According to CBRE’s Q1 2025 Denver Industrial figures, the first quarter of 2025 witnessed a total net absorption of 531,000 sq. ft., reflecting a slight shrink from the previous quarter but an increase of 9.9% compared to Q1 2024.
Historically, the beginning of the year has been marked by sluggish starts, with Q1 absorption being the lowest quarterly total in nine of the last ten years.
The construction pipeline showed signs of decline this quarter, with 864,000 sq. ft. delivered across six buildings and three new projects commencing, covering 397,000 sq. ft.
All new projects started this quarter were speculative and located within the Airport submarket.
Total vacancy in the industrial sector rose by 10 basis points (bps) quarter-over-quarter, attributed to delayed tenant build-outs and smaller speculative deliveries.
Despite this, 77.7% of completions this quarter were build-to-suits or preleased, hinting at continued demand.
In the first quarter, sublease availability saw an increase of only 69,000 sq. ft., although year-over-year, it has risen by 16.9%.
Key findings from the report indicate that Metro Denver achieved 531,000 sq. ft. of positive total net absorption in Q1 2025, which is an 8.4% decrease compared to the previous quarter.
However, this figure exceeds the positive absorption of 483,000 sq. ft. recorded in Q1 2024 by 9.9%.
The most notable absorptions this quarter included retailer Target occupying a new build-to-suit project in the North submarket, covering 529,000 sq. ft., and Discount Tire taking 339,000 sq. ft. at 9400 E 46th Ave in the Airport submarket.
Both the direct and total vacancy rates saw an uptick, with an increase of 10 bps quarter-over-quarter to 7.7% and 8.1%, respectively.
Year-over-year, total vacancy has risen by 30 bps but remains below the recent peak of 8.2% recorded in Q2 2024.
The increase in vacancy is largely driven by speculative deliveries in the market.
The overall average direct asking rent remained stable compared to Q4 2024 at $9.61 per sq. ft.
However, it saw a year-over-year increase of 3.2%.
Achieved rents held steady at $8.48 per sq. ft. quarter-over-quarter, marking an 8.2% rise year-over-year.
Leasing volume in Q1 2025 totaled 2.7 million sq. ft., a 13.0% decline compared to the previous quarter but still higher than the volumes in Q1 and Q2 of 2024.
Renewal activity notably increased, surpassing new leasing volume for the first time since Q2 2020.
New leases and expansions accounted for 41.0% of total activity, while renewals and extensions made up 59.0%.
Goods MFG overtook the Other category in leasing activity this quarter, with Packaging Corporation of America signing the largest lease.
Transportation and Distribution maintained its position at the top, representing 38.0% of activity over the last four quarters.
The Airport submarket dominated Q1 2025 leasing activity, capturing 1.6 million sq. ft., or 60.0% of total leasing, with the top five deals all located there.
The Northwest submarket followed with 365,000 sq. ft. signed, and the Southeast submarket reported 176,000 sq. ft.
Development activity resumed its decline after a brief increase in Q4 2024, with the amount under construction decreasing by 467,000 sq. ft. to 4.7 million sq. ft.
Three buildings broke ground this quarter, together encompassing 397,000 sq. ft., while 864,000 sq. ft. were delivered.
The new projects include Evergreen Development’s Superblock Building A & B and CIG’s Eastpark 70 Building 7, all speculative and located in the Airport submarket.
image source from：https://milehighcre.com/denver-industrial-market-posts-solid-q1-2025-gains-despite-seasonal-slowdown/
