Apartment Market Conditions and Trends
in Metro Denver, Colorado
3rd Quarter – 2019
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 2nd 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 continues to be perhaps more than plentiful. At the end of the 3rd quarter of 2019 over 21,600 units were under construction and another 33,000 units were proposed. During 2018 apartment building permits were issued for 13,828 units and 12,558 units were completed. During 2017 apartment building permits were issued for 11,902 units and 9,792 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. In recent years 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 may deteriorate in 2019 and 2020 as more new units come onto the market. Attention should also be given to trends in employment, which contributes to apartment demand.
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