(Continued from page 3)
While the apartment market has softened in metro Denver, there are wide ranges of conditions by submarket. Ac-
cording to the apartment association's report, vacancy rates are highest in Golden, parts of Aurora, Longmont, Castle
Rock, northern Douglas County and parts of far northeast and southeast City and County of Denver. Highest vacancy
rates were generally found in submarkets in which extensive new construction added units to the market.
Conversely, vacancy rates are still relatively low in several submarkets in which little new construction has occurred,
including Commerce City, Wheat Ridge, west central City and County of Denver and the University of Colorado area
in Boulder. In general, vacancy rates are lowest in older apartment properties and in those catering to low and moder-
ate-income residents.
There are two trends worth monitoring in the coming year:
·
Downtown Denver is becoming a popular place for apartment development, following the success of develop-
ers with condominium sales. About 2,000 units are underway in and adjacent to downtown, mainly in upscale
communities in the Central Platte River valley, Prospect and Ballpark neighborhoods. Most of these new
communities will start delivering units to the market in early 2003, testing the demand for such urban commu-
nities.
·
While vacancy rates are worse in apartment communities with higher rents, demand is steady for "affordable"
apartments, especially those using tax credit or bond financing. Developers are starting to delve more deeply
into this segment, especially in middle-income areas like Brighton, Commerce City and Longmont.
The softening market is also evident in the stability or actual decline in average rental rates. During the 3rd quarter of
2002, average rental rates continued to decline from the same period of 2001, and that does not take into considera-
tion the value of specials and concessions being offered by many apartment communities.
The average rental rates quoted in the apartment association report may be somewhat inflated due to the periodic
addition of new communities upon their completion, most of which have rental rates above the metro average. Un-
(Continued on page 5)
Volume 1, 4
Page 4
The Apartment Perspective
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The Metro Denver Apartment Market
(continued)
James Real Estate Services, Inc.
