The Denver rental market in mid-2025 is characterized by increased tenant options and a landscape that demands strategic adjustments from landlords. Understanding the nuances of current rents, vacancy rates, and tenant preferences is crucial for optimizing property performance.
Current Rent & Vacancy Snapshot: More Options for Tenants, A Shifting Landscape for Landlords
- Average Rents & Recent Shifts: As of early May 2025, the average rent across all property types and bedroom counts in Denver stood at $1,950 per month. While this represents a minor $6 increase from the previous month, it reflects a substantial year-over-year decrease of $239. This cooling trend is mirrored statewide, with theaverage Colorado rent at $1,981, down $249 year-over-year. This broader downward pressure compared to the peaks of previous years impacts revenue expectations and necessitates careful pricing strategies.
- Property-Specific Rents (Q1 2025): Landlords need to benchmark their properties against specific market segments. Data from Q1 2025 provides a more granular view:
- Studio Apartments: Averaged $1,484/month.
- 1-Bedroom Apartments: Averaged $1,761/month.
- 2-Bedroom Apartments: Averaged $2,318/month.
- City of Denver median rent for a 2BR apartment was reported lower at $1,653, highlighting potential differences between city core and metro averages.
- 2-Bedroom Houses: Averaged $2,358/month.
- This is notably close to the average for 2-Bedroom Apartments, indicating similar demand or value perception across property types.
- 3-Bedroom Houses: Averaged $2,966/month.
- 4-Bedroom Houses: Averaged $3,788/month, driven by strong family and corporate demand.
- Vacancy Rates – A 15-Year High (for Apartments): A defining characteristic of the early 2025 market is the elevated vacancy rate in apartments. The Denver metro apartment vacancy rate reached 7% in the first quarter, the highest level seen in 15 years.
- Within Denver County itself, the rate climbed even higher to 7.7%.6 Some data sources, like CoStar, reported a record peak vacancy of 10.9% in Q4 2024. This surge in vacancy is largely attributed to a significant influx of new apartment construction, with estimates of around 20,000 new units delivered in 2024 and over 6,000 more coming online in Q1 2025 alone.
- This contrasts with suburban markets like Douglas and Jefferson counties, which reported vacancy rates under 6%, indicating tighter conditions and less direct competition for landlords there.
- The high apartment vacancy rates – particularly in downtown Denver which saw a concentration of new builds – mean apartments face increased competition for tenants. This doesn’t necessarily mean landlords of single family (or non-apartment housing) face the same competition, but it could have some downstream effects on those rents if more tenants flock to less expensive apartments.
- Rent Declines & Market Reactions: The increased supply and vacancy have inevitably led to rent adjustments.
- Compared to the previous year, Denver County’s median rent dropped by 5% in Q1 2025, with the broader metro area seeing a 3.6% decline according to the Apartment Association of Metro Denver. This aligns with reports noting the first annual multifamily rent decline (-2.7%) since the Great Recession. Denverite observes that when vacancy surpasses the 6% threshold, property managers typically become less aggressive with rent increases and may even offer reductions to attract tenants.
- Rebound expected beyond 2027: New construction for apartments has been dwindling since 2022. As the remaining projects are projected to wrap up around 2027, expect another supply crunch for housing across the board with almost no new construction planned beyond 2027.
- Most projects take 2-5 years just to break ground – so it’s likely housing supply will remain constrained well into the 2030’s assuming we get any sort of economic recovery in the next few years.
The confluence of these factors – declining average rents, historically high apartment vacancy, and subsequent market reactions – does indicate a market that temporarily favors tenants. However, this situation appears to be a market correction driven by a supply boom in apartments, rather than a fundamental collapse in rental demand.
Underlying demand remains robust, evidenced by strong net absorption figures (over 9,000 units absorbed in 2024, and 9,600 units in the 12 months leading into early 2025) and continued population growth, with the Denver metro area adding ~84,000 residents between 2020-2024.
Critically, the pipeline for new construction is projected to slow dramatically. Forecasts anticipate new unit deliveries falling to around 7,900 units in 2025 and further to around 3,600 units in 2026 – beyond that, there is essentially nothing else planned. This projected constriction in new supply, coupled with sustained demand, suggests the current tenant-favorable conditions are likely temporary.
In the interim, it might be best to hold off on rent increases in 2025 and evaluate carefully in 2026 if you don’t want to lose your best tenants. Be prepared to keep up with a fast moving market beyond that though.
I remember what it was like trying to rent after college in 2011-2013 or ‘14. Lines around the block, bidding wars happening at the front door…it was pandemonium.
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