Apartments in the Denver area had boasted a 97.3% occupancy rate at year-end 2000, with an average monthly rent of $824, shows the report. Greg Willett, M/PF's editorial director and data analyst, says he can't rank Denver with other cities because all of the data isn't in yet.
However, Washington, D.C. and Orange County have even tighter markets and rents are rising faster than the 7.5% increase in the Denver area, he says. And when San Francisco data is available it is sure to be stronger than Denver.
M/PF's report shows higher occupancies and monthly rents then a local report by University of Denver business professor Gordon Von Stroh, who completes a quarterly report for the Apartment Association of Metropolitan Denver. The discrepancy is because of the universe that each surveys.
"We're surveying about 82,000 units, which is about a third of the market," Willett says. "Our numbers are always different than Von Stroh's because we tend to include the bigger projects managed by national firms. But with 82,000 units, we go pretty deep into the class-B projects, too."
Jeff Hawks, an apartment broker with Grubb & Ellis, says both surveys are valuable."I love to use Gordon's data because he's been doing it for 17 years and he has a good feel for the market," Hawks said. "M/PF tends to have the top institutional clients in the country. They send in their information every month, so you have a good idea of 'same store' comparisons. Gordon Von Stroh's survey, by contrast, might have information from JPI, as well as a mom and pop owner that manages fewer than 100 units."
Hawks says that Boston, New York City, San Francisco and Washington, D.C. markets are "basically no growth" areas, which has made them tighter than the Denver market. Hawks, who has just returned from National Multi-Housing Council meeting, says "they're rating Denver an 'A' market up there with those cities" although it failed to cop the standing. "The only two cities that aren't along either coast to get an 'A' rating are Denver and Chicago. Seattle and Portland are ranked a notch below Denver," reports Hawks.
Year 2000 occupancies have climbed more than two points from the year-end 1999 figures according to the M/PF. Occupancy climbed throughout the course of the year, rising more than 2 points from the year-end 1999 figure.
"Even with new product completions well above the amount of new supply seen during the previous few years, apartment demand in Denver surpassed deliveries," says Willett. Denver's healthy job growth and affordability challenges for would-be homebuyers in the lower end of the single-family market account for the city's strong leasing activity. "Also, the simple fact that more apartments were available helped demand top past unit absorption levels," he assesses.
M/PF Research estimates apartment demand in metropolitan Denver at more than12,000 units during the past year in comparison to completions totaling 7,854 apartments for the previous year.
The Littleton area along the southwest corridor had been Denver's demand leader in 2000. The submarket had handled 1,919 units of new supply and still ended up with an occupancy rate of 96.7%. At the other end of the metro area, Boulder County, which includes the University of Colorado's main campus, had 1,105 units completed units and an occupancy average of 97.8%.
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