While the occupancy rate is falling, it is not as sharp as it was in the previous three quarters, the report notes.

Surprisingly, in view of steadily falling occupancy rates, average rents increased by $10 a month to $863.

The slight increase in the average was caused by the lease-up of new higher-priced units coming into the market, RealFacts says.

In the past year rents in the metro area have increased by just 1.6%, effectively a flat market.

Denver's dynamic economic and employment growth in recent years enabled the steady absorption of the roughly 9,000 new units that have been built each year, RealFacts points out.

This company notes that Hendricks & Partners estimates that maybe less than half that number will come onto the market but it is certain that unless the economy sees a rapid turnaround, absorption will be a problem.

Building permits for new multifamily units are still being sought, although not at the levels seen in previous years, the company notes.

But until the turnaround takes place, it is difficult to estimate how many of those units will ever be built.

A substantial number of condominiums are in the pipeline either as newly built or conversions and these will add to the occupancy pressure on for-rent units as they come on line, RealFacts warns.

The unemployment rate for February fell 0.1% providing a glimmer of hope of continued improvement.

''As usual the Denver CMSA will be an interesting market to watch,'' the report concludes.