Another luxury complex is stretching Denver’s apartment market even further as the city’s record construction pipeline, which already leads the nation, is pushing developers to compete for tenants.

Multifamily giant Greystar, alongside global investment group Ivanhoé Cambridge and PSP Investments, one of Canada’s largest pension investment managers, completed work on a 230-unit apartment project in the city’s Five Points neighborhood, a fast-growing pocket that has attracted the bulk of new construction activity that has landed in the region over the past several years.

Known as The Dorsey, the 13-story property at 600 Park Ave. W touts amenities such as a sun deck, high-end fitness center, coworking and lounge spaces, and a wellness studio, all in a location the development team bets will be especially attractive to prospective renters thanks to its proximity to the local restaurant scene as well as multiple transit routes.

Yet even with perks such as free Wi-Fi for each unit and on-site office space rentals if residents need a separate workspace, The Dorsey is launching in an area that has consistently ranked among the top neighborhoods in the United States for construction activity over the past decade, said Jeannie Tobin, CoStar’s director of market analytics.

The neighborhood’s supply of apartments has ballooned by about 50% throughout that period, and with another 7,200 units still underway, the current pipeline is near an all-time high and will expand inventory by another 12.2%, CoStar projects.

The Dorsey broke ground in April 2021 alongside other projects that collectively are slated to add upward of 4,050 units once completed, according to CoStar data.

Denver isn’t alone in struggling to balance pandemic-era construction booms with waning demand. More than 583,000 new units were completed across the country last year, the highest number of units since the mid-1980s, according to CoStar analysis. That supply burst outstripped demand, pushing the national vacancy rate past 7.5% by year-end 2023 from the 6.5% reported at the start of the year.

Rent growth has slowed significantly as cities struggle to digest the influx of new apartment projects. That is especially true in Sun Belt markets that experienced an unprecedented population boom throughout the pandemic. Rents in both Austin, Texas, and Orlando, Florida, fell by roughly 5% last year, according to CoStar data, and the vacancy rate in Raleigh, North Carolina, jumped from about 8.5% to just shy of 12% over the past 12 months.

Bottom line: Developers with incoming projects are now scrambling to fill them.

From The Dorsey to other recently completed multifamily projects in the city, such as Hines’ 397-unit Mica RiNo and One River North at 3930 Blake St., developers and landlords — especially those with luxury properties — know renters have a lot of options to choose from and are offering concession packages in an effort to win over prospective leases.

About a third of the multifamily properties scattered across the greater downtown Denver area are offering some kind of incentive for new leases, Tobin said. Renters are most likely to find concessions in new construction complexes during the lease-up phase when up to six weeks of free rent has become the standard.

As new construction continues to outweigh demand, however, those free-rent periods are already getting longer and longer. The Dorsey, for example, is offering up to 12 complimentary weeks, according to the property’s website, a significant savings for future tenants considering rents at the Five Points complex are slated to be among some of the highest in the city.

A typical unit at The Dorsey is expected to command more than $2,400 per month, according to CoStar data. By comparison, rates across greater Denver average less than $1,850 a month.