Multifamily Investment Activity in Denver Gains Ground to Close 2024

After performing well during the first nine months of 2024, seasonal factors resulted in softening property fundamentals in the Denver multifamily market during the fourth quarter. Vacancy increases, rent declines, and a cooling pace of renter demand during the closing months of the year have been common in Denver during the past decade, but the recent downturn was more extreme than it has been in prior years. The seasonal trends were amplified by elevated levels of new inventory during 2024, with more than 19,800 units coming online during the course of the year. While an influx of new supply hit the market in 2024, not all submarkets moved in the same direction. The Central Business District, Denver Northeast, and Denver Northwest submarkets all posted modest annual vacancy improvements in 2024, despite being some of the most active portions of the region for new development. Vacancies in these three submarkets combined to average approximately 6 percent, lower than the metro average.

While investment activity was limited again in 2024, there was some positive momentum generated in the final two quarters of the year. Transaction volume in the second half outpaced levels recorded during the same period of 2023 by about 50 percent and sales totals in 2024 were up nearly 30 percent compared to the prior year. Class B properties accounted for about half of the total transactions in 2024, closely tracking trends recorded in 2022 and 2023, although sales of newer properties tapered off in 2024. This shift away from these assets was a primary driver as overall pricing trended lower during 2024. The median price was $278,600 per unit, down 13 percent from one year earlier.

Looking ahead

Property fundamentals in the Denver multifamily market are projected to improve in the coming year as inventory growth will be well below recent peak levels. After a surge in completions in 2024, projects totaling 14,000 units being forecast to come online in the coming year, closer to the region’s long-term supply growth trends. Vacancy is forecast to post a modest decline, with the rate dipping to 6.5 percent, about 80 basis points higher than the market’s average over the past 10 years. The mid-6 percent range may be the norm for vacancy in the coming years as inventory in Denver has expanded by 25 percent since the beginning of 2020. There should be room for modest rent increases across most submarkets in 2025, but it may take another year for gains to return closer to the region’s long-term trend.

Sales activity in the Denver multifamily market should gain some ground in the coming year, building upon the increases in activity that began in the second half of 2024. A return to historical levels of supply growth and continued leasing activity should buoy investor sentiment. Investors will likely track the pace of population growth and employment expansion. Denver had been a leading market for net in-migration from other states in prior years, but that pace has slowed. Business attraction has also leveled off, with employment expanding by about 1 percent per year since 2023, after growth in excess of 2 percent per year was common since 2014. A return to a faster pace of economic growth would likely spur some additional investment activity over the long term.

Learn more

Contact our Denver office for more information.