2018 Q3 Denver Industrial Market Report

Market Overview

Industrial investment activity has topped more than $1 billion during 2018, marking the highest year-to-date total on record. Boosted by two significant portfolio sales during the first quarter of the year, momentum persisted throughout the second and third quarters, as investor appetite for newly
constructed, fully-leased warehouse/ distribution assets remain strong despite on-going cap rate compression. As population growth fuels employment expansion throughout Metro Denver, the development pipeline is abundant with nearly 4.9 million square feet currently under construction. Sustained positive absorption, as experienced over the past four years in the industrial market, has developers feeling optimistic when bringing a new project out of the ground. The next 24 months should be no different as demand has kept pace with new supply.

Highlighted Trends

• Metro deliveries totaled approximately 1.6 million square feet during Q3.
• 10 out of 15 submarkets realized positive net absorption.
• Third quarter industrial investment activity totaled approximately $251 million with an average sales price per square foot of $107.
• Unemployment rate in Metro Denver currently sits at 3.3 percent – national unemployment is 3.7 percent.
• The September 2018 Manufacturing ISM Report on Business stated that economic activity in the manufacturing sector expanded and grew for the 113th consecutive month, with a slight decrease in the PMI of 1.5 percentage points since August 2018.