As seen in CoStar
What CoStar’s in-market analytics team is hearing from industry players in Denver
Denver’s multifamily construction wave continues to pummel the market. Vacancies remain near record highs, dragging down rent growth as landlords face increased competition for renters.
However, it appears that the most challenging circumstances are in the rearview mirror, with construction falling at a steady pace and demand holding at healthy levels.
From concession activity to a cooling construction pipeline, here’s what CoStar’s in-market analytics team is hearing from industry players heading into the second half of 2025.
Domestic in-migration picks up
Colorado has benefited from people relocating from other states, including California, Texas, North Carolina and Arizona. The majority of new inquiries are from potential residents coming from outside of the Denver market, property managers noted.
Colorado was the No. 1 destination for people moving from Texas in 2023, according to the most recent data from the U.S. Census Bureau, as the state’s high quality of life and temperate climate continue to draw residents. In total, a net of 6,800 Texans left the state to become Coloradoans in 2023.
Colorado routinely outperformed in attracting residents from other states in the decade leading up to the pandemic. However, domestic in-migration contracted from 2020 to 2022 as people prioritized affordability and moved to states with a lower cost of living. The Census Bureau will release updated migration data later this year, providing a better idea of whether the recent momentum points to a growing trend or if 2023 was a blip.
Demand is strong, though it may not feel that way
The Denver multifamily market recorded 8,900 units of absorption, or the difference in move-ins and move-outs, in the past year. That’s about 20% higher than the market’s five-year pre-pandemic average from 2015 to 2019, according to CoStar data.
However, landlords and property managers aren’t seeing more units filling up at the property level. That’s because more than 15,000 new units have been added to the market in the past year, almost double the number of units absorbed.
Even though demand has increased relative to historic levels, there are more options than ever for potential renters.
Groundbreakings fall
Denver’s supply surge added 45,000 units in the past five years, overwhelming renter demand. The vacancy rate more than doubled from the most recent low point in mid-2021 to the peak of 11.5% at the end of the first quarter of 2025, CoStar data shows.
While the vacancy rate remains near historic highs, it is now on a downward swing, falling 20 basis points from the end of the first quarter to 11.3% at the end of May.
While construction is still active, groundbreakings have plummeted as developers continue to face difficulties in obtaining financing for new projects. The significant downshift in construction starts indicates that the market should find relief from supply-side pressure over the next year.
Conditions are firmly in favor of tenants for the time being, but a recovery is slowly coming into view.
Concessions sweep the market
While an uptick in population and employment growth in the past year has helped drive demand, property managers noted that generous, widespread concessions are largely the reason leases are getting signed.
Roughly half of Denver-area apartment buildings were offering concessions in May, above the national average of 21%. Renters can expect up to 10 weeks of free rent on a one-year lease in new apartment complexes.
Concessions have also become increasingly common in stabilized properties, or those that are at least 90% leased or have been open for at least 18 months, as property managers focus on shoring up renewals.
Rents have moved by negative 3.3% in the past year, placing Denver in the bottom half of major markets across the country and lagging the national average of 0.9%. The Denver market will need to work through the supply overhang and heavy concessions before rents can recover.
