In an encouraging sign for local landlords and property managers, apartment demand in the Denver area pulled ahead of new construction for the first time in three years.

After 11 consecutive quarters of rising vacancy rates, renters leased about 475 more apartments than developers completed in the second quarter, CoStar data shows.

While Denver’s apartment market has likely turned a corner, the recovery is expected to be slow.

More than 51,000 apartments were developed from the second quarter of 2021 through the second quarter of 2025. During that time, net absorption — the difference in move-ins and move-outs — totaled roughly 30,500 units. This created a surplus of 20,500 units, increasing the overall vacancy rate from 5.5% midway through 2021 to the peak of 11.6% at the start of 2025.

However, an improving supply and demand balance brought vacancies down to 11.3% at the end of the second quarter, according to CoStar.

Another 12,200 units are in the pipeline. While the construction wave has cooled from the peak of 32,000 units underway in early 2023, the remaining units under construction will likely keep vacancies elevated in the near term as they are added to the market.

The elevated vacancy rate has forced Denver-area landlords to lower rents and offer generous concessions to compete for renters. Overall, rents are down 0.1% from the start of the year through the end of August.

Widespread concessions, such as several months of free rent, are largely the reason leases are getting signed, property managers have noted. Typically, concessions are limited to apartment complexes during lease-up, referring to properties that have been open for less than 18 months or haven’t reached at least 90% occupancy.

However, even stabilized properties are employing concessions as renters have more options than ever. Roughly half of Denver-area apartments are now offering some form of incentive.

Looking ahead, CoStar forecasts that supply and demand will end 2025 in equilibrium. However, vacancies will likely remain high this year, and rents aren’t projected to return to the long-term benchmark until 2026.