Denver’s multifamily development pipeline falls to five-year low

Changes in multifamily operating conditions have been mixed over the past year, with shorter-term trends appearing more favorable. Renter demand has remained strong with around 13,300 units absorbed since the start of the year, outpacing the number of units that have come online. While this absorption helped tighten local vacancy, rents are still down from one year ago. A 3.6% decline in rents during the fourth quarter of last year continues to weigh on year-over-year rent comparisons. During the middle part of this year, rents generally stabilized, although there are still softening conditions among Class C properties, where rents have retreated by 5.0% over the past 12 months. Outside of the lower tier, Class A rents have increased 3.1%, and Class B rents are up 0.9% since the first quarter.

Multifamily sales activity has been light in Denver this year, with the year-to-date transaction count down nearly 20% from the same point last year, and down almost 40% from the trailing five-year average for the same period. Despite the decline in the number of properties that are changing hands, pricing has stabilized in recent months. The current median sale price in 2025 of $281,400 per unit is nearly identical to the figure from last year. Prices remain 18% below the market peak in 2021, which was influenced by a significant share of Class A properties trading that year. In 2021, Class A properties accounted for 41% of all multifamily sales, compared with just 14% in 2025. Pricing on Class A and Class B assets increased this year, while Class C pricing continues to trend downward, falling 7% from last year to a median sale price of $167,100 per unit.

Looking ahead

Shifts in multifamily operating conditions in Denver are expected to be modest in the fourth quarter. Vacancies are expected to end the year close to its current level, which would represent the first calendar-year improvement since 2021. Still, rents are expected to inch a bit lower to close the year, although the sharpest declines have likely already occurred and conditions have been mostly stable in recent periods. Supply-side pressures are expected to ease. The number of units completed in 2025 is forecast to fall 34% from last year, and the construction pipeline is expected to continue tapering through 2026. With absorption remaining strong and deliveries declining from the highs of 2024 and 2025, there should be increased opportunities for rent growth in 2026 and 2027.

Multifamily sales activity in Denver is projected to maintain current trends through the end of the year, with the number of transactions remaining modest and the mix continuing to be weighted toward mid-tier properties. Looking beyond 2025, improving operating conditions in 2026 should help boost investor activity during the next 12 to 24 months. This trend is likely to be particularly pronounced in Class A properties, which will benefit from slowing supply growth and may begin to capture a greater share of total transactions, as they did in recent years. Class C assets may continue to lag in their share of the transaction mix during the next year. Even so, recent decreases in in Class C rents may stall, and by late 2026 or early 2027, interest in these lower-tier properties could increase as market conditions stabilize.

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