Colorado Multifamily, Q3 2025: Where We Stand and What We're Watching
This post is adapted from the very first issue of our monthly email update, sent in November 2025.
ZB3 Real Estate now manages 120 units across 4 properties, with portfolio occupancy of 59% and 90% across our stabilized properties.
Portfolio update
Southgate Commons continues to gain momentum after our rebrand and deep-concession strategy. Leasing and concessions have started to gain traction, resident feedback is trending positive, and the property's reputation is turning a corner.
Our other Colorado and Midwest assets remain steady and cash-flowing, supported by strong collections and disciplined management.
Our focus through year-end
Southgate Commons lease-up: target 70%+ occupancy, complete all major work, and solidify tenant retention and safety.
Portfolio financing review: assess refi vs. sale options for the stabilized properties, and keep building a strong, consistent operating history for future buyers. I think we can get to 100% occupancy across all stabilized properties by the end of the year.
Next acquisition preparation: refine underwriting and our deal flow process so we can act quickly when pricing aligns. We're seeing multiple distressed or re-priced opportunities across Colorado.
The Colorado market in Q3 2025
The Colorado apartment market continues to find its footing after two years of volatility. Across Denver and Colorado Springs, rents softened again in Q3, but there are encouraging signs the worst may be behind us.
Rents and occupancy. Average rents fell roughly 4 to 7% year over year across most submarkets, while occupancy landed near 91 to 94% in Denver and around 90% in Colorado Springs. The easy rent growth of the last cycle is gone. The focus has shifted to operations: reducing expenses, improving collections, and winning residents through better experience and reputation.
Supply and demand. The construction pipeline is shrinking fast. Denver saw new completions drop over 60% year over year, and Colorado Springs delivered roughly 1,800 units year to date, with fewer on the way. Fewer new projects today means a healthier balance between supply and demand over the next 12 to 18 months, especially for the workforce housing we focus on.
Transactions and pricing. Investment activity remains slow. Cap rates are holding firm, and the average price per unit in Denver slipped from $305K to $278K. For disciplined buyers, that creates a window to buy at a discount while competition stays quiet.
Regulatory updates. Colorado passed property tax relief measures that gradually lower assessment ratios through 2027, a quiet but meaningful boost to NOI. At the same time, a new Right-of-First-Refusal law (HB 24-1175) gives local governments the first opportunity to purchase certain multifamily assets, so we're watching that closely for future exits.
The Fed's October cut
The Fed cut the federal funds rate by 25 basis points to 3.75% to 4.00% on October 29, 2025. Fed Chair Jerome Powell stressed that a December cut is not guaranteed, citing high inflation and a volatile labor market.
This is the first real signal of easing after two years of high borrowing costs, but the impact for multifamily will unfold slowly. Short-term debt may see modest relief, while long-term financing and cap rates will likely stay sticky for several quarters. For operators, this is a window to stabilize assets, strengthen debt coverage, and position for a refinance or sale in mid-2026 rather than expect an immediate valuation rebound.
In short: rents are stabilizing, distress is increasing, and leverage is returning, setting up a potential buyer's market heading into 2026.
Looking ahead
Higher rates and slower rent growth reward operators who execute well. Our focus stays simple: stabilize, create value, and position for strength when the market turns.
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Every month I send a short, numbers-first update on what is happening at our properties and in Colorado multifamily. If you want it in your inbox, join the list at zb3realestate.com/contact.
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.
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