According to a recent update from the Apartment Association of Metro Denver (AAMD), the local apartment market is currently experiencing significant fluctuations, including a rise in vacancy rates to their highest level in 16 years.
In the first quarter of this year, the average rent in metro Denver decreased to $1,819. This marks a drop from $1,842 in the previous quarter and $1,846 during the same period last year. If rent had kept pace with overall inflation, the average would be approximately $1,951 monthly.
Cary Bruteig, a researcher with Apartment Insights and the report’s author, noted that this decline is largely due to a substantial supply of new apartment constructions.
Over the past year, builders have introduced 20,822 new apartments, while renters have only absorbed 14,504 units, contributing to an increase in the vacancy rate from 5.8% to 7%. This rate represents the most significant vacancy occurrence since the Great Recession.
Douglas County holds the lowest vacancy rate at 5.8%, in stark contrast to Denver’s highest rate of 7.7%. Some submarkets, such as southeast Denver and western Aurora, report even more distressing numbers, with vacancy rates exceeding 9%. Darren Everett, managing principal at Two Arrows Group, indicated that certain older properties are facing vacancy rates as high as 20%, forcing landlords to revisit rental prices reminiscent of those from 2017.
Data shows that apartments built in the 1970s currently command the lowest average rents, around $1,497, with options available for under $1,000 per month. In contrast, central Denver’s newer developments provide high value for rent, attracting renters despite the market’s struggles.
Bruteig explained that landlords generally manage a 5% vacancy rate without issue but tend to respond with actions such as rent reductions or additional concessions when the rate exceeds 6%. As the rate approaches 7%, the urgency to fill units increases, leading landlords to prioritize occupancy over maintaining higher rents.
Despite the expectation of a breaking point in the market due to the abundance of new units, Bruteig expressed surprise that it has yet to manifest, considering historical absorption averages of 5,000 to 6,000 units per year since the early 1980s. The current annual absorption has escalated closer to 15,000, showing an unparalleled growth rate.
However, as the supply continues to grow, with around 30,000 additional apartments in the pipeline expected to be completed over the next three or four years, the rental market faces uncertainty.
Should the economy remain stable, renters might find favorable conditions persist for another few years while the market strives to achieve equilibrium.
Nonetheless, Bruteig noted that the high vacancy rates and declining rents are often indicators of impending recessions.
If job loss becomes prevalent, absorption rates are likely to decrease as many renters struggle with lower incomes, potentially leading to increased household sharing and diminished interstate relocations for work opportunities.
It is estimated that the current construction of 30,000 apartments in metro Denver could take three years—or even up to five or six years, based on historical absorption rates—to be fully leased.
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image source from：https://www.denverpost.com/2025/04/25/metro-denver-apartment-rents-down-vacancy-up/
