Key Findings

Denver Industrial Market Demonstrates Strength Despite Volatility: Although quarterly sales volume totals have remained somewhat volatile, Q3 2025 posted the strongest third-quarter performance since Q3 2022, shortly after the interest rate hike cycle began. Historically, third quarters tend to be among the slowest periods of the year; however, this uptick compared to recent years indicates renewed confidence among buyers looking to deploy capital back into the Denver industrial market. Average sale price per square foot has eased from the recent peak earlier this year but still remains comfortably above pre-COVID benchmarks. Despite headwinds from both local and broader economic conditions, the Denver industrial sector continues to outperform most other asset classes, demonstrating notable resilience and sustained investor interest.
Extended Time on Market Reflects Shifting Dynamics in Sales and Leasing: Time on market for both sales and leasing has continued to rise quarter-over-quarter. On the sales side, extended listing periods are largely driven by unrealistic pricing expectations and ongoing challenges in securing financing, which remain key obstacles for many investors. Leasing activity has also slowed, with longer downtime between deals as more tenants opt to renew existing leases rather than pursue larger or additional spaces amid economic uncertainty. In response, landlords have become increasingly creative with concessions— offering incentives such as higher tenant improvement allowances, longer rent abatement periods, and other flexible terms to attract and retain tenants.
Asking Rents Taper as Vacancy Reaches Decade High: Asking rents have cooled from their recent peak in Q2 2024 as vacancy rates continue climbing, now reaching a decade high of 8.9%. Although new construction has slowed significantly, many companies remain hesitant to relocate or expand unless absolutely necessary amid unpredictable market conditions. Elevated debt levels, persistent trade tensions from tariffs, and recent federal government shutdowns have all contributed to a more cautious business environment. As a result, companies are adopting increasingly conservative expansion strategies until greater clarity emerges across both the micro and macroeconomic landscapes.

Denver Metro Demographics

Source: CoStar Group, Inc.

Households: 1,286,778
Current Population: 3,074,957
Median Household Income: $107, 841

Denver International Airport ranks as the third-busiest airport in North America, generating over $47B annually.

Source: CoStar Group, Inc.

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

Focused Metrics

5K-200K SF | Industrial & Flex Properties

Denver Industrial Sales Activity

Denver’s industrial sales volume reached $274.8 million in Q3 2025, marking a 1.1% year-over-year increase yet a 42.0% decrease from Q2 2025. The slowdown in sales volume highlights a cautious investment environment, as buyers navigate persistently high borrowing costs and ongoing macroeconomic uncertainty, ranging from elevated debt levels and trade tensions to recent government shutdowns. Although this represents a notable decline from the previous quarter, market sentiment remains cautiously optimistic. Volume is expected to rebound in the coming quarters, supported by early signs of stabilization driven by recent rate cuts and the prospect of additional easing anticipated in 2026.

Sale price per square foot averaged $153 in Q3 2025, representing a 9.5% decrease from the same period last year, however a modest 0.7% increase quarter-over-quarter from Q2 2025. Despite quarterly fluctuations, average pricing remains consistently above pre-COVID historical levels. This indicates that while broader macroeconomic factors have exerted some pressure on pricing, deal composition continues to play a significant role in driving quarterly variations.

Average months on market rose to 6.4 in Q3 2025, up 10.3% from the prior quarter and 28.0% above levels recorded a year ago. Sales transactions continue to take longer to close from increased buyer scrutiny amid ongoing market volatility and unrealistic seller pricing expectations. The extended timelines highlight a more deliberate pace of deal-making as participants navigate shifting economic conditions.

Denver Industrial Sales Volume & Price Per SF

5K-200K SF | Industrial & Flex Properties | Source: CoStar Group, Inc.

Focused Metrics

5K-200K SF | Industrial & Flex Properties

Denver Industrial Vacancy & Rents

Denver’s industrial vacancy reached 8.9% in Q3 2025, up 4.7% quarter-over-quarter and 21.9% year-over-year, marking the highest level in the past decade. The increase reflects a shift towards more disciplined business growth strategies, as ongoing trade disputes, tariffs, and recent federal government shutdowns have added additional uncertainties to the economic landscape. Companies are opting to renew leases more frequently as they carefully evaluate the risks and costs associated with relocation. This trend reflects a broader focus on stability and adaptability, with many organizations preferring to delay major real estate decisions until market conditions become clearer. With that said, smaller unit sizes continue to outperform. Units between 5,000 – 20,000 SF for example recorded vacancy rates of 5.1%, 370 basis points lower than the general average.

Vacancy Rate

Source: CoStar Group, Inc.

Asking rents averaged $11.49 per square foot in Q3 2025, reflecting a moderate 0.4% increase from the prior quarter but a 2.5% decline year-over-year. Rents have eased steadily since peaking in Q2 2024, as vacancies have risen from tempered tenant demand and a wave of new supply from the past decade. This increase has prompted landlords to employ more creative concession strategies to gain new interest and sustain occupancy levels. These include higher tenant improvement allowances, longer rent abatement periods, and enhanced incentives for tenant representation brokers.

Asking Rent Per SF

Source: CoStar Group, Inc.

Months to lease rose to 5.7 in Q3 2025, a 21.3% increase from the prior quarter and 26.7% higher than a year ago. The longer timelines reflect a softening in tenant urgency to commit to new industrial or flex space, as market unknowns and prolonged trade disruptions have encouraged many to renew existing leases rather than expand or relocate. With availability on the rise, tenants have gained greater leverage in site selection and lease negotiations, contributing to more deliberate decision-making across the market.

Focused Metrics

5K-200K SF | Industrial & Flex Properties

Denver Industrial Construction

Construction activity in Denver’s industrial market substantially eased through Q3 2025, continuing the city’s trend toward smaller-scale, demand-driven development. Projects under construction totaled 1.33 million square feet, marking a 40.5% year-over-year and 7.3% quarter-over-quarter decline, as developers remain cautious amid softer tenant demand and elevated construction financing/material costs. Despite the broader slowdown, new construction starts climbed to 534,523 square feet for the quarter, marking a 70.3% increase from Q2 and a 202.5% jump year-over-year. This growth is driven primarily by a shift in demand toward build-to-suit and preleased projects rather than speculative developments. Additionally, new construction is increasingly being demised into smaller units to better align with market demand—10 of the 17 projects currently underway are under 200,000 square feet. This trend highlights Denver’s resilient base of small and mid-sized businesses, as smaller unit sizes appeal to a broader and more active tenant pool.

SF Under Construction

Source: CoStar Group, Inc.

SF Construction Starts

Source: CoStar Group, Inc.

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