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Denver Multifamily Market Report – October 2023

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Denver Multifamily Market Report – October 2023

Picture of Chris Nebenzahl

Chris Nebenzahl

Denver Apartment Market Grows Slowly, And In This Market Slow Growth Wins

Denver apartment fundamentals are holding firm and growing slowly as we near the end of 2023. However, in this market growth of any kind is good growth, as most markets are experiencing declining fundamentals. Annual rent growth remains positive in the Mile High City and occupancy losses have been some of the lightest in the nation. Leading indicators have been mostly flat on both a short- and long-term basis. Migration has slowed compared to the boom Denver saw in the mid to late-2010’s, but the supply pipeline has also started to soften leaving less pressure on new and existing lease ups. Pockets of heavy supply remain, especially in Rino, Golden Triangle, and parts of Aurora, but the days of intense new supply across the metro appear to be behind us. The employment market remains tight, which should serve as a strong driver of demand as we enter a new multifamily cycle.

Denver CO MSA Market Snapshot

Rent and Operating Trends

Rents are up in Denver over the past year, one of only a handful of markets that can boast rent growth. Occupancy has fallen but its losses are about half of the national average. Traffic and leasing have kept pace with the national average and are holding their own.

Traffic and Leasing

  • Denver apartments average 7.3 tours per property per week as of mid-October. The average property is signing 2.5 new leases each week.
  • Leading the metro is the Southeast Denver submarket. Properties are averaging nearly 10 tours per week. South Lakewood and South Aurora are also doing well, averaging roughly 9 tours per property each week.
  • Central and North Aurora however are struggling from a traffic perspective. The submarkets average only 4.7 and 5.1 tours per week respectively. There is steady new supply coming in these submarkets and low traffic is cause for concern for owners and operators, especially those with lease-ups.
  • The Southeast Denver and Far Southeast Denver submarkets are also leading the market in new leases signed. Jefferson County and Central Aurora are the lowest performing submarkets from a leasing perspective with around one new lease signed per week.
Traffic and New Leases Signed Denver, CO
Source: Radix

Occupancy and ATR

  • Market occupancy has fallen just 43 basis points in the past year, and while a decline in occupancy is never a good thing for apartment performance, its relative slide is one of the smallest in the country. Average occupancy across Denver is 94.19%.
  • Most submarkets have seen occupancy fall in the past 12 months; however, a handful of suburban submarkets have improved their occupancy rates. Despite low traffic and leasing, Jefferson County occupancy is up 2.5% in the past year and maintains the highest occupancy rate in the metro at 95.77%.
  • Douglas County and Far Southeast Denver, two suburban areas, also have occupancy rates above 95% and have seen a steady uptick in occupancy since last fall.
  • As new supply continues to deliver in the Golden Triangle and Rino neighborhoods, the Downtown submarket has been hit hard from an occupancy perspective. Occupancy is down 1.2% over the past year and sits at a market low of 92.91%. Central Denver is not far behind with an occupancy rate of 93.56%.
  • ATR is slightly better than the national average, and Denver apartments have 13 units available to rent in the next 60 days. Despite low traffic counts, the Aurora submarkets have some of the tightest ATR in the metro.
Occupancy Rate Denver, CO
Source: Radix

Net Effective Rent and Concessions

  • Denver net effective rents are up 50 basis points in the last 12 months and the average rent is $1,979.
  • While growth remains positive at the market level, the results are widely mixed at the submarket level.
  • Central Aurora rents are down 6.6% in the past 12 months, followed by Central Denver and Downtown Denver. The two urban submarkets have seen NER drop 4.6% and 2.7% respectively.
  • The suburbs are far outpacing the urban pockets of Denver as Westminster, South Lakewood and Littleton rents are growing the fastest in the metro.
  • Concessions have increased modestly, but again, at a better pace than the national average. Across the metro, concessions have increased 32% in the past year, compared to 56% nationwide.
  • The highest concessions are in Central Denver, where the average monthly unit concession is $91. As new supply continues to deliver along Speer Blvd and in the Golden Triangle, these concessions are likely to stick around.
NER and YOY NER Denver, CO
Source: Radix

Employment Trends 

  • The employment market in Denver is tight, with unemployment at 3.6%, however job growth has slowed down. Recent months have seen modest new job formations under 1,000 and a few months have even dipped negative.
  • Denver’s unemployment rate is below the national average, but has been rising in recent months, after bottoming out in April at 2.4%.
  • Denver once boasted far cheaper cost of living and ease of doing business, but rising home values and rents along with a more restrictive local government has slowed the pace of growth across the metro.
  • The Mile High City is still attracting interest from corporate relocations, but the job growth is softer than a few years ago.
New Job Formations Denver, CO
Source: Bureau of Labor Statistics
Unemployment Rate Denver, CO
Source: Bureau of Labor Statistics

Construction Pipeline

  • The Denver construction pipeline remains well stocked; however, it has receded from recent highs in previous years. There are still more than 500 total projects in some stage of development, with more than 150 currently under construction.
  • Rino, Golden Triangle, and North Aurora have the heaviest concentration of new supply, and there are still a few deals being built along I-25 in Centennial. I expect lease up pressure to remain in these small pockets of the market, as the new supply eventually delivers and is absorbed.
  • Overall, the new supply pipeline is well balanced and lease ups are performing in line with national averages. Some lease up time frames are being extended given current market conditions, but major delays in absorption are uncommon.
Construction Pipeline Denver, CO
Source: BuildCentral

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Picture of Chris Nebenzahl
Chris Nebenzahl
Chris Nebenzahl is the Director of Economic Research at Radix, where he oversees all macroeconomic and multifamily market analysis. Chris has 15 years of multifamily experience in data analytics, research, asset management and acquisitions. Prior to his time in the multifamily industry Chris was a portfolio manager at Bank of New York, focusing in the government and commercial fixed income sectors.
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