OVERVIEW

The Denver metropolitan area vacancy rate remained at 4.6 percent for the first quarter of 1998. It was also 4.6 percent for both the third and fourth quarters of 1997. For the first quarter of 1997, it was 5.1 percent and 5.1 percent for the first quarter of 1996. In the first quarter of 1995, it was 3.9 percent. Four counties increased, one decreased and one remained the same. Seventeen market areas increased, nineteen decreased. Three market areas were above ten percent.

VACANCIES

Buildings with 200 and up units continue to have the highest vacacny (5.3 percent) while buildings with 2 to 8 units have the lowest (2.8 percent). Buildings with 2 to 8 units historically have the lowest vacancy while larger buildings generally have the highest vacancy rates. Buildings constructed since 1995 have the highest vacancy at 7.9 percent. Generally, the older the building, the lower the vacancy rate. Apartment units with 1000 and above square feet have the highest vacancy (6.6 percent) and those below 500 have the lowest vacancy (3.2 percent). Efficiencies have 3.3 percent vacant; one bedroom, 4.0 percent; two bedroom, one bath, 4.0; two bedroom, two bath, 6.3; and three bedroom, 5.1.

RENTAL RATES

The average rental rate for all apartments increased to $652.27 for the first quarter of 1997, up $2.66. This follows a 9 cent increase in the fourth quarter of 1997, a $11.86 increase in the third quarter of 1997 and a $31.81 increase in the secound quarter of 1997. For the first quarter of 1997, the average rental rate was $605.85 and for the first quarter of 1996, it was $587.10. Average rents 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 first quarter of 1998 that amounted to 5.4 percent, down 0.1 percent. Units constructed since 1995 average $889.32; 1990-94, $876.61; 1980-89, $684.07; 1970-79, $568.54; 1960-69, $533.56; and prior to 1960, $456.51. Highest rents continue to be in buildings/ complexes with 200 and up units ($717.74) and lowest in buildings with 9 to 50 units ($500.52). Buildings with 2 to 8 units averaged $652.30. Rent per square foot increased to 81 cents. For the first quarter of 1997 it was 76 cents, and for the first quarter of 1996 it was 74 cents. The highest rent is for those units with 500 and below square feet ($1.15) and lowest for units with 1000 and above sqaure feet (76 cents).

NEW ADDITIONS AND RESIDENT TURNOVER

Approximately 1,623 apartment units were added to the mulit-family housing inventory in the first quarter of 1998. There are about 236,666 apartment units in the six-county area. For the first quarter about 1,548 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 first quarter (month of February) of 1998 the monthly turnover was 5.4 percent, up from the fourth quarter of 1997 (4.5 percent). For the first quarter of 1997, it was 7.5 percent.

SUMMARY

The overall Denver metropolitan area apartment market continues to be extremely stable with a 4.6 percent vacancy rate for three consecutive quarters. Likewise, rental rates have remained relatively stable also. New apartment product is being absorbed without any impact on the overall vacancy rate. One market area that has a vacancy rate greater than ten percent is a small market area with a relatively high number of new units. It is expected that those units will be absorbed in the next quarter. The two other market areas that have a vacancy rate greater than ten percent have older housing stock that is not as competitive as units in nearby market areas.

The level of new additions increased in the first quarter of 1997. It is expected that the number of additions for 1998 will exceed the number for 1997.

One new market area was added, Arapahoe County - Southeast. For tables that show data by age of building, 1990 and above was changed to 1990 to 1994 and 1995 and above. In addition, several other enhancements has been made in the Survey.

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