This newsletter is a compilation of news and information regarding the rental markets in Boulder and Broomfield counties and the economic status of and outlook for the area. The sources for the data include local and regional news media, association publications and seminars, and information gathered from contacts in the property management and real estate fields. We make every effort to cite all of our sources. Should we miss one please let us know so that we can correct the omission.

Where are we?

What will rent have to be to stay competitive? There is no one answer for everyone. Each property is unique and there are differences (sometimes subtle!) in different geographic areas. This is true even within each community. We will be working with each of our clients to determine how their property should be priced in this market. Please contact us if you have specific questions or want more information.

Newsletter update

As many of you know, Kathy Foster-Patton has joined Personalized Management Services as a broker/property manager. We will be working closely together to issue this newsletter on a regular, monthly basis. From this month forward, the newsletter will be issued during the first week of the month.

Send us your questions and referrals

We are actively working to grow the business and to add new properties to our management inventory. If you know someone that would be interested in our services please send them our way. We pay referral fees to anyone referring us business!

That wraps things up for this month. Again, if you do not want to receive these messages please call or email us and we will take you off this mailing list.

The Boulder County Business Report has just issued its analysis of the Boulder County Leading Economic Indicators compiling the last quarter of 2001 and all four quarters of 2002. The statistics confirm the depressed state of the local economy, with some indicators even more bleak than expected. Boulder County unemployment has settled downward to 5.0% at the end of December 2002, as compared with a high of 5.6% at the end of March 2002. At the end of 2002, Boulder County retail sales were 11% less than for 2001, much of which was due to the establishment of Broomfield County. The Boulder County stock index ended the year at a level 23% lower than the previous year. Even more telling, the total Boulder County residential building permits in 2002 declined 39% as compared to the previous year. Single Family Residential Building Permits decreased by 29% while non-residential building permits fell a whopping 47% compared to 2001. Overall the indications are that the economy will remain in its depressed state until at least the second half of the year. (Boulder County Business Report, April 4-17, 2003).

As you can guess, the real estate market continues to be a buyer's market, with Denver home prices in March recording their first year-to-year drop since 1990. The suburban home market is especially vulnerable to price declines, as opposed to homes in the urban center of an area. (Denver Post, Mar. 2, 2003)

Denver ranks third in the nation in high-tech pay, second only to Silicon Valley and New York in salaries. This is small compensation for the loss of more than 13,000 high tech jobs in the Denver area that have been eliminated since January 2002. (Denver Post, Mar.) In addition, the average wages for Boulder County workers has decreased, partly due to the reduction/elimination of stock options and incentives. (Boulder County Business Report, April 4-17, 2003)

Colorado retail sales dropped from last year and continue to trail the national average in 2002. The trend would indicate that Colorado consumers are buying only necessities and sale items.

The most dramatic statistics we have seen lately are in the rental marketplace. Our tracking of available rental units shows a high volatility. At one point in April there were almost 300% more available rentals on the market compared to April 2002. This appeared to be a bubble and the numbers for May were better. The numbers are still still up over 200% from this time last year.

This vacancy level is the result of a confluence of factors: low mortgage rates are enticing tenants to buy homes instead of renting; some renters who have lost their jobs have departed the area in search of new work; whole companies have closed divisions as part of cost-cutting measures and transferred workers to other parts of the nation. As a result, the competition for renters has become increasingly keen and rents are down. For a time, landlords were offering a wide variety of incentives to potential tenants, such as free rent, new televisions, DVD players, ski lift tickets, etc. (Boulder Daily Camera, March 16, 2003). Recently this trend has changed as many landlords and leasing agents have bypassed these incentives in favor of further reducing rents. Many existing tenants are now able to renegotiate their leases with reduced rent as landlords work to avoid losing rent.

Credit, criminal background, employment and reference checks have become increasingly important as tenants move within the market. This is a very valuable indicator of the reliability of a potential tenant as some tenants move without notice to gain reductions in rents.

Bottom line: it is a very challenging market but there are good, qualified renters out looking right now. They are becoming increasingly savvy about rent levels and price is the most important factor in avoiding vacancies.

The situation with commercial leased space is just as challenging, as can be seen in the following chart.

Boulder City and County - Commercial Vacancy Rates

Retail Space 10-12%

Office Space 20%

Industrial/Warehouse Space 10-12%

Broomfield County

Retail Space 3.5%

Office Space 23.7%

Industrial/Warehouse Space 13.8%

(Boulder County Business Report, April 4-17, 2003)

New Federal regulations will go into effect July 1, 2005 requiring newly designed, safer water heaters.

These water heaters will be more expensive than the existing types, and require regular maintenance activities to ensure continued operations.

The existing water heaters will no longer be manufactured after July 1 of this year.

If you have an old water heater, you may consider replacing it while the less expensive versions are still available.

("Dwellings," BCAA, May 2003)

The City of Boulder is reviewing a request from the Boulder County Apartment Association to re-evaluate the interest requirements on security deposits from tenants.

The BCAA is working on a formal proposal which recommends changing the current rule which requires payment of 5.5% interest.

The proposal would set an interest requirement yearly based upon the fixed rate of interest on the first working day of the year.

This is a major issue with the BCAA and they are working hard to make the interest payment more equitable to water would be earned in a bank account.

The City of Boulder has passed a new law that requires all property owners of rental property on The Hill and in the Goss Grove area to contract with their trash haulers for six day per week trash service. The city will be sending out notification about the new law and owners must sign up before the May 7, 2003 start date. The two trash haulers willing to provide the six-day service are Western Disposal and Town & Country. They will pick up once per day during the two heavy move-out periods of the year: May 7-May 19 and August 1-September 2. No trash summonses for the areas around and including the dumpster will be issued by the city for any property that is signed up for the Six Day Review. The owner is still responsible for cleaning up litter and trash that is elsewhere on the property. (?Dwellings,? BCAA, May 2003)