Carey Bruteig, principal of Apartment Appraisers & Consultants, says the number was so high because apartment developers rushed to pull permits in the event that voters approved Amendment 24, which would have controlled growth, but went down the tubes by a 70% margin in November.
He says the other driving force is the region's strong apartment market, one marked by low vacancies and rising rents. The last time the apartment market approached last year's activity level was 1984, just before the local economy collapsed due to falling oil prices.
The report, which was adjusted by the Denver-based Genesis Group, shows that 5,340 permits were issued in 1999, down from 7,794 in 1998. Genesis also tracks the local real estate market. In 1991, when Denver was pulling out of the recession from the energy bust of the '80s, there were only 208 multifamily permits issued.
Jeff Hawks, a top apartment broker at Grubb & Ellis, says the latest report accurately reflects the market. "I would think that Amendment 24 resulted in a 25% increase in permit activity," Hawks says. He believes even more permits would have been issued if that measure had passed. Some purchase agreements had been tied to the results of the amendment.
Hawks says he doesn't think the market is in any danger of overbuilding. "The way to look at permits is their percentage of the base," Hawks says. "We're building the same number of apartments we did in 1984, but our base has grown by 60,000 units since 1984. So the numbers are the same, but the base has grown dramatically."
Hawks expects permit activity to cool dramatically this year. "Lenders are really smart," Hawks tels GlobeSt.com. "They look at a big year like 2000, and then they figure they need to cut back a bit the next year to avoid overbuilding. If you graphed permit activity, it would look something like a curve. When you have a big year, it backs off the next year, and then goes up the following year."
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