Denver Metro Rents Slightly Lower for Q4 2019, Continues Downward Trend

Quarterly results are the lowest growth in rents since 2011, but a worrisome slowdown in new
units could impact renters’ gains

Denver (January 22, 2020) – Average rents across the Denver Metro area decreased slightly to $1,503 in
the fourth quarter of 2019, according to the Denver Metro Area Apartment Vacancy and Rent report
published today. The total decrease reflects a 0.2% decrease in average rents from the previous quarter.
Rents are up $47 or 3.2% from this time last year. With inflation at 2.8% in the Denver Metro area, the
real rent growth is less than half of one percent for the year.

“With this very slight decrease in rent growth, we are seeing the Denver Metro rental market continue
to flatten,” said Mark Williams, executive vice president of the Apartment Association of Metro Denver.
“Last year’s average rent growth of 3.2% was the slowest since 2011. Denver is one quarter shy of a
three-year streak during which annual rent growth has been less than 5%. The increased inventory is
working to bring down rental prices, but there is concern that a slowdown in construction could edge
prices up again.”

Average discounts and concessions increased from $63 per month a year ago to $74 today. Average
effective rents, meaning average rents minus average discounts and concessions, were $1,429 in the
fourth quarter of 2019, representing a 1.1% decrease from the previous quarter and a 2.5% increase
from the year before. Once inflation is taken into account, average effective rents decreased by 0.3%
over the past 12 months.

Last year, just 9,952 new apartments were added to Denver’s housing inventory as compared to 12,324
new apartments in 2018 and 13,348 new apartments in 2017.

“New construction in 2019 was down 20% from 2018 levels and down 25% from 2017,” said Teo
Nicolais, a Harvard Extension School Instructor who specializes in real estate. “And, unfortunately, new
supply isn’t quite keeping up with new demand. In 2019, the number of apartment renter households
increased by 10,830 but only 9,952 new apartment units were built. That’s why the vacancy rate fell
from 5.8% to 5.4% over the past year.”

Nicolais noted that new demand outpaced new supply in 2018 as well. In 2018, the number of
apartment renter households increased by 13,709 but only 12,324 new apartments were built. As a
result, the average vacancy rate in the metro area dropped from 6.4% to 5.8% over the course of 2018.
In addition to the overall average rent decline across the Denver Metro area, rents are down in 23 out of
37 markets that the report analyzes. In four out of the six counties reviewed, average rent is down by
between $14 and $42 quarter over quarter. In Adams County, average rents are down in every
submarket. Similarly, Jefferson County and Boulder/Broomfield, saw average rents decline in all but one
of their submarkets.

“There is still a wide range of rents throughout the city, especially when you analyze apartment rental
rates by vintage” said Shane Ozment, Vice Chairman of NKF Multifamily. “Average rents for apartments
built in the 1970’s are 35% less than average rents for apartments built since 2010. With for sale home
prices over doubling in the past decade, apartments continue to offer the most attainable housing
option in metro Denver. According to the report, average rents for apartments built since 2010 were
$1,869 and average rents for apartments built in the 1970s were $1,208 in the fourth quarter of 2019.”

The Denver Metro Area Apartment Vacancy and Rent Report is coordinated and published by the
Apartment Association of Metro Denver. The survey is conducted by the University of Denver’s Daniels
College of Business and Colorado Economic and Management Associates, and is sponsored by the
Colorado Division of Housing and Newmark Knight Frank Multifamily.

The quarterly Vacancy and Rental Rate Survey is authored by Ron L. Throupe, Ph.D. of the University of
Denver Daniels College of Business, and Jennifer L. Von Stroh of Colorado Economic and Management
Associates. It has served as a reliable source for comprehensive data and analysis for over 36 years and
is made possible through the ongoing participation of the apartment industry and broad support from
private and public sector sponsors.

About the Apartment Association of Metro Denver
The Apartment Association of Metro Denver is among the largest multi-family housing trade
associations in the country, representing and supporting over 336,000 apartment homes in Denver. For
additional information about AAMD, please visit aamdhq.org.