The marketplace needs to absorb the large number of units added to it in recent years, as well as about 8,000 units expected to come on line this year, the report notes.
The overall vacancy rate will rise to 13% this year, before receding in 2004, Hendricks & Partners predicts.
Meanwhile, the average market rental rate will continue to decline, before improving in 2004, the report says.
The Iraq war is curtailing business expansion, and while a short war could benefit the metro area's oil and gas industries, "the battered telecommunications sector will be further dampened by a prolonged conflict," the report notes.
However, the long-term outlook remains positive for Denver, according to the forecast.
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