New Supply Tempers Rent Growth in Denver

The metro's steady job additions and population gains have rapidly pushed up housing demand. But the resultant heavy apartment development has put a damper on rent growth.
Denver rent evolution, click to enlarge
Denver rent evolution, click to enlarge

In the past few years, Denver saw a favorable demographic trend, shaped by steady job additions and population gains. This has rapidly pushed up housing demand. Construction has been strong, with nearly 32,000 units coming online since 2015. Heavy apartment development has put a damper on rent growth, up 2.2 percent year-over-year through March, below the 2.5 percent national rate.

Employment gains were led by the leisure and hospitality sector, with 10,400 jobs added in 2017, a 5.0 percent growth rate, as a strong tourism industry is leading to an increase in hotel demand. Denver attracted 17.3 million overnight visitors in 2016, adding as much as $5.3 billion in revenue. More than 4,100 hotel guestrooms were underway as of March, with 4,100 set to start construction later this year. Denver’s technology sector remains strong, sustaining demand for the 3.2 million square feet of office space underway.

The pipeline is growing fast, with 3,900 units coming online in the first quarter. Development is expected to remain robust, as roughly 28,000 units were under construction as of March, of which Yardi Matrix forecasts 11,700 to be delivered by year-end. As overall growth is set to continue fostering housing demand, especially in the case of workforce apartments, we expect a rent increase of 3.0 percent in 2018.

Read the full Yardi Matrix report.