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Navigating Denver’s Multifamily Market Trends in 2024: Insights and Expectations



Denver, Colorado

Denver's multifamily market, once characterized by robust growth and a flurry of construction activity, finds itself at a pivotal juncture as it navigates through a landscape shaped by evolving demographic shifts, changing renter preferences, and the enduring impact of a construction pipeline that dominated headlines in 2023. As stakeholders brace for the challenges and opportunities that lie ahead, understanding the key trends shaping the market is paramount.

 

Slowdown in Population Growth Presents Challenges


Denver's rise as a destination of choice for movers and shakers across the country has hit a speed bump. The city's population growth, once a driving force behind its thriving multifamily market, has witnessed a noticeable slowdown. While Denver's population nears the 3 million mark, the recent annual increase of 0.3% pales in comparison to the robust growth rates observed in the pre-pandemic era. This deceleration, although significant, may signal a transition to a more sustainable growth trajectory for the metropolitan area.

 

Luxury Renters Drive Demand, Middle Market Rebounds

Luxury

Denver's rise as a destination of choice for movers and shakers across the country has hit a speed bump. The city's population growth, once a driving force behind its thriving multifamily market, has witnessed a noticeable slowdown. While Denver's population nears the 3 million mark, the recent annual increase of 0.3% pales in comparison to the robust growth rates observed in the pre-pandemic era. This deceleration, although significant, may signal a transition to a more sustainable growth trajectory for the metropolitan area.

 

New Supply Overwhelms Demand, Impact Varies by Class and Location

In November 2023, the construction pipeline in Denver included 42,334 units actively under construction, ranking it as the fourth busiest in the country. Denver's construction boomhas ushered in challenges of its ownwith new supply outpacing demand. , Yet, the impact of the construction pipeline varies across segments and neighborhoods. Middle-tier apartments bear the brunt of supply and demand imbalances, while luxury properties in downtown Denver experience elevated vacancies, a stark contrast to historical trends.

 

Drop-Off in Multifamily Construction Starts

Construction

As cranes dotting the Denver skyline become fewer in number, the decline in multifamily construction starts reflects the complexities and obstacles facing developers. Delays in permitting, coupled with regulatory mandates such as the Affordable Housing Policy, present formidable challenges.

 

The slowdown in construction starts is contributing to a deceleration in rising construction costs, potentially providing relief from supply-side pressures. Additionally, there is a possibility that financing constraints may ease, facilitating new developments.


Rent Decline Forecast Continues in Near Term

The trajectory of rent growth in Denver remains tethered to the dynamics of supply and demand. Areas witnessing the greatest influx of new units experience corresponding declines in rents, with downtown Denver bearing the brunt of this trend. However, amidst the challenges, glimmers of optimism emerge as the market anticipates a rebalancing of supply and demand dynamics in the coming years. The potential for a reacceleration in rent growth by 2025 offers hope for stakeholders navigating the multifamily landscape.

 

Conclusion: Navigating Uncertainty with Strategic Insights

As Denver's multifamily market charts its course in 2024, stakeholders must remain agile and attuned to evolving trends and market dynamics. While challenges loom large, opportunities for growth and innovation abound. By leveraging strategic insights, fostering collaboration, and embracing a forward-thinking approach, stakeholders can navigate the complexities of the multifamily market and chart a path towards sustainable growth and prosperity in the Mile-High City.


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