H&P is forecasting that new apartment deliveries will slowto 2,300 units in 2008—from 2,725 units in 2007—and thatapproximately 1,200 units will be absorbed. In 2009, H&P isexpecting no new significant apartment deliveries and absorptionwill total 1,600 units. In 2007, a total of 319 units wereabsorbed. In the first quarter of 2008, net move-outs totaled 1,678units, according to H&P.

Apartment properties will continue to face significantcompetition in 2008 from condo rentals and single-family rentals,states the report. The average apartment vacancy rate will remainelevated and is expected to settle at 7.5% by year-end, while in2009, stronger employment growth and an absence of new apartmentdeliveries will help drive the average vacancy rate down to 6.3%.Average rent growth will range from 2.0% to 2.5% over the forecastperiod, according to H&P.

On the investment front, only five or six apartment propertiesover 100 units changed hands in the first quarter, even as 29properties are listed for sale, according to H&P. Last year 12plus-100-unit properties changed hands in the first quarter,according to research by local apartment broker MichaelBelnick.