Denver’s Soaring Rental Rates
- May 14, 2015
Driven by substantial job growth and rising rental rates, Denver boasts one of the strongest multifamily markets in the country, ranking fifth on Marcus & Millichap’s 2015 National Apartment Index. Despite having slipped two spots since last year’s ranking, the market is poised to experience positive growth in 2015, fueled by a significant increase in employment. Nearly 55,000 jobs will be added in 2015, which accounts for a 4.0 percent increase in total employment, according to Marcus & Millichap.
Denver has ranked among the top performing metros in the country over the past five years, and is currently one of the most promising markets nationwide. Data provided by Yardi Matrix positions Denver as one of the leading markets in the United States in terms of rent growth and absorption, alongside San Francisco and Portland. While national average rents registered a 4.3 percent year-over-year increase, Denver experienced an increase in rental rates, exceeding 10 percent in all asset classes.
Deliveries are expected to outpace demand this year, mostly in the desirable Central Denver submarket, pushing vacancy up 50 basis points to 4.6 percent. Nonetheless, as more jobs are added in nearly every employment sector, demand is expected to remain strong and drive further multifamily investment.
Marcus & Millichap reports that more than 10,000 apartment units are currently underway in the Denver metro area, with an additional 17,000 units proposed. Notable developments include the 424-unit Camden Flatirons in Broomfield and two multifamily projects undertaken by Southern Land Co. in Denver and Boulder. The transaction volume has almost doubled, with Bell Partners setting a new record with the $250 million purchase of a metro Denver apartment community.