MARKET SNAPSHOT
Heightened development activity has been a defining characteristic of the Denver multifamily market in recent years. As of the most recent quarter, approximately 13,800 units are under construction—a significant decline from the peak in early 2023, when nearly 32,000 units were underway. While construction continues, the pace of new project starts has slowed dramatically as developers face increasing challenges in securing financing.
Industry experts point to significant obstacles to building in Denver today. Local issues, such as prolonged delays in the permitting process and the introduction of the Affordable Housing Policy, have added layers of complexity. This policy, enacted in mid-2022, mandates that developers of projects with 10 or more units allocate 8% to 15% of units as affordable housing. Many developers rushed to submit plans before the policy took effect, but broader economic challenges have compounded these local issues. Rising construction and labor costs have further strained project feasibility, making new developments increasingly difficult to execute. As a result, construction starts dropped by nearly 50% in 2024, with unit completions expected to decline by nearly the same margin in 2025. Although the current construction inventory remains substantial, it has fallen below the 10-year average for the first time since the onset of the pandemic and is expected to decline further due to the sharp reduction in new construction starts.
While demand improved in 2024, exceeding the 10-year historical average, the market experienced one of its largest inventory expansions in recent memory, with over 18,000 units coming online. Since mid-2021—excluding Q2 2022—new supply has consistently outpaced demand, placing downward pressure on occupancy rates. Submarkets such as Downtown and East Denver, which saw the highest number of new deliveries last year, also led in net absorption. However, despite strong leasing activity, it was not enough to offset the influx of new supply, resulting in a decline of over 100 basis points in occupancy to 92.4% by year-end.
Looking ahead, supply pressures are expected to ease by late 2025 as construction activity slows and demand remains steady. This anticipated slowdown in new deliveries should help stabilize occupancy levels and support a gradual recovery in occupancies moving into 2026.
Denver’s historic surge in new supply continues to exert downward pressure on rent growth, with average annual declines recorded over the past two quarters—the first such trend since the height of the pandemic. Over the past year, rents have fallen by 3.1%, placing Denver near the bottom of major U.S. markets and trailing the national average growth rate of 1.0%. However, signs of stabilization are emerging as construction starts have dropped to their lowest level in a decade. While rent growth is expected to remain stagnant for most of 2025, the slowing pace of completions is anticipated to support a modest recovery, with rents projected to rise by 0.8% by year-end. A more substantial rebound is forecasted for 2026, with rent growth expected to range between 2% and 3%.
Despite recent declines, Denver remains one of the most expensive non-coastal major markets, with an average monthly rent of $1,791, prompting many renters to seek more affordable options. Suburban submarkets with limited new supply have demonstrated resilience and are expected to continue outperforming the broader market in 2025. Areas such as South Jefferson County, Clear Creek County, and Northeast Adams County are projected to achieve annual rent growth exceeding 2.0% this year, outpacing the market-wide average and highlighting the sustained demand for affordability-driven housing options.
12-month period ending November 2024
The Denver multifamily market is set to experience continued contraction through much of 2025, with a modest recovery anticipated by year’s end. Development activity is slowing significantly, with multifamily starts declining by over 50% in 2024 and new completions expected to follow suit. Despite these supply-side adjustments, strong in-migration continue to drive renter demand, with net absorption projected to surpass 8,300 units in 2025. Economic growth further bolsters the market’s outlook, as Denver’s employment base is forecasted to expand by 5% by 2029.
Rent growth, which has been under pressure due to Denver’s historic supply surge, is expected to turn positive in the final quarter of 2025, with average effective rents forecasted to rise by 0.8%, supported by an improving supply-demand balance. Suburban submarkets with limited construction activity, such as South Jefferson County, Clear Creek County, and Northeast Adams County, are projected to outperform the broader market, achieving above-average rent growth of at least 2.0%. Additionally, 14 of Denver’s 20 submarkets are expected to post modest rent gains by the end of 2025.
Overall, the Denver multifamily market is on track for gradual stabilization, driven by a shrinking construction pipeline, resilient renter demand, and an improving rental environment. These factors are expected to support occupancy improvements and pave the way for more sustained rent growth in 2026.
