Colorado Springs, CO Industrial Market Report Q3 2025

Key Findings

Leasing Velocity Slows as Tenants Take Longer to Commit: Leasing activity has noticeably slowed, with average months to lease rising to 6.6 in Q3 2025, the highest level in two years. This compares to 5.1 months in Q3 2024 and 5.5 months in Q2 2025, reflecting less appetite for companies to relocate or expand due to a more cautious approach amid economic uncertainty and increased competition among landlords to secure commitments.
Rents Reach New Heights Amid Slower Leasing Activity: Average asking rents rose to $12.02/SF in Q3 2025, marking a new record and up from $11.15/SF from the same period last year. This growth comes despite vacancy rates increasing and slowing leasing activity, indicating that landlords remain confident in the market’s long-term fundamentals. A limited pipeline of new construction has also helped keep additional supply in check relative to continued healthy demand.
Market Still Attracting Local Capital: Local investors and owner-users accounted for four of the five significant industrial sales in Q3 2025, reflecting sustained local confidence in the sector. This strong local activity contrasts with national buyers, who are taking a more selective approach amid tighter capital conditions. The trend suggests that while national capital remains active, local stakeholders continue to see value and opportunity in the market, helping to sustain transaction activity and support pricing stability.

Colorado Springs Demographics

Source: CoStar Group, Inc.

Households: 318,213
Current Population: 783,067
Median Household Income: $95,666

Information Technology (IT) company, ITS, LLC, has expanded to Colorado Springs, creating 500 new aerospace and defense jobs.

July 2025 | Source: Colorado Governor’s Office

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

Focused Metrics

5K-200K SF | Industrial & Flex Properties

Colorado Springs Industrial Sales Activity

The Colorado Springs industrial market recorded $31.51 million in total sales volume during Q3 2025, for properties in the 5K-200K SF range. This marks a 14.9% year-over-year increase from $27.43 million in Q3 2024 but a notable 56.3% decline from the $72.16 million posted in Q2 2025. Despite the quarter-over-quarter slowdown, the yearover-year gain underscores a healthier long-term trajectory for the market. This modest growth has likely been supported by emerging expectations of greater market stability heading into year-end and in 2026.

Average sale price settled at $120 per square foot in Q3, down 5.5% from the prior quarter and 7.7% below levels recorded a year ago. The $180 per square foot average spike seen in Q1 2025 illustrates how standout properties can still drive pricing well above the norm. This volatility puts an emphasis on the continued influence of deal composition on quarterly pricing trends, rather than a simple reflection of market conditions.

Average time on market improved to 6.2 months in Q3 2025, down 15.1% from Q2 but still 31.9% higher than the same period a year ago. This extended listing duration suggests a more selective and deliberate buyer pool, indicative of a market recalibrating rather than waning demand. However, the recent quarter’s faster turnover points to improving transaction velocity as pricing expectations between buyers and sellers continue to realign, signaling a potential acceleration in market activity.

Q3 2025 reflected a period of realignment in Colorado Springs’ industrial sales landscape, defined by selective dealmaking, moderated pricing, and early signs of renewed market confidence.

Colorado Springs Industrial Sales Volume & Price Per SF

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

Focused Metrics

5K-200K SF | Industrial & Flex Properties

Colorado Springs Industrial Vacancy & Rents

Colorado Springs’ industrial vacancy ticked up to 5.1% in Q3 2025, marking a 15.9% quarter-over-quarter increase from 4.4% in Q2 but a 3.8% year-over-year decline from 5.3% in Q3 2024. This modest rise signals a temporary cooling period as many businesses continue to delay expansion, or relocation plans amid broader economic uncertainty. Vacancy in Colorado Springs is well below both Denver and nationwide averages. The market’s low construction pipeline and consistent population growth are two of the main drivers behind its lower vacancies. While urgency has softened, underlying tenant demand remains intact, suggesting that the current uptick in vacancy is more reflective of cautious sentiment than structural weakness. Once macroeconomic conditions stabilize, the market appears well-positioned for a measured rebound.

Vacancy Rate

Source: CoStar Group, Inc.

Average asking rents climbed to $12.02 per square foot in Q3 2025, up 4.3% quarter-over-quarter and 8.0% year-over-year, marking a new record high and underscoring the sector’s resilient fundamentals. Landlords have maintained confidence despite lengthier lease-up times, as limited availability of high-quality space and a restrained construction pipeline continue to support pricing strength. The steady rise in rents, even as vacancy edges higher, highlights sustained occupier interest and disciplined development activity that keeps supply pressures in check.

Asking Rent Per SF

Source: CoStar Group, Inc.

Time-to-lease extended to 6.6 months in Q3 2025, increasing 20.0% from Q2 and 29.4% year-over-year. Although this represents a clear slowdown from previous quarters, current leasing durations remain within historical terms. The longer timelines reflect more deliberate decision-making rather than waning demand, as tenants weigh moving costs carefully in an evolving economic climate.

Focused Metrics

5K-200K SF | Industrial & Flex Properties

Colorado Springs Industrial Construction

Construction activity in Colorado Springs’ industrial market slowed notably through Q3 2025, extending the region’s ongoing pattern of restrained development. Projects under construction totaled 381,613 square feet, reflecting a 21.3% year-over-year and 16.9% quarter-over-quarter decline, as developers continue to adopt a measured approach amid shifting market dynamics. Construction starts dropped significantly to a mere 7,250 square feet, down 91.5% from the same quarter last year and 96.6% from Q2, signaling a near standstill in new project initiations. Recent activity indicates a halt in new developments compared to prior quarters, as developers remain cautious, carefully evaluating market conditions before proceeding with new projects. Developers are increasingly focusing on build-to-suit and pre-leased projects, moving away from speculative builds that were more common in previous cycles.