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Five key takeaways for the market heading into 2026
Denver developers completed over 12,000 units in 2025, including the 370-unit The Finch in the city’s Golden Triangle neighborhood. (CoStar)
CoStar Analytics
December 22, 2025 | 9:11 AM
Denver’s multifamily construction wave continues to pummel the market. Vacancies remain near record highs, dragging down rent growth as landlords face increased competition for renters.
However, construction is projected to decline sharply in the year ahead, setting the market up for a gradual recovery.
Multifamily rent growth has been under pressure this year due to an oversupply of units. Denver posted some of the steepest declines among major U.S. markets with rents contracting by 3.9% in 2025, according to CoStar data. Austin, Texas, was the only major market to outpace these rent losses, at negative 4.9% for the year.
Nearly all areas of the Denver market are reporting negative annual rent growth. The steepest declines are occurring in construction-heavy areas like Aurora and East Denver, where rents are down more than 4% from the previous year.
Looking ahead, CoStar forecasts that demand will outpace new supply in 2026. However, vacancies will likely remain high in the year ahead as the market contends with a significant supply overhang, and rents aren’t projected to return to the long-term benchmark until 2027.
Population growth in the Denver metropolitan area has moderated compared to the rapid expansion of the 2010s, when the region’s economic diversification into higher-paying industries attracted talent from across the country. The slowdown could further slow the apartment market’s recovery.
The region has grown 0.8% over the past year, compared to the pre-pandemic 10-year annual average of 1.6%. Denver’s higher cost of living has tempered growth, and domestic migration has shifted to affordable markets largely in the Sun Belt.
While population growth has slowed in recent years, the region continues to attract a younger demographic, largely due to the area’s outdoor and recreational lifestyle. Roughly 23.2% of Denver’s population is between 24 and 34 years old, according to Oxford Economic data. This younger demographic falls within prime renter years, helping to support demand for apartments.
Property managers note that generous, widespread concessions are primarily the reason leases are getting signed.
A record high 68% of Denver-area apartment buildings offered concessions in November, surpassing the national average of 44%. Renters can expect up to 12 weeks of free rent on a one-year lease in new apartment complexes.
Concessions have also become increasingly common in stabilized properties, or those that are at least 90% leased or have been open for at least 18 months, as property managers focus on shoring up renewals.
Renters of high-end units continue to drive demand. With tenants now receiving up to 12 weeks of free rent on a one-year lease, some renters are taking advantage of the substantial discounts to upgrade their living conditions. Over the past 12 months, net absorption — the difference between move-ins and move-outs — in high-end, four- and five-star buildings totaled 10,000 units, resulting in all positive net absorption in the Denver market. Vacancy in this segment peaked in late 2024 and has since fallen by 130 basis points to 12.8%.
As more renters take advantage of incentives offered at the top end of the market, demand and rent growth have pulled back in midtier, three-star properties. Vacancy in this segment is expected to continue rising through 2026, ultimately peaking near 14.5% in early 2027.
In an encouraging sign for local landlords and property managers, apartment demand in the Denver area is expected to pull ahead of new supply in the year ahead. Roughly 3,700 units are scheduled to open in 2026, marking the lowest level of new supply dating back to 2013.
As broader economic uncertainty mounts, coupled with Denver’s slowdown in population growth, recovery is expected to be slow. Vacancies will likely remain high in the year ahead, and rents aren’t projected to return to the long-term benchmark until 2027.
Despite an interest-rate hike of three-quarters of a percent by the Federal Reserve on Wednesday, and additional increases likely still to come, some housing economists aren’t expecting another big surge in mortgage rates now or in the coming months.
A recent slowdown observed in the U.S. housing market has largely stemmed from the sudden jump in mortgage rates felt in late spring and early summer, in line with the Fed’s decision to move up interest rates in an ongoing effort to combat inflation.
Existing-home sales declined for the fifth straight month in June, down 5.4% from May and 14.2% from the prior year, according to the National Association of Realtors. Unsold inventory was at three months’ supply nationally in June, up from 2.6 months in May and 2.5 months in June 2021, likely attributed to less buyer demand.
Lawrence Yun, chief economist at the NAR, said in a mid-year forecast event by the association before Wednesday’s Fed meeting that the mortgage market has already priced in additional rate hikes, including yesterday’s increase. Plus, fixed mortgage rates are tied to the 10-year Treasury rate, although other metrics, including inflation, are factored in.
“It’s possible that we may be topping out in mortgage rates, independent of what the Fed may be doing in future months,” Yun said.
After an average of 3.45% in January, the 30-year fixed mortgage rate jumped to an average of 4.98% in April, then 5.52% in June, according to Freddie Mac data. More recently, that rate has hovered in the mid-5% range.
That doesn’t mean mortgage rates will completely stabilize but smaller swings up and down are more likely, Yun and others predict.
Mark Vitner, senior economist at Wells Fargo & Co. (NYSE: WFC), said in an email there probably will not be a repeat of the abrupt move seen this past spring.
“There is a growing sense that the Fed is getting close to finishing hiking rate(s), and the markets are expecting the Fed to cut interest rates next year,” Vitner continued. “Mortgage rates have already likely seen their highs for this year but will probably spend much of the rest of the year a quarter percentage point above or below 5.5%.”
Skylar Olsen, chief economist at Seattle-based Zillow Group Inc. (NASDAQ: ZG), also said in an interview mortgage rates will likely be “steady as she goes” for the foreseeable future, even with the additional expected hikes from the Fed.
But if mortgage rates remain somewhat stable, hovering in the mid- to upper 5% range, does that mean the housing-market slowdown that’s occurred in recent weeks in response to skyrocketing mortgage rates will reverse course?Olsen said affordability because of higher mortgage rates and home prices will still be the key hurdle for a lot of households.
“If interest rates can remain stable, then changes and behavior are much more driven by long-term dynamics, which are still solid: a big millennial generation, a boomer generation downsizing,” Olsen said. “There’s a lot in the housing market that’s not going to change as much as (people might) think, but we are absolutely going into a period where the volumes and quantities are going to slow.”
A Message from Glass Properties Group
As we step into a brand-new year, all of us at Glass Properties Group want to take a moment to say thank you.
Thank you for trusting us with one of life’s biggest decisions. Thank you for your referrals, your loyalty, and your belief in our team. And thank you for allowing us to be a part of your journey—whether that meant buying your first home, selling a long-time property, or building long-term wealth through real estate investments.
Reflecting on the Year Behind Us
The past year brought challenges, changes, and opportunities across the real estate market. Through it all, our mission remained the same: to provide clear guidance, strategic insight, and hands-on support—no matter the market conditions.
We’re proud of the wins we achieved alongside our clients:
1. Helping buyers navigate competitive conditions with confidence
2. Assisting sellers in maximizing value through smart pricing and marketing
3. Guiding investors through value-add, multifamily, and long-term wealth-building opportunities
Every closing represented more than a transaction—it represented trust.
Looking Ahead to the Year in Front of Us
The new year brings fresh momentum, new goals, and exciting possibilities. Whether your plans include:
1. Purchasing your next home
2. Selling and repositioning your assets
3. Exploring investment or multifamily opportunities
4. Or simply staying informed as the market evolves
Our team is here to be your strategic partner, your advocate, and your trusted resource.
We’re entering this year energized, informed, and ready to help you make smart, confident real estate decisions—backed by data, experience, and a full-service support team.
Here’s to What’s Next
We believe real estate is more than property—it’s about building stability, opportunity, and long-term wealth. We’re honored to do that work alongside you.
From all of us at Glass Properties Group, we wish you a Happy New Year filled with success, growth, and new opportunities. We can’t wait to see what we’ll accomplish together.
Cheers to a great year ahead! 🥂
If a move is on your radar for 2026, there’s a lot more working in your favor than there has been in a while.
After a stretch where many people felt stuck, 2026 is shaping up to be a year with more balance, more options, and more clarity for people who want to make a move. Not because the market is suddenly “easy,” but because several key conditions are shifting.
Here’s what the experts are saying you have to look forward to.
Danielle Hale, Chief Economist at Realtor.com:
“After a challenging period for buyers, sellers and renters, 2026 should offer a welcome, if modest, step toward a healthier housing market.”
The National Association of Realtors (NAR):
“Top economists have one word to sum up the housing market for 2026: opportunity. Lower mortgage rates and a rising supply of homes are expected to open up the housing market . . . something the real estate industry and potential home buyers and sellers have been waiting for, following three years of stagnation.”
Mark Fleming, Chief Economist at First American:
“. . . for the first time in several years, the underlying forces are finally aligned toward gradual improvement. Mortgage rates may drift down only slowly, but income growth exceeding house price appreciation will provide a boost to house-buying power — even in a higher-rate world. Affordability won’t snap back overnight, but like a ship finally catching a steady tailwind, it’s now sailing in the right direction.”
Mischa Fisher, Chief Economist at Zillow:
“Buyers are benefiting from more inventory and improved affordability, while sellers are seeing price stability and more consistent demand. Each group should have a bit more breathing room in 2026.”
Just remember, while the national outlook is improving, conditions will still be different based on where you live. Some markets will move faster than others. Some will see stronger price growth. Others will remain flat. As Lisa Sturtevant, Chief Economist at Bright MLS, explains:
“Market performance will hinge on local economic conditions, making 2026 one of the most geographically divided markets we’ve seen in years.”
That’s why understanding what’s happening in your specific area is key. The national trends set the stage, but local dynamics determine how they play out for you. And that’s why you need an agent.
If you want more information on what these trends mean for your local market and which trends you’ll want to take advantage of, reach out to a trusted real estate agent.
Global investment firm Kennedy Wilson scooped up the Fletcher Southlands complex in Aurora, Colorado, for a bargain price. (CoStar)
By Katie Burke
CoStar News
November 25, 2025 | 11:13 AM
Denver’s multifamily market has been slogging through a panoply of challenges, but a flurry of larger deals among high-profile buyers is creating the framework for what could become a stronger year ahead.
Kennedy Wilson is the latest heavyweight investor to widen its stake in the region with the closing of a nearly $95 million deal for an apartment complex on the Denver outskirts. While the price tag is less than the $103.3 million CBRE Investment Management paid for the 320-unit complex in 2021, it’s the latest deal to suggest buyers see opportunity on the horizon.
The deal with the Beverly Hills, California-based global investment firm closed this month, according to property records.
Built in the early 2000s, the Fletcher Southlands apartment complex at 22959 E. Smoky Hill Road in Aurora has changed hands several times since, a trajectory that has coincided with Denver’s emergence as one of the fastest-growing multifamily markets in the United States.
CBRE’s investment arm purchased the complex when Denver and other cities across the country were benefiting from pandemic-triggered migration shifts. Population growth pushed demand and rents to all-time highs, and developers sprinted to capitalize on the boom.
Since the start of 2021, more than 55,450 units’ worth of projects have broken ground across the Denver area, one of the most active construction pipelines in the U.S.
The market has since been choking on some of that growth, a scenario in which pricing has fallen and investor interest has cooled.
More than 16,000 units have been added to the regional inventory over the past year, according to CoStar data. The influx of units has meant landlords have had to compete for renters, and demand was largely unable to keep up with the increasing supply.
With the higher cost of capital and slower rent growth, investment volume was pushed to a cyclical low in the second half of 2022, and many buyers kept their foot on the brake for the next couple of years.
Investors collectively have spent about $2.8 billion on Denver-area multifamily acquisitions over the past year, CoStar data shows, down roughly 30% from investment volume in the years leading up to the pandemic.
Hines sells apartment complex in Denver’s priciest multifamily deal this year
The historic spike in new development has also meant that landlords are competing for tenants, often offering concessions of up to 14 weeks of free rent on a one-year lease or other perks, such as complimentary parking, move-in services or credits to nearby businesses. As a result, Denver has been at the forefront of the national rent decline, in October posting a 1.3% drop — the steepest among U.S. markets.
Denver’s construction activity is finally beginning to slow. Add that to potential interest rate drops, and the city’s investment landscape could become a bit more attractive.
Already, Hines has landed a deal with a Florida investment firm for $125.6 million, Denver’s priciest multifamily acquisition so far this year. Shea Properties has also finalized a few sales in the Denver Tech Center over the past month. And Pacific Urban Investors, the multifamily management arm of brokerage Marcus & Millichap, paid $117 million for a 420-unit apartment complex in Greenwood Village, an affluent Denver suburb that commands some of the highest rents in the market.
Ball Arena isn’t getting left behind as Kroenke Sports & Entertainment plots to redevelop the acres of parking lots surrounding it.
The latest submission from KSE detailing work around where the Kroenke family’s professional sports teams play contained a hint at future changes to the arena itself.
In a formal site development plan for the first phase of the Ball Arena development, Ball Arena and the area directly surrounding the home of the Colorado Avalanche and Denver Nuggets is labeled with “Arena Expansion.”
There are no descriptions as to what arena expansion means in the plan. KSE said the company is identifying the best use of the arena and the space around it.
“The ‘Arena Expansion’ designation could turn out to be a lot of things,” Mike Neary, executive vice president of business operations and real estate, said in a statement. “We aren’t far enough along to know exactly what would go there but this allows us to move forward as soon as the best use has been identified.”
KSE could expand the arena itself or add long-desired practice facilities to Ball Arena. NBA athletes who have departed Denver have regularly said the team’s practice court and other training areas are not up to par.
As part of a development agreement with the city related to the reworking of the area around the arena, KSE agreed to keep the Avalanche, Nuggets and Colorado Mammoth in the city until 2050.
A site development plan identifies grading, preliminary transportation concerns, landscaping and utility needs for proposed development projects while giving a general sense of where buildings will be located and how large they will be. The arena expansion reference is included in the portions of the plan discussing water utilities and grading.
The Ball Arena development will eventually cover nearly 70 acres of prime real estate next to downtown and include a new city park, affordable housing, retail and residential space.
The first phase, which is expected to be completed in seven years, will include a performance venue, a hotel and two residential buildings along with a pedestrian bridge that will span Speer Boulevard, connecting the development to downtown. Those structures will all be built north and east of Ball Arena, close to Speer.
According to previous KSE submittals to the city, the performance venue will be around 128,000 square feet and include space for a restaurant on the ground floor. The venue, the hotel and two residential buildings will be connected by an underground parking structure. The new submission shows 225 spaces in that parking structure with a plan for 326 housing units and 481,672 square feet of commercial space. KSE has committed to designating 18% of the new housing units as affordable housing.
The new plans show a restaurant or bar will also be included as part of the hotel, as will a rooftop terrace.
There are extensive bike racks planned for the area, with over 150 bike parking spaces scattered around the four proposed new buildings; there will also be bike parking options inside the buildings, totaling 367 indoor spaces for bikes.
According to a transportation demand management plan submitted alongside the site development plan, KSE plans to subsidize at least 50% of the cost of transit passes for tenants who live on the site.
The intersection of Chopper Circle and 11th Street will also be reworked, according to the SDP.
The plans show that to complete streetscaping upgrades, 46 trees will be removed from the site, most of which are honey locusts. However, several currently paved areas will be converted to tree beds or other open space, the plans show. At least 40 trees will be added back into the area.
On the elevated promenade connected to the Wynkoop Crossing bridge, there will be even more plants and landscaping, according to the submission.
Commercial and multifamily mortgage loan originations were 36 percent higher in the third quarter of 2025 compared to a year earlier, and increased 18 percent from the second quarter of 2025, according to the Mortgage Bankers Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released earlier this month.
Commercial and multifamily borrowing has now increased for five straight quarters on both a quarterly and annual basis. Lending activity increased last quarter across most major property types and capital sources, led by particularly strong growth in office, retail, and hotel properties. While some sectors, such as health care and industrial saw slower activity, overall volumes reflected improving sentiment as property values stabilized and loans reaching maturity were refinanced.
Among investor types, the dollar volume of loans originated for investor-driven lenders increased by 83 percent year-over-year. There was a 52 percent increase in loans for depositories lenders, a 40 percent increase in loans for government sponsored enterprises (Fannie Mae and Freddie Mac), a 5 percent increase in commercial mortgage-backed securities loans, and a 4 percent decrease in life company loans.
On a quarterly basis, third quarter originations for retail properties increased 141 percent compared to the second quarter of 2025. There was a 76 percent increase in originations for hotel properties, a 67 percent increase for office properties, and a 12 percent increase for multifamily properties. Originations for health care properties decreased 6 percent and industrial properties decreased by 17 percent compared to second quarter of 2025.
Among investor types, between the second quarter and third quarter of 2025, the dollar volume of loans for GSEs increased 37 percent, loans for depositories increased 36 percent, originations for CMBS loans increased 31 percent, and loans for investor-driven lenders increased 14 percent. The dollar volume of loans for life insurance companies decreased by 22 percent.