Denver Class A Apartment Market Trends: Oversupply and Concessions (2022-2025)

The Denver Metro Class A multifamily market is currently defined by a historic imbalance between supply and demand. This segment—representing new construction, luxury finishes, and comprehensive amenity packages—is directly bearing the brunt of the thousands of new units delivered in 2024 and 2025.

Vacancy Rate Trends

Class A assets exhibit the highest vacancy rates in the metro area, reflecting the intense competition to fill units that have recently delivered or are still in lease-up phase.

• Current Status (Late 2025): Class A vacancy rates are significantly elevated, often reaching the 8.0% to 10.0% range, particularly in submarkets like Downtown, RiNo, and areas along the I-25 corridor where development has been densest. Vacancy for lease-up properties can be even higher.

• Historical Trend (2022-2024): Vacancy was tight in 2022 (around 5.0%), but began to climb sharply in 2023 and accelerated through 2024 as the construction pipeline started delivering units at an unprecedented pace. The current high rate is a function of supply outpacing even Denver’s traditionally strong demand.

Rental Rate Trends (Effective Rent)

While gross advertised rents for Class A remain the highest, the Effective Rent—the true income realized by the landlord after factoring in concessions—has declined steeply, marking significant negative growth.

• Current Status (Late 2025): Average gross advertised rents are high ($2,100 to $2,500 for a one-bedroom), but heavy concessions (commonly 6-12 weeks free rent on a 12-month lease) reduce the effective rent. Effective rent growth is near -5% to -8% year-over-year, as landlords give back significant income to maintain occupancy.

• Historical Trend (2022-2024): Rent growth was strongest in 2022, but by 2024, the pressure from oversupply forced an immediate reversal. 2025 is marked by intense price wars fought via concessions, which mask the actual price collapse in the effective rate.

Investment Implications: The Long-Term Play

Class A is a difficult short-term investment but offers an excellent long-term opportunity due to the high quality of the underlying assets.

1. High-Risk, High-Reward: Buying Class A assets today means accepting poor near-term cash flow and high vacancy risk. However, acquiring these top-tier assets at a discounted price or higher entry Cap Rate due to the current market headwinds positions an investor perfectly for the future.

2. Long-Term Demand: Denver's economy and desirability will continue to attract high-earning residents. Once the supply pipeline contracts (projected to begin in 2026/2027), the Class A segment will be the first to regain pricing power and experience rapid rent growth recovery.

3. Low Value-Add Necessity: Unlike Class B and C, Class A requires minimal immediate capital expenditure beyond normal maintenance. The investment focus is entirely on weathering the current supply storm and maintaining exceptional service/amenities.

Sources

1. [Denver Metro Multifamily Quarterly Report - Q3 2025]

2. [Denver apartment market vacancy rates and rent growth trends]

3. [Multifamily Market Trends: Class A Concessions Surge]

In summary, Class A assets are currently experiencing the most extreme market competition, resulting in the highest vacancy rates and the steepest declines in effective rent. This is a buyer's market for long-term holders willing to accept initial cash flow softness in exchange for acquiring premium, stabilized assets positioned for a strong recovery once supply normalizes.