Why 2025 is the Year to Invest in Denver’s Value-Add Multifamily Market
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As we enter 2025, the real estate investment landscape is defined by uncertainty. Rising interest rates, concerns over a potential economic slowdown, and fluctuating property valuations have prompted many investors to either wait on the sidelines or turn to large institutional funds in search of perceived stability. However, these approaches often come with drawbacks: higher fees, less disciplined underwriting, and a one-size-fits-all strategy that misses niche opportunities.
At Ninth Square Real Estate Partners, we see this as a moment of opportunity, especially in Denver’s multifamily housing market. Our boutique investment fund focuses on value-add properties in Denver’s core neighborhoods, where local expertise and strategic improvements create compelling opportunities for investors. Here’s why Denver should be at the top of your list in 2025.
Why Denver Stands Out Among Multifamily Markets
Denver continues to outperform other popular real estate markets like Austin, Raleigh-Durham, and Nashville. Its combination of stable rental demand, strong occupancy rates, and a thriving economy driven by high-quality job creation makes it uniquely resilient, even in challenging market conditions.
Resilient Rent Rates
Denver experienced a modest rent adjustment of -0.6% YoY in Q3 2024, driven by a temporary oversupply of approximately 18,000 new units delivered during the year. Historically, Denver’s rent rates stabilize quickly after similar periods of increased supply. Compare this to Austin, which faced an -8.1% decline in rents during the same period due to a significant supply surge. Raleigh-Durham and Nashville also underperformed, with rent declines of -3.7% and -1.8%, respectively.
This steady performance reflects Denver’s ability to weather fluctuations in supply and demand, providing investors with greater long-term stability.
Strong Occupancy Rates
Denver’s Q3 2024 occupancy rate of 94.0% was only slightly below the national average of 94.7%, and key submarkets like Five Points, Capitol Hill, and Cherry Creek reported higher occupancy at 94.3%. These neighborhoods are particularly attractive due to their vibrant cultural amenities, proximity to employment hubs, and walkability. By contrast, Austin’s occupancy rate was 92.4%, and Raleigh-Durham stood at 93.1%. Denver’s ability to retain tenants, even in a volatile market, underscores its strength as a rental market.
Tech-Driven Economic Growth
Denver has emerged as a hub for tech and innovation, attracting top-tier companies like Amazon, Google, and Palantir. Between 2018 and 2023, Denver awarded over 21,500 tech-related degrees, supporting a 12.3% increase in tech employment—ahead of Austin’s 10.4% and Raleigh’s 6.5%. This influx of educated, high-earning professionals drives demand for quality multifamily housing in the city’s most desirable neighborhoods.
The Value-Add Opportunity in Denver
In competitive real estate markets, value-add multifamily investments present a compelling alternative to high-priced, institutional-grade Class A properties.
Affordable Alternatives: Renovated value-add properties provide tenants with modern amenities and finishes at a more accessible price point, catering to a broader segment of Denver’s growing renter population.
Upside Potential: Many underperforming assets in Denver’s core neighborhoods offer significant room for strategic improvements. By enhancing interiors, upgrading energy efficiency, and adding desirable community amenities, we unlock higher rents and property appreciation.
Why Partner with Ninth Square Real Estate Partners?
As a boutique investment fund, Ninth Square offers distinct advantages over larger institutional investors.
Local Market Expertise: We specialize in Denver, operating on a block-by-block level to identify hidden opportunities.
Proven Track Record: Recent acquisitions like 1326 Corona and 815 Ellsworth highlight our ability to generate consistent rent growth and NOI improvements, even in volatile market conditions.
Aligned Incentives: We invest our own capital alongside our partners, ensuring shared goals and a commitment to success.
Why Act Now?
Market dislocations often create rare opportunities for those ready to act:
Attractive Pricing: Rising interest rates and refinancing challenges are motivating sellers, creating opportunities to acquire properties below replacement cost. Older Class B and C assets in prime locations are particularly attractive for modernization or repositioning.
Positioned for Recovery: By investing now, you can capitalize on Denver’s tightening rental inventory and projected rent growth in 2025 and beyond.
Ready to Invest in Denver’s Multifamily Market?
At Ninth Square Real Estate Partners, we believe Denver’s resilience and growth potential make it one of the best markets for value-add multifamily investments in 2025. Our boutique approach, proven strategies, and alignment with investors’ goals ensure a partnership built for long-term success.
Contact us today at info@ninthsquarere.com to explore how we can help you achieve your investment goals.