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DENVER-Permits were pulled for only 36 multifamily rental units during February in the metropolitan area, which encompasses a total of 34 different municipalities, shows the most recent Home Builders Association of Metropolitan Denver. That represents an 83.42% drop from the 217 permits pulled in February 2003, according to the HBA.

In February, all of the units were planned in Boulder. A year earlier, 196 permits were pulled in Aurora and 21 permits were pulled in Denver. In the first two months of the year, developers pulled 271 permits, a 3.22% drop from the first two months of 2003.

Steve Rahe, an apartment broker with CB Richard Ellis, says based on the first two months of the year, there will be only 1,625 new units brought to the market this year. However, he tells GlobeSt.com he expects more units than that to be built this year. Still, the market doesn’t need to fear overbuilding, because lenders won’t let them, Rahe notes.

And if interest rates continue to rise, it’s likely that the exodus from apartments to owner-occupied homes will slow. Those factors, with some modest job gains, should bring the apartment vacancy rate down to just below 10%, from the current vacancy rate of 10.5%, Rahe predicts.

Meanwhile, permits for condominiums and townhomes fell by 38.84% in February to 291 units from 405 a year ago. In the first two months of the year, condo and townhome permit activity fell by 26.37% to 405 from 550 in the first two months of last year. Permits for single-family homes showed less of a dip, dropping by 15.84% in February to 661 from 1,023. And in the first two months of the year, the number of home permits fell by 18.68% to 1,672 from 2,056.

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