Apartment-building boom in Denver second-largest in the U.S., per capita

Helen H. Richardson, The Denver Post

As much as rents have risen in metro Denver this decade, the increases could have been even higher absent the second-largest surge in apartment construction of any major metro area in the country, according to a new report from Apartment List.

Metro Denver added $12 billion worth of new apartments between 2000 and 2016. That ranks 11th among the nation’s 25 largest metros in dollar terms, but second only to Seattle after adjusting for the size of the population.

“It’s hard to quantify an exact rent impact, but it’s safe to say that in the face of rapidly increasing demand, Denver’s rent growth would have been more extreme without these additional units,” said Chris Salviati, a housing economist at Apartment List, an apartment search site based in San Francisco.

Rents in metro Denver are up 62.5 percent between 2000 and 2016, according to the Consumer Price Index for Denver-Aurora-Lakewood. That is higher than the 42.4 percent increase in consumer prices overall across that same time period.

Apartments as a share of metro Denver residential construction have gone from $1 out of every $5 spent in 2000 to nearly $1 out of every $3 in 2016. Multifamily permits went from 41.4 percent of the total to 53.3 percent over that time period.

To put into perspective how apartment-heavy metro Denver has become, multifamily permits account for only 18 percent of all permits in the U.S. Nationally, apartment construction ramped up between 2000 and 2007, dropped sharply through 2010 and then came just shy of the old highs in 2017, according to the study.

Metro Denver followed a different trajectory. Multifamily construction peaked in 2001 during the tech boom at $1.27 billion, crashed to $342 million in 2003, made a lower peak of $862 billion in 2007 and then fell hard to a 24-year low of $142 million in 2010.

But apartment construction has surged this decade, passing the 2007 high in 2015 when it reached $983 million and continued to hold up even as the trend has slowed nationally.

Apartment completions soared to 13,348 for 2017, a 38 percent increase from 2016, according to a report in January from the Apartment Association of Metro Denver. The trade group forecasts metro Denver could see another 10,000 to 12,000 deliveries this year.

Single-family construction nationally, by contrast, remains at half the old peak reached in 2005, which has contributed to severe housing shortages across the country. A study from the Up for Growth National Coalition estimates that even accounting for last decade’s housing surplus, the country fell short of needed housing by 7.3 million units between 2000 and 2015.

A study from Shift Research Labs and the Colorado Futures Center at Colorado State University estimates metro Denver faces a shortfall of 32,000 housing units.

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