Denver Multifamily Report – Summer 2020
While the metro felt the effects of the ongoing downturn, fundamentals are holding up well compared to U.S. averages.
Denver rent evolution, click to enlarge
The decade-long economic expansion that helped fuel the development boom in Denver has abruptly ended, due to the COVID-19 pandemic. The multifamily market showed resilience to the robust inventory expansion and the health crisis’ impacts, and, after 10 consecutive months of declines, rent rates bounced back 0.1 percent on a trailing three-month basis through July, to an overall average of $1,549. The occupancy rate in stabilized properties decreased to 94.0 percent as of June.
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Denver sales volume and number of properties sold, click to enlarge
Denver continued to outperform the national trend, but although it showed signs of recovery, uncertainty remained high over concerns about a new surge in infections. The unemployment rate rose to a high of 12.3 percent in April and slid to 10.5 percent in May, but June preliminary data pointed to a new increase to 11.0 percent. Leisure and hospitality shrunk by 37.5 percent, while professional and business services and trade, transportation and utilities—the metro’s largest sectors—contracted by 1.2 percent and 7.6 percent, respectively. Unemployment claims filed across the state since the outbreak crossed the 694,000 mark in August.
Development was high, with 20,915 units underway as of July and 8,697 units delivered so far in 2020. Meanwhile, transaction activity virtually stopped in the second quarter—of the $1.6 billion in multifamily assets that traded, nearly $1.2 billion of transactions were in the first quarter. We expect rents to contract 0.9 percent by year-end.
