See what's driving rents Mile-High in this Colorado city (HINT: It's not the legalization of marijuana). Mile-High Rents >
Rents in Denver have hit all time highs. Monthly rent for an average 1 bedroom is now $1,180 in Denver, up 5.2% over last year. To put this in perspective, it is roughly 2X the average rent increase in the top 50 U.S. cities.
The popular Lower Downtown "LoDo" neighborhood, renowned for its nightlife and 70+ bars and restaurants, currently has the most expensive 1 bedrooms in the city with an average cost of $1,790 per month. Close behind are the Golden Triangle and Downtown neighborhoods with 1 bedroom monthly rents of $1,640 and $1,520, respectively.
Denver's sky-high rents are the result of explosive demand and a lack of available housing options. In the following report, Apartment List will uncover the 8 trends that have led to the recent surge in Denver rental prices.
The bustling Denver economy has been a major draw for many out-of-state residents looking for jobs. Colorado ranked among the top states for employment growth in 2013, and that growth is expected to continue throughout 2014.
By mid 2013, Colorado was one of only 15 states in the U.S. that had achieved a full recovery from the recession and Denver saw many of the benefits of the state's healthy bounceback.
In fact, over 45% of the jobs created in Denver in recent years are considered "high paying" jobs, defined as jobs paying over $30.00 per hour. These lucrative jobs have been a huge draw for skilled professionals both inside and outside of Colorado. This trend is expected to continue given the optimistic forecast for hiring expectations in Denver. The Metro Denver Economic Development Corporation’s CEO, Tom Clark, said the forecast is encouraging for business expansion in the region:
"Metro Denver will continue to record higher personal income, stronger retail sales, enhanced residential and commercial construction, and broad-based job growth at higher rates than both the nation and state. We plan to capitalize on these strengths when pitching companies considering new jobs and investment in our region," - The Metro Denver Economic Development Corporation CEO, Tom Clark
According to several recent studies, Denver is also frequently cited as one of the best cities in the U.S. to start a business. In its annual analysis of the "The Best Small Business Cities in America" Biz2Credit ranks Denver as the 3rd best small-business city in the nation, and several other publications - including Forbes and VentureBeat - have noted Denver's business-friendly environment and healthy startup ecosystem. Startup Genome mapped out startups in the Denver metro area and there are over 220 startups who call Denver home. This healthy and growing business community has further increased the popularity of the city from job seekers and job creators alike.
Given the business-friendly environment and concentration of skilled talent, a number of businesses are setting up satellite offices, or relocating their corporate headquarters to Denver. A recent example is Layer3 TV. The company's choice to relocate its headquarters from Boston to Denver will add over 300 skilled jobs to the Mile-High City:
"Layer3 TV is excited to open our corporate headquarters in Denver and to become part of the thriving Colorado eco-system of innovators in both telecommunications and entertainment. We look forward to benefiting from the tremendous talent pool here and becoming a contributor to the Colorado economy." - Layer3 Co-founder and CEO, Jeff Binder
According to Colorado Governor John Hickenlooper: "Layer3 TV’s decision to move its headquarters to LoDo is the latest in a growing trend of innovative start-ups that have chosen Colorado as the best place to expand their business…Our entrepreneurial and highly educated workforce and innovative business climate entices exciting companies like Layer3 TV to move here."
The local Denver economy has also been strengthened by an oil and gas boom. The production growth, as well as the increase in the prices of these commodities, has created additional jobs in Colorado, leading to more migration into the state and Denver.
Due to the robust job creation, Colorado has seen a huge surge in new, younger, residents. This influx of younger professionals is more likely to be renters than homeowners, which further increases demand for apartments.
Many other states are losing this younger renting demographic to Colorado because of a rapid rise in job creation. These young renters flock from both coasts.
The chart below shows migration patterns into the state of Colorado. Which two states are losing the most residents to the mountain state? California and Massachusetts.
Rental prices are not the only thing rising in the Mile-High City. The cost of buying a home is also increasing at a faster clip than the national average. Surging home prices make it even more challenging for Denver locals to buy a home, so they remain renters for longer. This in turn feeds the demand for rental units.
Given the rapid increase in home prices, we wanted to investigate whether it makes more sense to rent or buy a home in Denver. According to our analysis, purchasing a house is the more economical decision for those planning to stay in their same home for 5+ years. This is typically the case for most real estate markets in this country given the relatively low interest rate environment and appreciating home prices (and rent prices!) in most areas of the country. When we compared the total cost of either renting a 2 bedroom apartment or purchasing a $250,000 home in Denver, the savings were between $400 and $800 per month. Although the purchasing option is more economical over time, Denver residents should consider the hefty upfront costs and lack of flexibility involved with home ownership.
Typically, rents increase in environments where vacancy rates are extremely low. In Denver, the vacancy rate is currently 4.8% (as of Q1 2014). Anything under 5% is considered an "extremely low" vacancy rate. Rates this low are typically seen in extremely supply-constrained markets like Manhattan or San Francisco.
When you consider that the most recent rental vacancy rates for the U.S. are 8.4% and Denver's is 4.8%, you can begin to understand how few apartments there are available for rent in Denver on a relative basis. This lack of housing supply has caused upward pricing pressure and will continue until more supply, in the form of new housing options, becomes available in Denver.
During the economic downturn, there was a dearth of new multifamily housing options built in Denver. The lack of new supply in recent years has caused rents to spike as the demand for housing was far exceeding available supply. The good news is that developers have begun to pick up the pace again and the new supply coming to market should relieve the pricing pressure over the long term.
In 2013, Denver ranked among the top 10 cities in the U.S. to authorize new multifamily housing permits. There is a period of time between the authorization of these permits and the actual apartments being made available for rentals.
When the time comes, these new apartments should provide some relief given how few housing options are currently available to Denver residents.
No analysis of the economic boom that Denver has witnessed in recent years would be complete without an investigation of the impact of the recent passing of Amendment 64: the legalization of recreational marijuana usage in Colorado. While tourism has experienced a bump due to the new regulations, we have not yet been able to capture the full impact as it relates to rental prices.
The robust economy and spike in migrations to Colorado have led to an influx of new demand for housing in Denver. At the same time, the supply of apartments available to these new residents has not been able to keep up with the demand, leading to intense pressure on housing prices. The good news for Denver residents is that hope may be in store. A recent study by ARA Colorado’s Apartment Insights showed 19,349 apartment units are currently under construction in metro Denver, with another 19,110 units in planning stages. This additional supply of available housing should bring some relief to Denver residents who have seen their rents increase faster than almost every region across the country.
We’re not lying when we say that in Denver, health and fitness are king. Don’t let anyone catch you smoking unless you spend most of your time on E. Colfax Ave., begging for change. Invest in an REI membership, secure a pair of skis or a snowboard, and exchange your loafers for a pair of Chacos (which you should expect to wear year-round).
Seriously, though: this town loves outdoor sports. Boulder’s Flatirons protest the plains a meager 30 miles away, and the Estes Park entrance to Rocky Mountain National Park is only 50 miles further. If you’re not willing to get active, you’re going to miss out on a lot of social opportunities. This also means you’ll need a mode of transportation—or a roommate with one and one hell of a closet for all that gear. Let’s get you acquainted with your options for storage—er, accommodation!
Henry John Deutschendorf, Jr. (John Denver to you noobs) didn’t err when he chained not only his name but also his decidedly smiley brand of folk music to this city and its nearby mountains. But you’ll likely be smiling only after you master these roads, which can feel a bit “country” even inside the city limits.
Like many cities in the western U.S., Denver evolved organically: planners only later imposing number schemes and cardinal directionality, bringing order to (beautiful) chaos. Thus the neighborhoods in Denver follow no pattern. Instead, they pop up like dandelions in springtime.
Great metaphor, huh? But if it’s true, it means you’re going to have a time and a half navigating this prairie. Here are some hints to aid you find your pick among the local flora.
Because there really are so many varieties, we’ve picked only the neighborhoods closest to the city center.
LoDo: Ah, the stately orchid. Lower Downtown (get it now, dontcha?) perches on the park-lined Platte River. Close to Union Station, Coors Field, MCAD (the Museum of Contemporary Art Denver), and the Auraria Campus (an educational facility housing three public universities), LoDo leaves little for want. Parking is crazy, and crazy expensive, so find a complex with a private garage if possible. Unsurprisingly, this zone has the highest rates in town. Don’t get your hopes up for anything less than $900/month for a studio, $1650/month for a two-bedroom unit. This is also a relatively pet-unfriendly area. Unless your beloved Fido is smaller than the average carry-on luggage item—and you don’t mind paying an extra fee—look elsewhere.
Uptown/Capitol Hill: Each portion of this neighborhood borders the central business district, making the iris a perfect example for it. Irises look a lot like orchids, but (due to being more common), they brag a slightly lower price tag. $800-$900/month for a spacious studio to enjoy the urban residential feel of Uptown. If you care to mix this sentiment with historic architecture; and higher population density, skip south to Capitol Hill. Cap Hill has a young, energetic, pedestrian-friendly feel—although if you’re not looking to extend your college years into professional adulthood, you may find the neighbors tiresome, despite their “eccentricity.” $700/month all-inclusive studio near Wax Trax Records is the low end. More pet friendly than LoDo.
Five Points: You’d do well to call this one the desert sage. Its close-in location makes this neighborhood prime fodder for urban renewal. Great access to downtown with a fraction of the action. (In other words: perfect for commuters!) Lots of stand-alone homes converted to duplexes and single-accommodation apartments, some of which go for as little as $825/month (for a whole house?!), but some as much as $1500/month (2nd floor converted executive condo). Expect the deposit to match the monthly rent.
East Denver: The multicolored gazania represents this strange conglomeration of communities. Park Hill is the first intentional interracial neighborhood, and Congress Park was gentrified long ago. The latter is jealously close to the Botanic Gardens and Cheesman Park. Both neighborhoods are vying to be considered part of the proper “midtown” section of Denver, and new apartment complexes will reflect this competitive stance in their rates. A two-bedroom townhouse in Park Hill ought to run you $1400-$1600/month, but that will likely include a pool and gym access. It’s easier to find single apartments in Congress Park, which should cost $600-$800/month and require a 12-month lease.
Washington Park and Baker: Washington Park is as all-American as the sunflower. Imagine “Life is Good”-clad parents training for marathons with their wee ones in the stroller, careening down a beautiful, tree-lined street. This perfect portrait is gonna cost, ya, though: expect around $800-1000/month for a single duplex apartment. The historic Baker neighborhood, on the other hand, sits west of Washington Park and boasts dive bars and dirty music venues. Here’s South Denver’s veritable cactus. It doesn’t get any edgier than setting off to thrift the S. Broadway strip. $650/month for a two-bedroom bungalow sets the bottom range; a single room in a renovated Victorian, however, can cost you that much alone.
Lincoln Park: The dahlia of Denver, Lincoln Park is predominantly Hispanic. Revitalization work is well underway which would turn this close-in neighborhood into a cultural hub. That said, it’s not there yet…So be wary and check the digs out thoroughly. Inexpensive rent here (some single units $500/month), but you’re usually looking at an older complex. Definitely pit-bull friendly.
Highlands: At long last! The coveted rose. The Highlands enclave has become incredibly popular in recent years, as it combines the amenities of the other close-in neighborhoods without the parking problem of LoDo.. Sitting just across I-25 from downtown, Highlands consists of pockets of boutiques and pubs, solid restaurants with local flavor and heaps of diverse housing. $800/month for a single luxury apartment; $1400/month for a three-bedroom ranch house. And everyone has a dog or baby, according to his or her preference!
The best way to find an apartment in Denver is simply to go meandering in this sunny wonderland yourself. Just don’t get distracted and try to bed down in one of the many glorious parks—that’s still illegal, even in Denver. Good luck, dear hopeful Coloradoan. Recall the words of our patron saint: “Sunshine on my shoulders makes me happy…”
Now go getcha some!
Apartment List is your go-to rental site for your apartment search. Browse thousands of new listings every day to give you the largest selection of cheap 1 bedroom, 2 bedroom and 3 bedroom apartments for rent in Denver. Find studios, condos, townhomes, and homes in your favorite neighborhoods. You can search for all utilities paid apartments, and pet-friendly homes with the tap of a button. With more available listings than Craigslist, you're sure to find a house for rent on Apartment List.