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Metro Denver is experiencing a glut of luxury apartments that is depressing rents in swanky neighborhoods. Landlords are being pushed into offering more concessions, which is dropping the cost to live downtown. Some believe a bubble is about to burst while others claim the market will catch up with prices bouncing back.

“I personally believe that Denver is overbuilt,” says Kelley Klobetanz, chief underwriter at Greystone & Co. in Denver said at a multifamily conference hosted by Bisnow.

Charlie Williams, a senior vice president at KeyBank in Denver, acknowledges a slowing down but isn't ready to talk about bursting bubbles. “We are a market that is diversified finally. Denver isn’t a boom and bust town anymore,” he said.

Looking at Class A space, the newest and highest quality units, annual rent increases over the past five years have run 1.9 percent downtown, 4.1 percent elsewhere in the Denver area and 2.7 percent nationally. About one in seven units downtown come with concessions like a month or more of free rent versus 1 in 10 elsewhere.

Five years ago, a developer who built or purchased Class A units outside Denver’s core would have enjoyed rent increases of 20 percent versus only 10 percent for those who followed the herd and stayed in the urban core, Pierce’s numbers show. So what are developers doing? Last year, they increased the supply of downtown units by about two-thirds over the annual average going back to 2014. They are doubling down rather than pulling back.

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