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July 5, 2021

Denver has long been recognized for its quality of life and accessibility to nature, and the region’s burgeoning tech scene has exploded in recent years, further adding to the city’s charms. In fact, the U.S. News & World Report ranked Denver the #2 best place to live in the U.S. in 2020, in terms of quality of life and employment prospects (1).

As a result, the Denver–Aurora–Lakewood metro area has seen an influx of in-migration and business expansion in recent years, and there are several compelling reasons why commercial real estate investors should consider the region’s robust multifamily market.


1. Denver’s economy outperformed the U.S. average through 2020

While no city emerged unscathed from the pandemic, Denver’s total employment only contracted by approximately 3.3% in 2020 — approximately half the national rate (2). Most sectors in the local economy recorded modest losses in 2020, but employment in the Denver area’s large professional and business services sector actually expanded last year, and Denver’s tech industry also helped shield the market from the impacts of the COVID-19 induced shutdown (3).

Denver’s sizable transportation and warehousing sectors also expanded due to the explosive growth of e-commerce, and these resilient industries have helped fuel apartment demand, supporting positive absorption in each quarter of 2020 (3). Denver’s lower cost of business and well-educated workforce continue to attract a broad spectrum of businesses and Palantir Technologies, Healthpeak Properties, and VF Corp. all established headquarters in the metro late last year. Smaller companies are also taking advantage of the city’s business-friendly environment; Vectra Bank is building a nine-story headquarters in the Denver Tech Center, and several other businesses such as MotoRefi, AgriWebb, and Kleos Space S.A. announced expansions into Denver (4).

Many of these firms may recruit from outside the market, translating to relocations that could bolster demand for additional housing. Looking forward, local employers are forecast to add approximately 45,000 jobs in 2021, which translates to a ~3% increase. This would mark the greatest number of new jobs added to the Denver market in a single year since 2014 (2).


2. Denver’s new housing supply remains constrained

Last year, fewer than 8,000 new multifamily units were delivered in the Denver metro area — down 32% from the total inventory growth in 2019.2 This was the first time since 2016 that annual apartment deliveries dropped below 10,000 units, and the shortage of new housing supply has created a strong seller’s market for every property type and price point (5).

Much of this slowdown can be attributed to scheduling delays brought about by the pandemic and rising construction material prices that arose from unanticipated supply shocks. According to a report by Rider Levett Bucknall, a global construction and property consultancy, Denver’s comparative cost index for new construction has increased 1.83% year-over-year, and costs are expected to continue increasing through 2021 (3)

Looking forward, the total pipeline of new units currently under construction in the Denver metro area is approximately 22,300 – the lowest it’s been in years. And while new completions in Denver’s suburban markets are expected to account for 60% of all new multifamily units added to the region in 2021, demand continues to outpace supply in these submarkets. More people are opting for more spacious, suburban housing options, as long as they are close to Denver’s primary employment and entertainment hubs (2).


3. Rent growth is higher in Denver’s suburban submarkets

Denver’s quarterly rent trends were uneven through 2020, with asking rents ending the year at essentially the same level as they were in January. However, most suburban submarkets recorded rent increases last year, with the outlying areas to the east and south of Denver proper generally posting the strongest rent performance.2 Some of these submarkets achieved 2.5-4.5% rent growth through the pandemic, with submarkets like Aurora benefiting from the stronger demand in suburban housing since COVID-19 struck Colorado.2 With a year-over-year rent growth rate of 3.1% as of Q1 2021, Aurora is one of the rent growth leaders in the Denver region. Furthermore, since the city’s average asking rent is still roughly 12% below the Denver–Aurora–Lakewood metro area average, we believe there is still considerable room for local rent growth (6).

Denver has long been a poster child for rent growth, with average asking rents increasing ~85% since 2010 (7). While rent growth has cooled off in recent quarters, suburban markets continue to exhibit strong performances, and rents across the greater Denver region are expected to perform well through the remainder of 2021 and beyond as the city returns to pre-pandemic employment levels, coupled with the ongoing effects of slower multifamily construction permitting (8). Most estimates put Denver’s 2021 rent growth between 1.1%-2.5%, and CBRE expects the region’s rent growth rate to reach 10.5% in 2022 (9).


4. Denver’s real estate activity is picking up

While many markets were lackluster during the pandemic, multifamily investment activity in Denver spiked in the final months of 2020. More than half of the year’s total sales volume took place during the fourth quarter, and the median per-unit sales price shot up 8% relative to 2019 levels.2 With the Denver metro area continuing to stabilize and employers ramping up hiring activity, commercial real estate investment volume is expected to continue increasing, particularly within conveniently located suburban submarkets that continue to exhibit strong rent growth and below-average vacancy rates.

Our latest multifamily deal in Aurora is capitalizing on the economic tailwinds that are fueling the Denver metro market. The deal asset is centrally located between several of Denver’s largest employment hubs, including the Fitzsimons Life Sciences District, Denver Tech Center, and Downtown Denver, and is nearly fully occupied with a 99% collection rate as of March 2021. The Sponsor sees significant value-add potential in this well-maintained, conveniently located asset, and if you’re interested we encourage you to reach out soon.



  1. U.S. News & World Report, “150 Best Places to Live in the U.S. in 2020-21”
  2. NorthMarq, “Greater Denver Multifamily Report: Q4 2020”
  3. Marcus & Millichap, “Denver Metro Area Multifamily Market Report: Q1 2021”
  4. Colliers, “Metro Denver Multifamily Research & Forecast Report: Q1 2021”
  5. The Denver Post, “Metro Denver’s Hot Housing Market Faces a Dry Spring of Supply”
  6. CoStar, “Aurora-Denver Multifamily Submarket Report”
  7. Colorado Real Estate Real Journal, “Accelerated Growth Defines Denver’s Past Decade”
  8. The Denver Post, “Denver Rent Increases Expected to Accelerate in the Months Ahead“
  9. CBRE, “Q3 2020 Denver Apartment Outlook”