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. It is issued during the first week of the month. 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.

New staff addition

On May 1st we added Sean Caulfield to our property management staff in the Boulder office. Sean is in training and is currently studying for his Colorado Real Estate Broker License. Initially, he will focus on the student segment of our business while he works to grow his portfolio.

National Economy

Sale of new homes set a record in April for the year. Sales were up 4.9% for the highest level since December 2005 (Daily Camera 5/25/06). However, the number of unsold homes set an all time record last month. Most analysts see this as further depressing sales in the future.

Rising interest rates and falling demand is leading many developers to the lowest confidence level in almost 11 years (Denver Post 5/16/06). In addition, a record number of new homes on the market is dropping overall sales and reducing profits.

The rental market in the West is improving. It is being driven by the increases in interest rates and more jobs. According to the Daily Camera (4/20/06) the average rent in 20 western markets is up about 4%. the biggest increases were along the West Coast markets. In addition, landlords are seeing some improvements as interest rates climb and fewer people can afford to buy homes.

Regional Economy

Colorado is second among all states for foreclosures and Denver ranks fifth among the 100 largest national metro areas (Denver Post 5/23/06). this is just in the first quarter 2006. In March and April Colorado ranked first. There were one out of every 105 homes in foreclosure. Many analysts blame this on the high use of adjustable rate mortgages and the increasing interest rates.

On a very positive note, the unemployment rate for Boulder and Broomfield counties continues to drop due to more jobs (Daily Camera (5/20/2006). while the overall Colorado rate is down about 4.3% the rates are down to about 3.6% and 4.3% respectively. The increase in jobs appears to be in the higher paying professional and business services areas.

However, while the Denver rental market is improving, rents are only up only about 0.7%.

According to Chris Boston (Daily Camera 4/10/2006) the overall leasing activity in the NW (Boulder, Broomfield, Louisville, Lafayette and Longmont) was about 331,000 square feet with a net absorption (total space under lease) was down about 78,000 sq. ft. The local commercial management companies see increasing tenant activity even though the vacancy rates are slightly up

Rents on the rise the market in the West is improving. It is being driven by the increases in interest rates and more jobs. According to the Daily Camera (4/20/06) the average rent in 20 western markets is up about 4%. the biggest increases were along the West Coast markets. However, while the Denver market is improving, rents are only up only about 0.7%. In addition, landlords are seeing some improvements as interest rates climb and fewer people can afford to buy homes.

Vacancies are going down In the Denver Post (4/28/06) the apartment vacancy rates for the first quarter were the lowest in 5 years across most of the Metro Denver counties. The overall vacancy rate dropped to 7.4% the fist quarter from 7.9% the 4th quarter 2005. The last time the vacancy rates dropped below 7% was in 3qtr 2001.

The vacancy rate in the Boulder/Broomfield counties was actually down to 6.9%, the lowest across 6 county markets. Most analysts still have concerns about the very high foreclosure rates and that developers are still bringing more units to the market. However, many developers are holding off due to the high costs of construction as a result of last year's hurricanes and increasing land prices.

Commentary

We are seeing an increase from last year in the number of tenants looking for properties. While it is still a renter's market overall, this does show a good trend for landlords. Some rents, particularly in the Boulder area, are up slightly. However, many property managers are holding rents static to lock in tenants before the typical July/August rush. Overall, we see the market continuing to improve--just not as fast as any of us would like.

Student market

The student market is still changing. We are seeing a lot more vacancies even this late in the pre-leasing season. Many tenants are still looking. With the number of available units they can afford to shop for deals. A number of properties have lowered rents in order to lock in tenants before we get to the slower summer season. With the University looking at making their Bear Creek Apartments more attractive we may still see more downward pressure on this segment of the rental market.

Environmental Enforcement

In an earlier newsletter we let you know the City is cracking down on rental violations. We also found out that the first thing Environmental Enforcement checks is the status of the rental license. If the license is not current the landlord/agent will receive a court summons and be subject to a $1000 fine.

Please note: we are finding that the City notices of rental license expirations are not always getting to the landlords or agents. You should check the City website to make sure your properties are current. The City will not accept the defense that you did not receive the notice.

What is a competitive rent for your property? There is no one answer for everyone. 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.

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.