89, $692.02; 1970-79, $568.08; 1960-69, $525.34; and prior to 1960, $437.04. Highest rents continue to be in buildings/ complexes with 200 and up units ($711.49) and lowest in the buildings/ complexes with 9 to 50 units ($491.38). Buildings with 2 to 8 units averaged $624.85. Rent per square foot remained at 80 cents. For the fourth quarter of 1996, it was 76 cents and for the fourth quarter of 1995, it was 72 cents. The highest rent is for those units with 500 and below square feet ($1.15) and lowest for units with 749 to 999 and 1000 and above (78 cents).

NEW ADDITIONS AND RESIDENT TURNOVER

Approximately 1,561 apartment units were added to the multi-family inventory this quarter. There are about 235,043 apartment units in the six-county area. For the fourth quarter of 1997, about 1,489 units were absorbed. Absorption is the net change in the number of apartment units rented in the current time period (quarter/ year) compared to the number of units rented in the previous time period (quarter/ year). For the fourth quarter (month of November) 1997, the monthly turnover of residents was 4.5 percent, down from 6.2 percent for the third quarter (August). For the fourth quarter (November) of 1996, it was 10.2 percent. The average monthly resident turnover for 1997 was 6.0 percent, down from 7.1 percent for 1996.

SUMMARY

The overall Denver metropolitan area apartment market continues to be very stable with occupancy very strong. Average rents, after having climbed significantly in the second quarter with a smaller increase in the third quarter, were flat this quarter. New apartment product is being absorbed without any significant impact on overall vacancy. Overall vacancy rates generally correlate with the price of the unit; as the unit price increases the vacancy rate increases generally in a corresponding manner.

New additions increased in the fourth quarter. However, the overall number of new units for 1997 was not at the same level as for 1996, or even 1995. It is expected that the number of new additions will increase 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 December except for "resident turnover" and "rental losses from discounts and concessions, models, deliquents and bad debts" which is for the month of November. 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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