OVERVIEW

The metropolitan vacancy rate increased to 5.1 percent for the first quarter of 1997. It was 4.9 percent in the fourth quarter of 1996. For the first quarter of 1996, it was 5.1 percent and for the first quarter of 1995 it was 3.9 percent. Three counties showed an increase, two showed a decrease, and one remained the same. Twenty one market areas showed an increase, fourteen showed a decrease, and one remained the same. Four market areas have vacancies above ten percent. For the fourth quarter of 1996 all market areas had less than a ten percent vacancy rate.

VACANCIES

Buildings with 100 and up units have the highest vacancy (5.4 percent), while buildings with 2 to 8 units have the lowest (2.8 percent). This pattern has existed for the last five years. Buildings constructed since 1990 continue to have the highest vacancy (9.3 percent), up from the fourth quarter (7.6 percent). Apartments with 1000 and above square feet continue to have the highest vacancy (6.6 percent). Those between 500 to 749 have the lowest vacancy (4.4 percent). Efficiencies have 3.0 percent vacant; one bedroom, 4.8 percent; two bedroom, one bath, 5.2 percent; two bedroom, two bath, 6.1 percent; and three bedroom, 6.2 percent.

RENTAL RATES

The average rental rate for all apartment units decreased to $605.85 for the first quarter of 1997. For the fourth quarter of 1996, the average was $607.28. For the first quarter of 1996, it was $587.10. For the first quarter of 1995, it was $548.96. 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 delinquencies. For the first quarter that amounted to 5.9 percent, up 0.1 percent. Units constructed since 1990 averaged $862.76; 1980-89, $649.83; 1970-79, $564.50; 1960-69, $517.06; and prior to 1959, $436.23. Highest rents continue to be in buildings with 100 and up units ($639.37); and lowest in buildings with 9 to 50 units ($465.93). Buildings with 2 to 8 units averaged $583.53. Rent per square foot remained at 76 cents. For the first quarter of 1996, rent per square foot was 74 cents and for the first quarter of 1995, it was 69 cents. The highest rent per square foot is for units with 500 and below square feet ($1.00) and lowest for units with 1000 and above square feet (71 cents).

NEW ADDITIONS AND RESIDENT TURNOVER

Approximately 300 new units were added to the multi-family inventory this quarter. There are about 231,817 apartment units in the six-county area. For the first quarter of 1997 there was a negative absorption of 179 units. In the first quarter of 1996, 1,680 units were absorbed and in the first quarter of 1995, 1,034 units were absorbed. Absorption is the net change in the number of total apartment units rented this quarter compared to the total number of apartment units rented in the previous time period (quarter or year). For the first quarter of 1997, the monthly turnover of residents was 7.5 percent, down from 10.2 percent for the fourth quarter of 1996.

SUMMARY

Overall vacancy rates increased very slightly during the first quarter of 1997. The twelve month average of 5.0 percent has remained the same for the last three quarters indicating a high degree of overall stability in the market. The new apartment product appears to be absorbed at a slightly lower rate than for the last quarter. With the market areas showing significantly higher vacancies some of this is due to market conditions and some due to new construction. Rent losses are continuing to increase due to numerous incentives being provided, suggesting that the level of competition among existing units is increasing. Several new report features have been developed. The matrices showing rent levels by county and market have been increased to $1,800.00 from a previous high of $1,000.00. In addition, tables showing rent levels and vacancy rates by market area have been subdivided by county.

The Denver Area Apartment Vacancy and Rental Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, and age of building. The Survey is conducted by mail and includes 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 in the apartment industry. Comments on the Survey are appreciated.

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