Why rents in Denver will continue to fall this year
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If it seems like it’s becoming more affordable to live in the Denver area, it may be because you glimpsed recent headlines about apartment rents, like this one: “Rental housing in Metro Denver is cheaper today than it was in 2022.”
Rents are down, according to the latest report from Apartment Association Metro Denver (credited with the aforementioned headline). In the first three months of this year, average monthly rents in the Denver metro fell $56 from a year ago to $1,819. That’s also lower than where they were in 2022, at $1,870 a month.
The main reason is that 20,000 new apartments flooded the Denver market last year, said Cary Bruteig, a researcher with Apartment Insights who worked on the report for the association.
“That is a huge number … a 5% increase in a single year,” Bruteig said. “What that’s done is vacancies have moved up from 5.8% a year ago to 7% today. … And what happens when vacancy rates get over six is apartment communities start becoming much less aggressive in raising rents. In fact, they will often start flattening rents and offering concessions.”
On average, the region has added 5,000 to 7,000 new units a year. In the past decade, new construction has added more than 10,000 units a year to meet the need for more housing. And even though 2024 saw double the number of new units than the past decade, renters did move into most of them, leaving about 6,000 units still available.
“I would not and did not forecast that we would absorb 50% more apartments over the last year than we did in the last 10. Just look around and you don’t get the sense that Denver’s on fire economically,” Bruteig said.
So, a 7% vacancy rate isn’t so bad, considering it was a big year for new apartments. It’s been about 15 years since vacancy rates last hit the 7%, said Mark Williams, president of the association. That was in 2010, coming out of the Great Recession.
It is what’s ahead that could be concerning. So far for the first quarter, Colorado has lost jobs, including 11,600 in February. For the past 12 months, the average monthly change in jobs was -800, according to the state labor department.
“For several years now, what’s been helping drive the market, though, was job growth. When you continue to see job creation, those units are going to continue to get absorbed,” Williams said. “The concern going forward is maybe in the next six, 12, 18 months, what’s going to happen to job growth? If job growth picks back up, I think the market will be fine. If it declines, there will be a steeper concern on the side of the housing providers.”
In 3 years, rents fell only for the newest apartments
While overall rents have dropped in the past three years, a closer look at the data shows that decline was only seen in newer properties. Units built since 2020 averaged $2,340 a month, down 7% from monthly rents of $2,516 three years ago.
Monthly rents for all older properties rose since third-quarter 2022, when average rents hit $1,870:
The lowest rents were in buildings from the 1970s, averaging $1,497 a month, more than one-third less than newer apartments. But 50-year-old properties do come with their challenges, like no washer and dryer or other amenities.
So owners of newer buildings are offering move-in specials and other concessions to attract renters who may be paying less but without modern conveniences, like “new counters, new appliances and secure access and all that,” Williams said.
Places like the 187-unit One River North, which opened last year, received architectural accolades for its “cracked” exterior to mimic a natural canyon terrain. It’s offering 50% off rent for the first six months.
While the 10-story Art Studios in downtown Denver added 192 units to the market last year. There are apparently a lot of available units with move-in specials offering 10 weeks of free rent, “up to $500 on a Visa Gift Card” plus a free membership to the nearby Denver Art Museum or History Colorado.
“The renter has more power to negotiate,” he said. “And we’re seeing discounts for three, four, five, six weeks of free rent, in some cases, to two months of free rent to get that unit occupied.”
The forecast? Rents will continue to decline
More apartment units are coming.
“There’s nearly 31,000 available apartment homes right now so competition is heating up,” Williams said.
Call it a renters market, he added, a time for folks who added a roommate in the pandemic or moved into their parent’s basement to find a place of their own.
And that will keep the market competitive, at least for landlords trying to avoid empty apartments, Bruteig said.
“I do think rents will continue to fall. The properties just don’t want to be empty,” he said. “They’d rather have higher occupancy at lower rents than just be sitting there with vacant apartments.”
Keeping rents lower isn’t necessarily a bad thing, even for some landlords. While Denver’s slow rent growth last month ranked it in the middle of the nation, the area’s rents are in the top-third of the 100 largest cities in the U.S., according to Apartment List.
Karen Arnold, a landlord of a few units in Aurora, prefers long-term renters so she’s kept her monthly rates lower than average to retain reliable tenants. She even lowered them during the pandemic when her tenants lost their jobs. She’s raised rents just once in the past five years, and that was to cover rising insurance costs. But now, she has three vacancies. She’ll likely increase monthly rents to $1,500.
“I don’t believe that rents dropping is a bad thing,” Arnold said in an email. “$1500 for a one-bedroom apartment? That’s soul-crushing for the individual who needs to pay it.”
Rents around the state, nation
Declining Denver-area rents is just a cycle, said Rob Warnock, senior research associate with Apartment List, which posts apartment listings and tracks rental data for many Front Range locations.
Rents did increase in Denver last month by 0.6% but were down 6% from a year ago.
“Before 2020, rents were skyrocketing so the industry wanted to get in on that,” Warnock said. “Taking on debt to build apartments was going to create huge returns because it was in the moment. So, supply expanded greatly over those couple of years. And now the cycle is cresting.”
Up and down the Front Range, nearly all communities have seen rents fall in the past 12 months, though areas that saw slight increases, including Highlands Ranch, up 0.3%, Weld County, up 0.7%, and Greeley, up 0.8%.
But pretty much all communities have seen rents increase since March 2020, and most are at double-digit rate increases. The highest were Highlands Ranch, up 25.8%, Castle Rock, up 23%, and Douglas County, up 22.7%.
The larger populated metro areas also saw rents drop, like Colorado Springs, where rent on a one-bedroom apartment fell 4.8% in the past year to $1,142. Denver County’s rents fell 6.3% to $1,456. (Warnock said that one-bedroom apartments tend to be the largest type of unit in any given area so it’s best to compare the rents of one bedrooms.)
Cities that are seeing monthly rents increasing “didn’t build nearly the volume of new supply in the past couple years as Denver did,” he said.
Chicago’s rents have grown 4% from a year ago. New York City’s rose 5.5%. Boston’s are up 1.5%. “People are moving back to places like D.C. and without any kind of new apartment supply to absorb that demand, prices there have been going up,” he said.
➔ ICYMI: Denver-area inflation was up 1.9% in March. That was slower than the U.S. inflation rate of 2.4%, according to the Bureau of Labor Statistics. Higher costs for the Denver region were blamed on dining out at restaurants (up 5%) as well as the cost of meat and eggs (up 9.2%). Lower energy costs, which fell 8.4%, helped the region see lower inflation. >> BLS data
Sun economy stories you may have missed
➔ Colorado’s outdoor businesses buckling in Trump trade war, closing up shop and laying off long-time workers. Small Colorado outdoor manufacturers are wilting as tariffs, declining spending and international anger conjure a costly storm >> Read story
➔ Colorado legislature passes $43.9 billion budget that cuts transportation, social programs to fund rising health care costs. Lawmakers closed a $1.2 billion shortfall to balance the budget. But they largely avoided deep cuts to three of the biggest spending areas: health care, K-12 and higher education. >> Read story
➔ Uber says it will exit Colorado if bill aimed at boosting rideshare safety becomes law. The California-based company says it could not comply with House Bill 1291 and the measure would pose too big a legal risk. It has never pulled out of a state before. >> Read story
➔ Colorado drillers must recycle fracking water starting in 2026 under first-in-the-nation rules. Front Range oil and gas development uses more fresh water in a year than the city of Boulder consumes. The state wants at least some of that to be recycled. >> Read story
➔ Why Colorado’s artificial intelligence law is a big deal for the whole country. Nearly a year after it passed, it’s still the only one of its kind, so far. But as revisions are still planned, could Colorado’s law become a model to emulate — or avoid? >> Read story
➔ Colorado farmers just lost their most important mental health lifeline. The $10 million program offered services to farmers and ranchers, whose suicide rate is at least two times higher than the average population >> Read story
Take this week’s poll
Even without the Trump administration’s effort to overhaul the federal government, Colorado’s economy was facing a slow down in job growth, rising inventories of homes for sale and now, falling rents. Is a recession really on the way?
➔ Take the new What’s Working reader poll at cosun.co/WWrecession
Other working bits
➔ Supersonic aircraft maker picks Watkins for testing. Boom Supersonic is already based in Centennial but it’s had to conduct its testing of an aircraft flying faster than the speed of sound out of state. On Friday, the company said it picked the Colorado Air and Space Port in Watkins to conduct engine tests. Boom plans to invest $3 million to $5 million to prepare the site for supersonic engine testing, which is expected to start this year, according to a news release. The ultimate goal? Flights from the U.S. to other countries at the speed of sound. >> ICYMI: Boom’s first supersonic flight
➔ It’s Mile High Asian Food Week. While restaurants continue to struggle with food and labor costs and regulations, it’s heartening to hear that Mile High Asian Food Week is still going strong. It’s the third year (remember the first one?) and starts Sunday. There’s a longer list of participating restaurants from Longmont to Colorado Springs, with the usual mix of Asian cuisines but some nice additions featuring Filipino, Nepalese and Laotian food. >> Check out the food
➔ State workforce centers add free American Sign Language service. It’s part of a pilot program using Aira ASL, a mobile app that connects users to a human ASL interpreter to translate what’s happening on site with in-person services. The pilot runs through July 31 and is at all 32 Division of Vocational Rehabilitation locations and the state’s 46 Workforce Centers. Users can download Aira ASL at the Apple App Store or Google Play Store. >> Details
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Thanks for sticking with me for this week’s report. As always, share your 2 cents on how the economy is keeping you down or helping you up at cosun.co/heyww. ~ tamara
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