Yardi Matrix reported last week that they believe that new apartment completions in metro Denver will drop by 51% this year from last year when 11,618 new apartments were added according to them. Why the big drop this year? Yardi Matrix cited slowing rent growth at the end of last year, construction financing that went away, not enough construction crews were available, and prices for construction were rising 5% a month earlier this year.
However, local firm Apartment Insights recently counted 22k new apartments as under construction in the metro Denver area with another 40k in the planning pipeline. Those 22k new apartments will probably be delivered in 2020, 2021, and 2022. This would be about 7,300 new apartments a year which sounds like a very believable number.
Remember the vacancy rate dropped last quarter to just 5.1% which tells me that higher rents are coming soon. Thus, I expect more new apartments will be built. But, I bet we will see more apartments being built in the suburbs than in the City of Denver going forward. Why pay extra to live near downtown if there are no live sports, concerts, shows, or plays to attend? Not to mention many restaurants and bars have closed in the City of Denver. Plus who wants to ride in a germ factory, an elevator, to get to their 10th story apartment?