Denver’s industrial market is expected to keep up the momentum coming off a record-breaking year that saw absorption reach 4.5M SF — the highest since before the recession, when 5.5M SF was absorbed in 2006, according to CBRE’s fourth-quarter industrial report.
While users have been increasingly attracted to the Northeast submarket — only the second submarket to post more than 1M SF of annual absorption in the past 15 years — other markets also are faring well.
“Across the board, most submarkets continue to excel,” Etkin Johnson Executive Vice President Ryan Good said. “The Central corridor is probably the highest in demand, followed by the Northeast market along I-70.”
Etkin Johnson’s focus, however, is in the Northwest corridor, where it has been developing flex/industrial space at the Colorado Technology Center in Louisville. Those projects are ideally suited for research and development, pharmaceutical and high-tech engineering companies because they can accommodate an office finish of up to 40%, Good said.
Good will be among the speakers at Bisnow’s The State of Denver Industrial event Feb. 21.
“The Northeast market is a distribution market,” he said. “The Northwest is more R&D, technology — the innovative side of the marketplace. There are more specialized buildings in the Northwest and more traditional in the Northeast.”
While much credit for the strong absorption has been given to companies leasing industrial space to support their e-commerce activity, Comunale Properties President John Comunale said the market is more diverse. A number of users, for example, cater to homebuilders and contractors.
“Everybody likes to talk about e-commerce, but there’s a lot more to it than that,” said Comunale, who is also speaking at the event. “There are the granite suppliers and cabinet suppliers contractors use. It’s very broad.”
Metro Denver’s industrial market finished 2018 strong. Nine projects were delivered in the fourth quarter, adding 1.5M SF of new industrial space. For the year, 35 projects totaling 5M SF were completed.
In the Northeast market, notable completions included Becknell’s Nexus at DIA, a 540,240 SF warehouse in Commerce City, and 76 Commerce Center Building 5, a 266,240 SF warehouse in Brighton.
In the Northwest corridor, Etkin Johnson recently completed two new buildings at the Colorado Technology Center: a 109,386 SF build-to-suit for FedEx, which is relocating its distribution operations from Boulder, and a 136,610 SF speculative industrial/flex building.
Last year also was a record-setting year for sales activity with $378.4M in sales logged in the fourth quarter, bringing the year-end investment and owner/user volume to nearly $1.7B.
“It’s strong and very competitive in terms of there’s a lot of capital wanting to be in Denver,” Comunale said. “I think with Denver’s growth, it’s become more of a primary market over time and in the institutional real estate community. Denver is now on the map and it’s known as a very good place to invest.”