In the third quarter of 2002 the rate was 9.4%, according to the report that was authored by Gordon Von Stroh, a business professor at the Daniels School of Business at the University of Denver.

In the fourth quarter of 2001 it was at 8.7%.

"The steep climb to 11.7% was due to supply and demand," says Steve Rahe, an apartment broker with CB Richard Ellis. "Supply grew by 9,120 unit - too much. Demand dropped dramatically in 2002. The low number of apartment units absorbed is mainly due to the many job cutbacks."

Von Stroh notes that the vacancy rate for the fourth quarter of 2000 was 4.7%, which makes last year's tally the largest two-year increase in Denver's history.

"Things have become much more competitive for property owners," he said.

The average rental rate, meanwhile, increased to $813.92 for the fourth quarter of last year, up from $807.71 from the third quarter of 2002, an increase of$6.21. For the fourth quarter of 2001 it was at $821.61. Average rents do not include the cost of rental discounts and concessions, bad debts, delinquencies and models.

Eric Tupler of LJ Melody Co., says the market continued to soften for four reasons: stagnant job growth, historically low interest rates that makes homeownership more affordable, and the continued addition of new units.

"However, an increase in interest rates and no additional new supply will not result in a full recovery," he warns. "Job creation will be required to backfill the existing vacant supply and bring the market back to equilibrium."