Multifamily Development Report | Denver, CO
Denver Construction
During Q4 2023, the Denver multifamily construction pipeline exhibited 42,900 units under construction alongside 65,700 units in various planning stages. Both figures experienced a reduction compared to the previous quarter, marking a combined decrease of 6,100 units. Anticipated further decreases are on the horizon, with projections set to be unveiled in mid-April upon the release of first-quarter results.
While vacancy rates have been on a gradual ascent over the past two years, they persist below the 6% mark, with rents maintaining marginal annual increments. Notably, numerous key markets nationwide, including Colorado Springs, have witnessed annual rent declines.
The construction pipeline’s contraction coincides with absorption rates nearly keeping pace with the influx of new apartment deliveries. Concessions have marginally decreased and remain below pre-pandemic levels. Encouragingly, investor interest, as gauged by sales volume, appears to be rebounding from the previous year’s lows.
This landscape suggests a nuanced yet resilient real estate market, navigating fluctuations with measured stability and poised for potential growth amid evolving economic conditions.
Denver Absorption
When looking at properties that contain 50 units or more, there has been a noteworthy uptick in quarterly absorption. The latest figures reveal a surge of 805 units over the previous quarter, bringing the total to 1,910 units within conventionally operated properties. This increase slightly surpasses the absorption rate recorded a year ago, which stood at 1,821 apartments during the same quarterly period. Consequently, the trailing 12-month absorption total has also seen a modest rise, climbing from 7,476 to 7,565 units.
Of notable mention is the Central Business District (CBD), experiencing the most significant gain with an impressive 590 units added in the quarter and 1,654 units over the past year. Meanwhile, near the Denver International Airport (DIA), there was an annual increase of 905 units.
When taking into consideration all apartment types (tax credit & student), there has been a quarterly surge of 2,412 occupied units and a substantial total annual absorption of 9,228 units. These statistics reflect a promising trend in the real estate market, indicating robust activity and demand across various segments.
