Denver Metro Housing Market is in Balance for Q1 2020, Creating Reasonable Benchmark for Measuring F

Data collected through March 11 and is not inclusive of coronavirus impact

Denver (April 24, 2020) – Today the Apartment Association of Metro Denver released results from the
quarterly Denver Metro Area Apartment Vacancy and Rent Survey conducted by the University of
Denver’s Daniels College of Business and Colorado Economic Management Associates and sponsored by
the Colorado Division of Housing.

The vacancy rate was 5.9% for the first quarter of 2020, up from the prior quarter where it was 5.3%.
This translates to approximately 21,300 vacant apartments in the metro area.

The average rent increased 2.2% to $1,536. This is a $33 increase from the prior quarter. The annualized
(12-month) rent increase was up 3.7% from a year ago.

“The most important lens through which to view this quarter’s report is that the data was collected
through March 11,” said Mark Williams, executive vice president of the Apartment Association. “This
means the data is not reflective of the coronavirus and its subsequent economic impact. Certainly, next
quarter’s study will illustrate the impact from the virus.”

The Denver Metro apartment market added 2,240 new units with a negative absorption of 429 units for
the first quarter.

Teo Nicolais, a Harvard Extension School Instructor specializing in real estate, said this increase in the
first quarter is normal.

“Rent increases slightly in the first quarter are normal,” said Nicolais. “In 28 of the last 39 years and in 10
of the last 10 years, rent increases have taken place in the first quarter. Generally, that is a result of
management companies setting rent prices for the new year and increased concessions typically
accompany the rent increases to soften the impact on renters. This year was no exception.”
The Q1 report found that concessions increased during the first quarter and were at the second highest
in the last 10 years. The Q1 concession average was $88, up 0.8% from Q4 2019, reflecting a balanced
and softening market, according Nicolais.

Regarding vacancies for Q1, the report indicated that the average unit vacancy was 5.9%, which is up
0.6% from Q4 of 2019, again, showing another indication that the market was balanced.

“Vacancy increases in the first quarter only about half of the time,” said Nicolais. “This quarter’s increase
in vacancy implies that it’s a softer rental market, which is good news for renters.”

While the overall average rent is $1,536, different rent ranges fluctuate greatly based on the age of the
buildings. Properties built in the 1970s continue to rent for an average of 30% less than average rental
costs for apartments, coming in at an average of $1,197. There are currently more 1970s units available
than any other decade, creating a wider variety of attainable options for renters.

“This Q1 report showed a relatively strong and balanced rental housing industry in Metro Denver,” said
Williams. “While it remained strong in Q1, this baseline report will show how quickly the coronavirus
impact will be measured in the second quarter, which will be seen in the report published in mid-July. In
the meantime, housing providers are working extremely hard to keep their residents in their apartments
with flexible payment plans and creative solutions. Everyone wins when residents can stay in their
homes.”

New construction of apartments will be interesting to watch, as over 275 new apartment communities
are currently under construction. These properties will add another 22,700 new units to the metro area.
It’s estimated one-third of those units will still open this year.

“How quickly those units are built and then absorbed will be a huge indicator of how durable the
apartment market is in Denver,” remarked Williams.

For all of 2019, 10,829 units were absorbed, which is lowest number of unit absorption compared to
each of the past four years. For all of 2018, 13,708 units were absorbed, which is a 21% decrease from
2018 to 2019. Nicolais stated that it’s important for the Metro Denver economy to continue
construction of new units to maintain the rental housing economy for the long haul.

“The results of the Q1 report continue to demonstrate strong year-over-year rent growth in metro
Denver. As the current COVID-19 situation unfolds, we will begin to determine the impacts on
multifamily market fundamentals. April collections have been better than originally forecasted and a
slowdown in deliveries could ultimately relieve concerns related to overbuilding in metro Denver," said
Richard Ritter, financial/research analyst for Newmark Knight Frank's Multifamily Capital Markets group
in Denver.

The Denver Metro Area Apartment Vacancy and Rent Report is coordinated and published by the
Apartment Association of Metro Denver. The survey is conducted by the University of Denver’s Daniels
College of Business and Colorado Economic and Management Associates and is sponsored by the
Colorado Division of Housing and Newmark Knight Frank Multifamily.

The quarterly Vacancy and Rental Rate Survey is authored by Ron L. Throupe, Ph.D. of the University of
Denver Daniels College of Business, and Jennifer L. Von Stroh of Colorado Economic and Management
Associates. It has served as a reliable source for comprehensive data and analysis for over 36 years and
is made possible through the ongoing participation of the apartment industry and broad support from
private and public sector sponsors.

About the Apartment Association of Metro Denver
The Apartment Association of Metro Denver is among the largest multi-family housing trade
associations in the country, representing and supporting over 361,000 apartment homes in Denver. For
additional information about AAMD, please visit aamdhq.org.