Let’s call it like it is: Denver is a boom town. You don’t have to be from here to appreciate just how rapidly the city is growing. The cranes all over town are visible the moment you head towards the city from the airport. Turns out, most of those cranes are building luxury apartment buildings, which is why AptAmigo picked Denver as our second market in October 2018!
So what should Denver renters expect in 2020? Let’s start by unpacking how we got here.
Denver’s housing market fluctuates as much as its weather. However, the general trend is up. Natives, longtime residents, and new arrivals are frequently greeted by new construction cropping up throughout once quiet neighborhoods, while rent prices continue to climb.
While some are wary of the growth, others approach the boom with optimism. The rise in Denver’s population brings a need for more housing, increasing competition amongst rental companies and landlords while also increasing job opportunities in construction, property management, real estate and more.
In 2018 10,854 new apartments hit the market, and 10,201 of those were leased by year’s end, making the absorption rate a staggering 94.3%. Estimates predict that 2020 will see the addition of 13,300 new units and most experts are predicting similar absorption.
Why so many apartments and why Denver?
In this real estate cycle (since about 2012), real estate developers and employers nationwide have realized millennials are saddled with student debt, are more geographically mobile than ever before, and really want the convenience of city life. Our generation is delaying marriage, delaying children, and delaying the purchase of our first home. We don’t want the suburbs!
Employers and employees are also realizing that Denver’s corporate tax environment and cost of living vs. quality of life is pretty compelling when compared to New York City, San Francisco, and several other high priced cities on the coasts.
Compared to larger cities, Denver offers affordable housing, a high quality of life, and a large professional community. Tech companies like Slack, Udemy, and Sendgrid recently established offices in Denver; while major Silicon Valley players like Google and Netflix have set up shop next door in Boulder. With this influx of mid-level jobs, Denver’s median salary sits at $76,643— which is $16,307 higher than the average American’s.
So you have major employers moving their headquarters and/or major headcount to Denver. As a result of these changing preferences, Denver developers have shifted focus from condo and single family home development in 2002-2008 to luxury apartments in downtown urban areas. Relocating employees often prefer to rent for a time – even at higher income levels – when relocating to a new city.
We spoke to Amanda Feldman from Your Castle Realty, who gave us some insight on the Denver market. (Although she works primarily in the buy/sell market, we frequently see the same trends overlap into the rental market.) The consensus seems to be that although construction hasn’t slowed at all, the Denver market might be leveling out.
“Colorado has seen a net migration of over 40,000 people for the past several years, while 2017 saw a dip [with] only about 30,000 net new migrations.” However, “we have more inventory on the market than we’ve had in five years, and there were more permits approved, showing that it’s not slowing down.”
In January of 2018, there were 2,386 homes for sale and the average house sat on the market for less than a month (0.8 months to be exact). While in January 2019, there were 3,351 for sale, and they sat an average of 1.2 months. She notes that although it doesn’t predict the future, it means that supply might finally catch up to demand.
This might attract more real estate investors, because “in a hot market, you see a bunch of investors come in and try to take advantage, but when the market gets too hot, it doesn’t make sense because you don’t see the return on your investment.”
“As far as AirBnBs, Denver in general has cracked down on the laws on short-term rentals, so legally, you can’t turn it into an AirBnB unless it’s your primary residence.”
Feldman notes that most of her buyers are moving from out of state and “want to rent for a little bit to figure out where they want to live. And because [buying a house is] so expensive, you don’t want to make a really quick decision with that much money.”
We asked her which neighborhoods to watch in the next year. Her response: LoDo, and LoHi. “Lohi is a crazy area, you can’t even buy there– if you want any type of square footage– for less than a million. So LoHi is a really hot neighborhood, LoDo is a really hot neighborhood, too.”
With housing in LoDo and LoHi so pricey, people want to rent before they buy. That’s why we think 10,854 new apartment units hit Denver in 2018, the majority of which were at ‘luxury’ price points closer to downtown.
Why ‘luxury’? Land in downtown Denver is expensive and construction costs aren’t cheap either, which means the only way to make the numbers work as a developer is to charge ‘luxury’ prices and/or make units smaller.
There’s more to it than this, but in general these are the trends driving the construction of larger (200+ unit) buildings that generally have unbelievable amenities across downtown Denver.
So what does this mean for renters?
Even though the experts think that prices might rise, we’re not so sure. Let’s start with what we do know: prices will still be seasonal. Prices typically spike in the summer— making November, December, and January a good time to lock down a lower rental rate. Most buildings will also throw in concessions during these slow winter months. Common incentives include one free month of rent, free parking, or discounted move-in costs.
Additionally, Denver apartment development has been highly concentrated in neighborhoods with convenient access to downtown. LoHi, LoDo, RiNo, and Cap Hill have all had multiple active cranes for several years now. Interestingly, many of the new buildings in these areas have started leasing out a large number of units to corporate housing companies, effectively converting much of these units to ‘hotels’. We think that these buildings will be fine in the long-term, because of all the employment growth and housing demand that’s coming to Denver, but that there might be some challenges in the short-term as supply could outpace demand.
There are great deals for renters if you know where to look…and we know where to look!
AptAmigo is one of the many businesses putting down roots in Denver. We expanded from Chicago in 2018 and chose Denver for its booming market, active lifestyle, and talented workforce. We’d love to help you make sense of Denver’s rapidly changing apartment market and make your move as seamless as possible.
Since 2015, we’ve helped thousands of people find homes that fit their budget and lifestyle. If you’re thinking about relocating to the mile-high city, check out our in-depth neighborhood guide or read on to the neighborhood summaries below. If you’re thinking about moving to Denver, reach out to us here. We’d love to help you find your perfect place!
Denver Rental Summary by Neighborhood
Top Neighborhoods to Watch: LoDo, LoHi, & RiNo
- LoDo is at the center of everything and the most walkable. Includes 16th Street mall, Larimer Square, Union Station and easy access to all sporting events. Can get busy on game days and weekends.
- $1,700 starting price
- AMLI Riverfront Park, AMLI Riverfront Green
- Tons of mid to upscale bars and restaurants are around LoHi. Walking and biking distance to downtown, but just outside the boundary of workweek chaos. Hip professionals make up this crowd. Short cab ride to Mile High and Coors Field.
- $1,700-$1,800 for a one bed
- Westend Apartments, Alexan LoHi, Centric LoHi
- Up-and-coming arts district (just gave a ton of street artists free reign to “beautify” Larimer Street). Upcycled industrial warehouse feel with lots of new builds. Trendy crowd, tons of breweries, bars, restaurants, and art galleries.
- Price trends are pretty standard and start at $1,500
- Edison at RiNo, AMLI Denargo Market, The Dylan
- Also called North Cap Hill, this quiet neighborhood is a close walk to downtown. Tons of restaurants, even a couple Speakeasies. Brick streets with a quaint feel.
- Little more expensive at $1,600-$1,700
- One City Block, AMLI Park Avenue, The York on City Park
Central Business District
- The CBD sits at the heart of everything. Very professional crowd, lots of office buildings, rush hour traffic, and high rises. Parking is usually in a garage or paid lot; Many buildings don’t have guest parking. Great options for public transportation, though: close to Union Station, the Light Rail, bus stops, and very bikeable.
- Prices start in the mid 1500s for a small studio.
- The Quincy, The Apartments at Denver Place, 1600 Glenarm Place
- Said to be “where everybody lives when they first move to Denver.” A laid-back vibe: No highrises here, mostly older houses with yards and street parking. Check out local favorite City O’City for vegan comfort food and a view of the Capitol Building.
- Affordable: starting at $1,000 per month
- The Burnsley, 7/s Denver Haus
- West Highland boasts a neighborhood vibe with city amenities: breweries, restaurants, bars, and great view of the downtown high-rises. The location makes commuting easy as it’s close to the freeway and removed from rush hour traffic.
- $1,400 for a studio and $1,500-$1,700 for a one bed. In an effort to draw people to the area, lots of buildings are offering concessions.
- Highlands32, Emery West Highland
- Denver’s high-end neighborhood with fine dining and upscale shopping (Tiffany & Co., Burberry, Louis Vuitton, Restoration Hardware, etc.). Nightlife is quiet here, as most residents are business professionals.
- $1,800 starting for a studio
- St. Paul Collection, Alexan Cherry Creek, Steele Creek
- Move to Washington Park for a quiet neighborhood with expansive flower gardens, wine bars, and lots of active people. Weekend farmers markets, community events, and sports are common in the park.
- Starting around $1,600
- The Henry, Hanover Platt Park
If you’d like to chat with one of our knowledgeable locals and get some personalized advice, we are only a call or text away. We’ve helped thousands of people relocate, and would love to help make your move a breeze.
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Dan is the CEO and Co-founder of AptAmigo. You can find him spending time with his newborn, staying on top of rent trends, and exploring all Chicago has to offer.