Denver Industrial Market Report

Builders resume notable construction efforts. After a slowdown in deliveries last year, development output accelerates in 2023, with supply arrivals nearly reaching the record 8.2 million-square-foot total achieved in 2021. Of this substantial construction slate, a large portion is going toward the Northeast area near Interstate 70 and the Denver International Airport. Although, a small share is being built on a speculative basis, which should help mitigate supply pressure. Meanwhile, warehouse and manufacturing facilities here have accessibility to ground transportation west of the Rocky Mountains and east to Kansas City, St. Louis and Indianapolis. Marketwide, manufacturing operations have also been increasing, with the metro registering its highest headcount in this sector since 2002 last year. Nevertheless, concerns over a potential recession could weigh on discretionary spending and industrial fundamentals in the near term. Metro vacancy is expected to increase for the first time in three years, moderating the speed of rent growth in 2023 as the annual pace falls below the trailing 10-year average.