Demand remains sluggish because of the economy, but at least the supply isn't growing like it was a few years ago.
"Residential permits fell to a 10-year low in 2003, due in part to the lowest level of apartment permit activity since 1991,"the report notes. "Buttressed by modest employment growth and relatively uninhibited by single-family competition, Denver's apartment market will see a sizable reduction in its supply/demand imbalance over the next two years. However, it will be several years before multifamily vacancy approaches equilibrium."
New units reaching lease-up stage will total about a total of 2,500 units in 2004 and 2005, according to Hendricks.
With generous concessions and attractive rental rates, "absorption will return to a more sustainable level this year of approximately 5,00 units," the report notes.
Hendricks predicts that by year end, the overall vacancy rate will have fallen about a point to 9.8% and to the mid-8% range in 2005.
"Rent growth will remain flat this year as the use of concessions wanes," according to the report. "A return to positive rent growth is forecast for 2005, with asking rents advancing an average 2% to 3% for the year."
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