Denver Concessions Remain Robust, Reflecting Soft Demand and High Supply

For the past few years, Denver has flown a bit under the radar, but operators local to the area have felt a lot of challenges lately. Recent results appear mixed, with some directional improvement of late but a big mountain still left to climb. Denver's 2nd quarter saw rents grow 1.7%, according to data from Realpage Market Analytics. That far exceeded the 2nd quarter performance of the past two years. Despite the overall improvement, Denver remains a deeply challenged market. The fact that Class A, Class B, and Class C rents have fallen year-over-year for two straight years now suggests Denver's market woes aren't just supply driven. Instead, it looks like Denver's a market where demand has been the issue. And there may be no better indicator than concessions. Denver's concessions skyrocketed last year, approaching a frequency not seen since the Great Financial Crisis (GFC). But the average discount being offered (now an incredible 43 days free on average) is actually higher than even the GFC period. A downtick in concessions was recorded in 2nd quarter, but that was the first time that's happened since 2023. So, there may be some early signs of demand stabilizing as supply simultaneously eases. But again, Denver's story isn't a ringing endorsement of strong market fundamentals (at least for now). Class A woes look to be supply-driven with lingering labor market softness. Class B and especially Class C look to be heavily impacted by weak job growth and further complicated by unfavorable migration trends.