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Denver Continues to be among the Strongest Multi-Housing Markets in 2015

Tuesday, April 28, 2015

With strong job growth, population growth and multi-housing buildings, Denver emerged as one of the three strongest apartment markets of 2014. The lure of the mountains and relatively low cost of living has made the area a job magnet, sparking demand for multi-housing buildings in Denver. Employment and Population Totals Though the 2014 job growth of 2.6 percent was a 60-basis-point (bp) decrease from 2013’s 3.2 percent, it remained stronger than the national average of 1.8 percent. Employment growth is expected to return to 3.2 percent in 2015.

Axiometrics describes Denver as, “one of the top-tier apartment markets in the country for rent growth and occupancy. Strong performance is not contained to one area of town, or one type of property. Practically every neighborhood and asset class performed off the charts in 2014. It will once again show some of the strongest growth rates in the U.S. in 2015.”

Denver Multi-Housing Development

Close to 9,000 units were delivered in 2014, and another 8,700 units are expected for 2015. In the 10 years leading up to the most recent recession (1998-2007), Denver averaged approximately 5,500 new apartment units delivered each year, showing demand for multi-housing buildings. Axiometrics projects new deliveries to trend closer to that level after 2015.

Multi-Housing Building Occupancy and Absorption

Denver’s multi-housing buildings' occupancy rate was 95.9 percent in 2014. Axiometrics forecasts Denver’s occupancy rate to lower to 95 percent in 2015, but stay well above the 1997-2014 average of 93.4 percent. Absorption, 9,100 units in 2014, outpaced new supply for the sixth straight year. In 2015, new apartment supply is expected to exceed demand, which will result in the occupancy declining to a lower, yet still very strong, rate of 95 percent.

Denver Occupancy Denver Completions and Net Absorption

Rental Rates for Multi-Housing Buildings

Annual effective rent growth reached 10.6 percent in 2014, the fifth consecutive year that growth exceeded 6 percent. Axiometrics expects Denver to have one of the strongest rent growth rates in the U.S. for 2015, but they project rent growth closer to 5 percent due to another round of above-average supply delivering to the market.

Denver Rental Rates Denver Annual Rental Rate Growth

Contact HFF Denver for more information regarding multi-housing properties on the market in this area. 

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