"The San Jose apartment market is nearing the bottom," says GaryR. Lucas, senior vice president and regional manager of the firm'sPalo Alto office. "Vacancy improved early in the year, due toheightened demand for apartments. Job creation is essential for therecovery of the local apartment market and over the next year; theresurgence of employment growth is forecast to generate enoughdemand to keep market fundamentals moving towardsstabilization."

After falling by 4.3%, or 39,000 jobs, from mid-2002 tomid-2003, employment is forecast to grow by 0.5% from mid-2003through mid-2004. While that works out to a net gain of 4,600 newjobs, a few sectors will continue to contract includingconstruction, which is forecast to shrink by 1,600 jobs over thenext year.

In support of the recovery, developers abandoned projects indroves and delivered just 800 units in 2002, according to thereport. That figure is expected to rise to 1,150 units in 2003 andthen fall back to 950 in 2004. The North Park complex in San Joseis home to 43% of the units slated for completion in 2003.