Market Conditions and Trends in Metro Denver, Colorado
Welcome to Apartment Perspective. In addition to JRES analysis of vacancy, demand and rental rate trends, Apartment Perspective includes a survey of all apartment projects under construction and proposed in metro Denver, and all communities started and completed during the 1st quarter. Apartment demand trends based on employment growth are compared with supply trends to provide an assessment of apartment market conditions over the foreseeable future.
The Denver area apartment market is still very active. While the strong local economy has created healthy demand for apartments, supply is becoming perhaps more than plentiful. At the end of the 1st quarter of 2018 over 27,000 units are under construction and another nearly 26,000 units are proposed. During 2017 apartment building permits were issued for 11,902 units and 13,341 units were completed. To put the volume of construction in perspective, in the current era the number of apartment building permits first began to consistently exceed 10,000 in 2013. The last time the Denver metro apartment market experienced a similar surge was in 1970-1973 when apartment unit building permits averaged 16,674 per year and peaked in 1972 at 24,928 units.
The Denver area is an attractive market for apartment developers, lenders, investors and renters. The metro area benefits from a vibrant economy, attractive natural and built environments and a welcoming attitude towards newcomers. These factors combine to generate strong apartment demand, development, investment.
Developers continue to plan and build new apartments in metro Denver at a vigorous pace. Until recently, rental rates were increasing due to strong demand, but the amount of new apartment construction coming onto the market is causing conditions to soften. Increased incentives and concessions are offered to attract and retain residents, especially in newly completed projects and those in the upper rental rate range.
Over the long term Denver remains an appealing market for apartment investment but it is important to be cautious since market conditions will likely continue to deteriorate in 2018 as more new units come onto the market, especially during the second half of the year.
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