What Pandemic? Denver’s Apartment Market Sets Records

Denver is one of the busiest multifamily markets nationally, boasting recording-setting performance in rent growth, absorption, and transaction volume.
“I never thought I'd see $10 billion in annual sales in the multifamily space in Metro Denver,” says Dave Martin, Northmarq’s Managing Director of Investment Sales. “I remember when the market hit about $1 billion dollars in sales in 2007, and people were doing high fives. But to now come out of the pandemic with $10 billion in sales puts us seventh or eighth in the nation in total volume, which is pretty amazing.”

That includes a record, single-asset trade -- The Pullman in Denver’s Union Station neighborhood -- that sold for more $1 million a unit. It’s a huge boon and one that’s expected to bring even more investors to the Mile-High City.  

“That’s a staggering number, and something you might see in San Francisco or Manhattan,” notes Dave Link, Northmarq’s Managing Director of Debt and Equity.  

What’s driving low cap rates?

At year-end 2021, cap rates in Denver averaged 3.5 percent, reflecting hungry investors and intensifying competition. 

“We have a huge wave of buyers fueling all-time low cap rates, largely driven by low treasuries and low-interest rates,” Link explains. “What we've seen the past couple weeks is a quick rise in both treasuries and spreads, which might mean a 30- or 35-basis point increase in borrowing rates compared to mid-January. We'll see what effect that has on the market.”

Many drivers ‘went right’ for an unprecedented year

Job growth. Denver added roughly 95,000 jobs in 2021, including many high-paying positions. The local labor market is expected to surpass the pre-COVID peak in the next several months.

In-migration trends. “Denver benefited tremendously from the exodus from major gateway markets during the pandemic,” notes Martin. “People came to Denver as a lifestyle choice. Work from anywhere took root here.”

Rising home prices. The median price of a single-family home in Denver is $600,000. Potential homebuyers may not have the required down payment and become renters by necessity.

Demand is outpacing supply.


Listen to the podcast 🡪

In this episode, Dave Martin, Managing Director of Investment Sales, and Dave Link, Managing Director of Debt and Equity discuss the factors driving Denver's record-setting multifamily market. 

Overbuilding concerns?

Recent headlines warned of the explosion of new apartment supply coming online. “However, you really need to peel back the onion,” Link explains. Denver typically absorbs approximately 14,000 units a year, while 25,000 to 35,000 units are in the “pipeline” or under construction at any given time.

“If you peel things back, you find this all-encompassing number includes developers going in for zoning changes or concept review applications, etc.,” says Link. “Only one-third to a half of these units will come to fruition.”

Additionally, labor constraints, construction delays, and materials/supplies challenges are pushing deals further out. Historically, around 11,000 new units are delivered annually in Denver.

Urban vs. suburban?

When COVID-19 hit, an urban exodus occurred nationally including Denver. “We saw a pronounced shift from the central urban core to the suburbs in 2020,” says Martin. “The big question became when are we going to see the central urban core rebound? It didn't happen in 2021. Will it happen in 2022? I think it’s a 50/50 proposition. We need new crops of graduates coming into the job market who want that urban lifestyle.”

Martin notes it’s becoming relatively less expensive to live downtown where rents plateaued. Meanwhile, suburban rents exploded. The 17 percent rent growth recorded in Denver in 2021 was virtually all in the suburbs.


Multifamily fundamentals are expected to remain strong. Rent growth of 6 or 7 percent is likely, which is still double the average. Additionally, robust in-migration and job growth should continue.

“There's an abundant amount of capital earmarked for multifamily acquisitions,” Martin goes to say. “There's not enough supply to satisfy demand.”

In terms of financing, transaction activity was incredibly high in the floating-rate bridge space in 2021.

 “We'll see what effect interest rates have in 2022,” Link points out. “For now, there’s plenty of capital, and people love Denver. They love this story.”