Closing Out 2025: Projects Done, Pricing Down 20 to 30%

This post is adapted from the December 2025 issue of our monthly email update.

Over the past month, our attention has been heavily weighted toward operations and project completion.

Projects finished

We wrapped up several key improvements that changed the look and feel of our properties, including exterior and security upgrades at Southgate Commons and a full unit refresh at a couple of other properties. These projects improved curb appeal, resident experience and long-term durability.

A slow leasing season

Leasing season has been especially slow this year, and we're seeing it across the state as Colorado works through elevated new supply. We also had a couple of move-outs and are pushing hard to backfill those units quickly while staying disciplined on resident quality. Tracking our leasing KPIs closely and working with property management to adjust and try new strategies based on the data has set us apart from the competition.

Acquisitions: more active than in months

• Toured 5 deals in the past month

• Submitted multiple LOIs

• Seeing assets in our wheelhouse trade 20 to 30%+ below 2021 to 2022 pricing

Many of these properties have sat on the market for 12+ months, and sellers are increasingly realistic about today's conditions. It feels like we're approaching the bottom, and we want to be ready.

New Colorado laws (effective January 1st)

Several new regulations take effect at the start of the year, including changes to how utilities are billed. Across our portfolio, our property management partners are handling this by wrapping utility fees into rent. That simplifies compliance, but it puts more pressure on headline rents and leasing strategy in an already soft market.

Leasing and rent trends

Leasing has been brutal the past couple of months across Colorado.

• Average rents statewide are down high single digits year over year

• Older vintage properties, like the ones we focus on, have seen rent declines of up to 20% on some assets

This is why operational discipline, tenant experience and expense control matter more than ever. Absent and mom-and-pop landlords are getting crushed.

Transaction activity

Market activity remains muted:

• 2025 sales volume is roughly 40% of 2021 levels

• About 50% of 2022 levels across Colorado

Many owners are choosing to hold rather than sell. That creates a good environment for prepared buyers. Competition is lighter, and the sellers who are active often need to transact.

Interest rates

The Fed delivered its third rate cut of the year, continuing a slow shift toward easing. It won't immediately reset values or cap rates, but it helps stabilize financing conditions and supports the case for buying assets now that can be refinanced or repositioned as capital markets normalize.

Our focus (unchanged, for a reason)

• Lease up and maintain occupancy in a challenging market

• Weather the storm through disciplined operations

• Begin selectively targeting distressed or mispriced opportunities we can buy at a meaningful discount

Supply is already starting to slow, and we expect much better conditions in 2026 and especially 2027 and beyond as today's challenges work through the system.

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About the author: Zach Bagby is the founder of ZB3 Real Estate. Zach has invested in Colorado apartments since 2018, starting with a Denver 4-plex Zach lived in and growing to a 77-unit community in Colorado Springs. Zach leads deal sourcing, underwriting and capital raising, and lives in Castle Rock.