Key Findings

• Transaction Activity Rebounds Strongly: Total sales volume reached $1.48 billion in 2025, up 7.6% from 2024, with Q4 marking the strongest quarterly performance in three years. While Q1 reflected a slow start, pent-up demand and improved pricing clarity fueled accelerated activity throughout the year, signaling a return of transactional momentum and increased market confidence heading into 2026.
• Vacancy Remains Elevated, Small-Bay Units Outperform: Average vacancy climbed to 8.63% in 2025, a decade high, driven by COVID-era oversupply and cautious tenant leasing. Smaller-bay units under 20,000 square feet continued to outperform, maintaining near 5% vacancy, over 300 basis points below the broader market, highlighting strong and resilient demand for this segment.
• Development Activity Remains Cautious Despite More Starts: New construction starts rose 74.9% year-over-year, but total under-construction inventory fell 40% compared to 2024. Elevated construction costs and limited speculative development have concentrated new projects in pre-leased or build-to-suit opportunities, suggesting that future development will remain deliberate, well-capitalized, and demand-driven.

 

Focused Metrics

5K-200K SF | Industrial & Flex Properties

 

Denver Industrial Sales Activity

Q4 2025 marked the strongest quarterly sales volume over the past three years within the private sector, underscoring a decisive close to the year and reinforcing the return of transactional momentum in Denver’s industrial market. While Q1 reflected a muted start amid lingering uncertainty, activity accelerated meaningfully as the year progressed. For example, Q2 delivered a sharp 79.3% year-over-year increase, representing the most pronounced quarterly rebound of the year and signaling the release of pent-up demand. This acceleration was driven by improving pricing clarity and a growing willingness among sellers to adjust expectations, allowing existing on-market inventory to transact. Total annual sales volume reached $1.48 billion in 2025, up from $1.38 billion in 2024, reflecting a 7.6% increase year over year. Looking ahead, the strong finish to 2025 has materially improved sentiment entering 2026. Market participants are increasingly optimistic, with greater confidence that values have stabilized and downside risk has moderated. As a result, landlords who have been on the sidelines waiting for stability are electing to bring assets to market, buyer pools are deepening, and softened pricing continues to support liquidity. These conditions collectively point toward a more active and constructive transaction environment in the coming year.

 

Denver Industrial Sales Volume

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

 

Pricing trends in 2025 underscore a clear shift from the volatility seen in 2024 to a more stable market environment, with quarterly price-per-square-foot movements remaining within a much tighter range than in the prior year. With that said, each quarter recorded year-over-year pricing declines, with the most significant adjustment occurring in Q3, when average pricing fell 23.6% from the same period in 2024, marking the pricing trough for the year. Quarterly movement in 2025 was notably restrained. Prices declined modestly from Q1 to Q3 before rebounding in Q4, suggesting that buyer resistance likely emerged once pricing reached a perceived floor. This Q4 stabilization coincided with the strongest sales volume of the year, underscoring a correlation between pricing certainty and transaction velocity. The consistent pricing in 2025 indicates that the market is transitioning from repricing to normalization, allowing capital to deploy with greater confidence.

 

Sales Price Per SF

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

 

Months on market continued to lengthen in 2025, averaging 6.38 months, reflecting a significant 26.3% increase from 2024. Marketing timelines peaked in the fourth quarter at 7.60 months, an 18.8% increase from Q3, and a new decade high. This extended exposure period highlights a more cautious buyer environment, as purchasers apply more conservative underwriting standards and exhibit heightened risk aversion amid ongoing economic and capital market uncertainty. Deals are getting done, as evident with increased sales volume, but only after rigorous underwriting and further diligence upfront.

 

Months on Market

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

 

Denver Industrial Vacancy & Rents

Vacancy in 2025 climbed steadily to an average rate of 8.63%, a notable 18.5% increase over last year. While the 9.00% recorded in Q4 2025 represents a modest 1.1% quarterly rise, it establishes now as the highest quarterly vacancy level seen in the past decade. This elevated level reflects a combination of oversupply stemming from the COVID-era development cycle and sustained caution in tenant leasing decisions. While vacancy is expected to moderate in 2026, it is likely to remain elevated relative to historical norms.

 

Smaller-bay unit sizes under 20,000 square feet however continue to significantly outperform, with vacancy near 5% for 2025—over 300 basis points below the broader market—supported by a limited supply pipeline and a diversified tenant base. These factors reinforce the resilience of small-bay industrial properties as one of the most stable and in-demand segments of the market.

 

Denver Industrial Vacancy Rate

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

 

Average asking rents softened modestly in 2025, declining 3.4% from the prior year to $11.53 per square foot. Despite this annual decrease, rents remained relatively stable quarter-over-quarter, with minimal fluctuation throughout the year, an indication that owners largely resisted aggressive rate reductions even as vacancy continued to rise.

 

While overall absorption has been tempered by lingering oversupply and fewer tenant relocation or expansion plans, landlords have focused on maintaining headline rents and have relied more on concessions to keep spaces occupied. Extended rent abatement periods, larger tenant improvement allowances, and flexible deal structures have become common tools to attract tenants, suggesting that occupancy—rather than rent growth—will be the primary driver in gradually bringing vacancy back toward normalized levels. Tenant reactions to rising labor and operating costs will be important indicators to watch for in 2026 as well.

 

Asking Rent Per SF

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

 

Leasing timelines lengthened meaningfully in 2025, with average months to lease increasing to 5.45 months on average for the year, a dramatic 28.8% increase from 2024. As vacancy remains elevated, tenants benefit from a wider range of available options, allowing for greater selectivity and prolonged negotiations. From Q2 to Q4 2025, months to lease rose sharply, increasing 18% over just three quarters. This environment continues to pressure owners to differentiate their assets through competitive pricing, enhanced concessions, and increased broker incentives. With tenants holding more leverage in a market with ample availability, lease negotiations are increasingly driven by tenant priorities, requiring owners to offer creative concessions to minimize turnover and maintain occupancy.

 

Months to Lease

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

 

Denver Industrial Construction

New construction starts in 2025 totaled 365,157 square feet, marking a 74.9% increase over 2024. The year began strong, with Q1 leading the gains, while activity slowed in Q4, consistent with trends from the prior year. Despite the notable year-over-year growth, overall starts remained well below historical levels observed over the past decade, reflecting a still-cautious development environment.

 

SF Construction Starts

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

 

Even with an increase in new construction starts in 2025, overall square footage under construction declined by 40% compared to 2024, averaging only 1.45 million square feet per quarter for the year. Elevated construction costs—driven by labor constraints, material pricing, and financing, along with tempered tenant demand—have continued to limit speculative development, with most new starts focused on pre-leased or build-to-suit projects. This disciplined approach reflects careful capital deployment by developers. Given the ongoing imbalance between supply and demand and persistently high construction costs, the development pipeline is expected to remain moderate, with future projects increasingly intentional, well-capitalized, and driven by confirmed tenant demand.

 

SF Under Construction

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

 

 2025 Buyer & Seller Composition

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

 

 Sales by Buyer Origin

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