Q1 Denver Multifamily Market Report

Market Overview

The Denver multifamily market is managing to stabilize demand levels in the face of one of the most active multifamily pipelines in the country. Class-A apartments continue to attract renters who can absorb higher costs, driving demand in the larger market encompassing various types of rental properties. The Denver metro region boasts a steadily growing population and a diverse economy mainly driven by tech. The region’s job market recovered swiftly from the pandemic, with a low unemployment rate of 3.4%. Denver’s economic fundamentals remain strong, supporting the multifamily market in the long term. Despite challenges in construction, Denver’s market participants are optimistic about future rent growth as supply-side pressure plans to ease by 2025. Landlords and property managers are focusing on renewals, capitalizing on higher renewal rates amidst a competitive environment.

Highlights

• Denver has one of the most active construction pipelines in the country, and demand remains robust.
• The Denver multifamily market participants are optimistic about future rent growth as supply-side pressure plans to ease by 2025.
• Absorption rates align with pre-pandemic levels, showing signs of continued stability.
• Concessions are increasing to stimulate demand, especially in high-cost and densely supplied regions of Denver, with a focus on Downtown where around a quarter of properties were providing incentives in December 2023.

Rents | Vacancy | Construction

Demand appears to be stabilizing in Denver, with absorption in the past three quarters on pace with pre-pandemic levels. However, the market faces significant supply with 27,000 units under construction. Downtown Denver continues to be heavily supplied, with a concentration of the construction pipeline. The vacancy rate has risen by 300 basis points to 8.9% in Q1 2024. Despite this, Class-B apartments are experiencing a rebound in demand. Average rent levels in Denver have reached $1,840 per month, with an increase of 0.8% over the past year. Lower- to middle-income households are seeking alternatives due to high living costs, resulting in suppressed demand in certain segments. Concession activity is increasing in supply-heavy areas, with incentives offered to drive demand. Rent growth is projected to average 1.9% through 2024.

Sales

Despite a decline in investment volume to $2.7 billion in 2023, the market has shown signs of positive activity in Q1 2024, with prominent transactions taking place. The market has witnessed adjustments in pricing and yields in response to elevated interest rates and a pullback in rent growth. Denver’s multifamily investment landscape continues to attract investors, particularly in desirable submarkets like Downtown and Cherry Creek. Private investors remain prominent players in the market, targeting assets across various price points. Approximately 80% of transactions involved private buyers in the past year, reflecting sustained interest in multifamily properties.

Denver By The Numbers | Last 12 Months | Source: CoStar Group

• Sales Volume: $3.2B
• Vacancy Rate: 8.9%
• Units Delivered: 13,392
• Rent Growth: 0.8%

To read the End of Year Multifamily Market Report for Denver, click here.