Conditions are looking up for tenants in metro Denver and Boulder as more new apartments keep rolling into the market, keeping rents in check and providing more options for those looking for housing, according to a quarterly update from the Apartment Association of Metro Denver.
The average rent for an apartment in the seven-county metro area, including Boulder, was $1,870 in the fourth quarter, which is down from $1,888 in the third quarter and not much above the average of $1,838 a year earlier. Two years ago, the average rent was at $1,708.67, which is below current levels after adjusting for inflation.
Average rents were highest in Douglas County at $2,006 a month, followed by Boulder/Broomfield at $1,950 a month and Denver at $1,909 a month. Adams and Arapahoe counties had the lowest rents at $1,725 and $1,794 a month, respectively.
The vacancy rate or share of unrented and available apartments metro-wide was 5.8%, up from 5.4% in the third quarter and 5.6% a year earlier. Adams, Denver and Douglas counties reported the highest vacancy rates at 6.1%.
“The long and short of it is, the market has been pretty stable over the last couple of years,” said Scott Rathbun, president of Apartment Appraisers & Consultants in Denver during a Zoom call with reporters on Tuesday afternoon.
Last year, developers supplied 13,246 new apartments, with tenants claiming or “absorbing” 11,613 of those units. In a sign of how the market has become more competitive, offering a month of free rent to prospective tenants has become fairly standard, Rathbun said.
In Denver’s denser neighborhoods with a lot of new units arriving, free rent concessions can run as long as six to eight weeks, he said.
With about 45,000 apartments currently under construction, vacancies will likely keep rising this year and next. But after those, the roughly 75,000 apartments on the drawing board are getting squeezed by higher interest rates and tighter lending standards and may not come through.
The total pipeline, once at over 120,000, continues to shrink as more and more deals fail to pencil out, and the number of multifamily permits being pursued is falling sharply, especially in Denver, which implemented a new inclusive housing ordinance in July of 2022.
Denver experienced a huge surge of multifamily permit applications ahead of the new rules, but the flow has slowed to a trickle since then. Given that Denver accounts for just under half of the new apartments built in the metro area, shortages could return by late 2026 or 2027, depending on what happens with migration to the region.
“We may see rent increases unless we can continue the momentum of new apartments,” Rathbun cautioned.
But for now, and in the next few years, renters will have a reprieve.
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