Denver Multifamily Market Report

Market Overview

Demand for the Denver multifamily market has returned, although the market is facing one of the most active pipelines in the country. Denver consistently ranks among the top metros nationally in terms of construction activity and is one of the most heavily supplied submarkets in the nation. Construction activity is elevated, but new projects have slowed. This downshift should allow for supply-side pressures to balance out by 2025.

 

Denver Multifamily by the Numbers

• Delivered units: 16,384
• Absorption units: 9,648
• Vacancy rate: 9.5%
• Asking rent growth: 0.6%
• Sales volume: $3B

Past 12 months | Source: CoStar Group

 

Rents, Vacancy & Construction

In Denver, the multifamily market is experiencing aggressive supply with 20,000 units under construction, leading to increased vacancy at 9.4% as of Q2 2024. Despite this, demand shows encouraging improvement, with 850 units absorbed in the past year. The average rent in Denver has reached $1,880 monthly, rising 0.6% in the last year. In turn, lower- to middle-income households are seeking alternative living situations due to the high cost of living, which continues to suppress demand. Construction faces challenges due to lengthy approval processes and financing difficulties, particularly in downtown Denver, where over 5,900 units are underway.

 

Sales

Multifamily investment volume looks stable at around $900 million per quarter—still under pre-pandemic levels. Elevated interest rates and a pullback in rent growth put upward pressure on yields, making deals more challenging. However, in the last year, downtown Denver led multifamily transactions within the region boasting $865 million in trading. This past year, investors targeted Cherry Creek and the River North area, which command some of the highest rents across the market. The buyer pool has shifted, with private investors now targeting lower-priced assets, within the Class C tier. In the past year, 70% of transactions involved private investors, with about 75% of transactions valued under $5 million.