Apartment Building Permits Fall

For the entire year, only 1,858 permits were pulled, a 54.52% drop from the 4,085 permits issued in 2002. Indeed, last year's tally marked the fewest numbers of permits issued in the metro area since 1992, when 1,764 permits were issued.

The drop in permit activity is good news for the metro area, which is suffering from a lackluster economy and a lack of demand, says CB Richard Ellis apartment broker Steve Rahe. One reason that the market is suffering is because developers Amendment 24 in 2000, which would have changed the state constitution and was considered anti-growth.

Fearing caps on the number of units they could build if the measure passed, they pulled 9,090 permits in 2000 and 9,116 permits in 2001, he notes. "That was not a normal reaction to supply and demand," Rahe tells GlobeSt.com. "They pulled far more permits than they normally would have."

However, the measure was overwhelmingly defeated. And the market was saddled with overbuilding, just as the economy entered into a recession. But now most signs point to the beginning of a recovery, Rahe says.

Indeed, if the metro area creates 20,000 jobs next year and 3,000 new units open, the apartment vacancy rate will drop from 10.9% to 10.1%, he says. "I've heard two economists say that we will create more than 20,000 new jobs, but I want to be conservative," Rahe tells GlobeSt.com.

The HBA report also shows that developers pulled 3,755 permits for condominiums, town homes and duplexes in 2003, 15.15% fewer than the 4,425 in 2002. In December, they pulled 300 condo permits, 14.78% fewer than the 352 in 2002.

And for single-family, detached homes, builders took out 1,806 permits last year, the fewest number since the 9,374 issued in 1992. In December, however, builders pulled 1,137 permits, 10.06% more than the 1,033 in December 2002.