$1,858 2Q 2024
0.3%
94.0% 2Q 2024
0 BASIS POINTS
4,156 [YTD: 6,334]
5,286 [YTD: 8,993]
In 2Q 2024, Denver’s apartment market maintained an occupancy rate of 94.0% for stabilized assets, despite a significant influx of new unit deliveries. This rate also surpassed the U.S. average occupancy rate of 92.7% during the same period.
The market’s active development scene has prompted owners and operators to prioritize maintaining occupancy over pushing rents upwards, thereby moderating rent increases.
In the second quarter of 2024, new construction activity in the Denver market was widespread, with a projected expansion of 6.7% in the upcoming quarters due to 20,310 units currently under construction.
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
During the second quarter of 2024, Denver’s apartment market saw a significant surge in demand, with a total of 4,156 units absorbed, far surpassing typical levels for this period. All submarkets, except South Jefferson County, experienced positive net absorption. Downtown Denver stood out as a hub of renter activity, with 797 units absorbed, underscoring its ongoing attractiveness to residents.
In the second quarter of 2024, new construction activity in the Denver market was widespread, with a projected expansion of 6.7% in the upcoming quarters due to 20,310 units currently under construction. Downtown Denver remains the epicenter of development, hosting 5,919 units, which accounts for nearly 30% of all active developments.
In 2Q 2024, Denver’s apartment market maintained a strong occupancy rate of 94.0%, even amidst a surge in new unit deliveries. Performance varied across submarkets, with Clear Creek County and Downtown Denver showing exceptional results, where occupancy rates increased annually by 2.8% and 1.0%, respectively. Conversely, South Douglas County experienced a 1.1% decline in occupancy. Overall, the market exhibits a healthy balance, with the majority of submarkets outperforming the average occupancy rate.
Although growth continues, the rate of increase has decelerated from previous quarters in the Denver multifamily market. In 2Q 2024, average effective rents rose modestly by 0.3% year-over-year, reaching $1,858 per month. The market’s active development scene has prompted owners and operators to prioritize maintaining occupancy over pushing rents upwards, thereby moderating rent increases. Most submarkets have shown positive rent performance, notably Aurora, which experienced a 2.5% increase. Looking ahead, rents in Denver are expected to continue rising but at a more moderate pace. A projected annual increase of 1.2% by year-end suggests a balanced interaction between supply and demand within the market.
Average Monthly Mortgage Payment
Average Monthly Rent
Denver’s multifamily market saw a notable uptick in transaction activity of individual assets in the first half of 2024. Despite a challenging economic environment characterized by elevated interest rates, sales volume surged by 47% year-over-year, reaching $919 million. This increase in activity sharply contrasts with the performance of other markets affected by higher borrowing costs. The market also recorded 25 deals, which, while below recent peaks, aligns with the historical average.
Private investors have long dominated the Denver multifamily market, a trend that continued into 2024. Additionally, asset pricing appreciated by 3.9% over the past year, bringing the average price per unit to $314,000. This robust performance underscores Denver’s enduring appeal as a destination for multifamily investments.
*Most Active Buyers and Sellers are based on the sale volume of apartment units.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
2.1%
|
-0.9%
|
-1.0%
|
-0.4%
|
0.4%
|
-0.1%
|
-0.2%
|
The under-35 age group has become the fastest-growing segment of the rental market, expanding by 2.1% between 2019 and 2022. This trend underscores a growing demand for rental housing that caters to the preferences and lifestyles of younger individuals. Communities located near lifestyle amenities, entertainment venues, and employment hubs are particularly appealing to this demographic, reflecting their desire for convenience and vibrant, urban living.
Denver’s apartment market is currently navigating a delicate balance between strong underlying demand and a significant influx of new units. Anchored by a thriving job market and a business-friendly climate, the metro continues to attract both residents and businesses. However, the immediate impact of an extensive construction boom is evident, with a notable 20,310 units currently under construction exerting downward pressure on occupancy rates. This cyclical challenge is temporarily overshadowing the city’s robust fundamentals, which include a highly educated workforce, a globally connected airport, and a low-tax environment.
Despite these short-term challenges, Denver’s long-term prospects remain promising. Significant development projects, such as the ONEOK $480 million expansion and the redevelopment of the National Western Center, are expected to further stimulate the local economy and drive housing demand. This ensures that while current market conditions may be challenging, Denver’s economic and residential landscapes are poised for future growth.
