A s we move into the second half of the year, now is an opportune time to consider how multifamily has per- formed in the opening two quarters of 2018. The combined mar- kets of Denver and Colorado Springs are major markets tracked by our national firm and, compared to the same period in previous years, 2018 has been strong. • New supply. In the first six months of 2018, the markets added just under 5,500 new units. During the same span two years ago, that number was only 1,100. The area has been experiencing a new con- struction boom, and the flow still is increasing. In addi- tion to the new supply already delivered this year, 11,000 units are under construc- tion. These likely will be entering the markets within the next 12 to 18 months. For ref- erence, a total of 9,000 units have been delivered in the last 12 months. • Average occupancy and absorp- tion . Average occupancy rose just over 0.6 percent in the first half of the year, slightly below the national average of 0.75 percent. Trailing the national average slightly isn’t much of a concern. The areas had above- average new supply to contend with, and the mark was still an improve- ment over the 0.2 percent gain dur- ing the same period last year. As of the end of June, average occupancy sat at 90.7 percent. Net absorption, defined as the net change in the number of rented units, also has been strong. The areas absorbed almost 6,500 in the first two quarters and over 9,800 units year over year. After adding more units than were newly rented in the opening half of 2017, it’s a positive development that absorp- tion has outpaced new supply by 1,000 units in 2018. • Average effective rent gain. With so much new supply, it’s no surprise that average effective rent growth outperformed the national average of 3 percent in the period – manag- ing to hit 4 percent. While a 4 per- cent gain is very strong, and beating the national average sounds good, the fact remains there’s been a drop off compared to previous years. During the first six months of 2017, average effective rent for the Please see Page 26 Midyear review: What to watch INSIDE The power of systems thinking helps create vibrant, inclusive and activated communities Development insights This section highlights many associations helping to tackle the statewide challenge Affordable housing PAGES 30-36 The Coloradan, a development at Denver Union Station, proves condo demand is high Project spotlight PAGE 18 August 2018 Jordan Brooks Analytics specialist, ALN Apartment Data Inc. PAGE 10 Jeff Perry, Rocky Mountain Photography The markets of Denver and Colorado Springs, compared to the same period in previous years, have been strong in 2018; however, there are areas to watch as new units are delivered.