The Denver real estate market is experiencing a dynamic landscape across various property types. This comprehensive update covers the multifamily, industrial, retail, and office markets, drawing insights from the latest trends and data.
Multifamily Market
Key Highlights:
• Vacancy Rate: The multifamily sector faces a significant supply influx, driving vacancy rates to 11.1%, a two-decade high.
• Rent Trends: Average asking rents have decreased by 2.9% year-over-year, with suburban areas showing more resilience compared to luxury developments concentrated in Downtown Denver.
• Pipeline Challenges: Over 14,000 units remain under construction, predominantly in the luxury category. Developers have significantly reduced new starts due to high construction costs and economic pressures.
Outlook: While vacancy rates are expected to stay elevated through early 2025, reduced construction starts signal potential relief from supply-side pressures later in the year.
Industrial Market
Key Highlights:
• Vacancy Rate: The industrial market shows a vacancy rate of 7.9%, one of the highest in major U.S. markets.
• Rent Growth: Despite high vacancies, annual rent growth reached 1.0%, driven by strong demand for small-bay properties.
• Development Trends: The pipeline includes 4.0 million square feet, with most projects targeting large-scale logistics facilities. Small-bay properties remain in high demand.
Outlook: The market is transitioning toward balance as construction starts have slowed significantly. Rent growth is anticipated to improve in late 2025 as availability tightens.
Retail Market
Key Highlights:
• Vacancy and Rent: Retail remains a strong performer with a low vacancy rate of 3.9%. Rents have risen 3.6% over the past year, outpacing inflation-adjusted growth.
• Demand Drivers: National chains and experiential retailers are driving leasing activity. Cherry Creek stands out as a premium retail submarket, benefiting from mixed-use developments.
• Construction Trends: Limited new construction has kept supply in check, supporting tight fundamentals.
Outlook: Retail is expected to remain a stable performer in 2025, with sustained demand from national and local tenants.
Office Market
Key Highlights:
• Vacancy Rate: At 17.3%, Denver’s office market struggles with one of the highest vacancy rates in the nation.
• Leasing Trends: Tenants are downsizing and shifting to newer, high-quality spaces. Older buildings are experiencing high negative absorption rates.
• Rent Growth: Asking rents grew by 1.1% year-over-year, though real rent growth is muted due to significant concessions.
Outlook: The office market remains tenant-favorable, with an oversupply of space and limited recovery prospects in 2025.
The Denver real estate market reflects a mix of challenges and opportunities. Multifamily and office sectors face headwinds from oversupply and evolving demand, while industrial and retail markets exhibit resilience. As developers adjust to new economic realities, market stabilization is on the horizon for the latter half of 2025.
At Corken + Company, we are here to help you navigate Denver’s ever-changing real estate landscape. Whether you’re looking to invest, lease, or buy, our expert team can guide you every step of the way. Contact us today!
