As seen in Colorado Real Estate Journal
Did you miss it? Denver renters absorbed nearly 14,000 apartment units over the past year, the most CoStar has ever recorded for the market. Vacancy has dropped from 12.4% to 9.9% in less than a year, and for the first time in five years, demand is on pace to outrun new supply. Promising, right? It’s the kind of news that is easily missed when the national narrative on Denver is that its best days are behind us.
To be fair, that narrative has merit. For more than a decade, Denver multifamily enjoyed a long party, fueled by cheap debt, rent growth and a seemingly insatiable appetite for any building in the city with a few bedrooms and a roof. But like every party, it had to end, and a party that big and that fun had to come with a large bill and a painful hangover. It has. Rents are still down year over year, and concessions are everywhere, with roughly half of Denver apartments offering some form of incentive.
I’m a multifamily broker, so when I read that sales volume is running at less than half its pre-pandemic average, and that prices are down roughly 17% from their peak (and up to 50% depending on the metric), I get it. In fact, I’m living it. Not only is volume down, but the deals that do close are a slog. We aren’t charging to the closing table so much as we are limping to it. We congratulate our sellers at the same time we console them. We lick our wounds together.
But while investors tell us they are packing up and looking for opportunities in other states or putting their capital into the stock market, something is happening here in Denver. I’m not denying the mess that is our market. But I can see the green shoots of change we’ve been waiting for, and not just because we all want them to be there.
It starts with supply, or lack thereof. Denver built a historic wave of apartments, and filling them took time. The worst of that wave is moving behind us. According to CoStar, deliveries peaked at nearly 18,000 units in 2024, and this year’s roughly 8,100 will be the fewest since 2020. There’s still work to do. Thousands of new units are still leasing up, and more are scheduled for 2027. But with new projects hard to finance, the number of units under construction has fallen by half since 2022. Increasing demand and a shrinking pipeline? That sounds like a market turning a corner.
As today’s lease-ups fill, I expect the conversation over the next few years to shift from “too many apartments” to “we need more apartments!” That’s not the conversation right now, but it’s one we’ll be having again.
The real issue in declaring the bottom of the Denver market isn’t actually about Denver. It’s about debt. I’m not talking about the cost of new debt (although that’s not helping.) I’m referring to the cheap pandemic debt that took our then-frothy market and let it go completely unhinged. We had a great time riding cheap debt to record sales volume and prices in 2021. Now, we can’t get rid of it fast enough. As with any hangover, you don’t feel right until it passes. But here’s the good news: We’re almost there.
Nationally, multifamily loan maturities are estimated at roughly $162 billion in 2026 and $168 billion in 2027, the peak of the wave. Denver ranked second in the country (thanks, Atlanta!) for the share of its apartment loans coming due through 2029. That means the bulk of the reckoning is happening right now.
Every resolved loan gives the market an honest data point. Every investor with an expiring loan has to decide whether to sell, bring in new partners or refinance (often by writing a big check, effectively “buying” their property again at today’s market value.) The market is tough to see right now, but every resolved loan makes the picture a little clearer.
Here’s the bottom line: Debt cycles come and go. Supply ebbs and flows. Rent data changes quarterly, if not weekly. What lasts is why people want to live somewhere, and on that front, I still think Denver is a winner. I get the complaints: the politics, the homelessness, the affordability. But what desirable city is free of those challenges? I’m writing this from my office, looking out at a sunny, warm fall day. I rode my mountain bike all weekend through glorious fall colors, and I came home to start planning the coming ski season with my family. I can’t imagine living anywhere else, and I’m not alone.
The skeptics are right: The party is over. But I think they’re wrong about what comes next. We’re knocking on the door of a very exciting time to be a buyer in Denver, and I’m here for it. The hangover is almost gone. There will be another party. Of course, we all promise that at the next party, we’ll be more responsible, right? Right.
–Scott Fetter, Principal, NorthPeak Commercial Advisors
