Key Findings

• Sales Activity Rebounds Late in the Year: After a slow start, sales volume strengthened in the second half of 2025, pushing total transactions up 6.5% year-over-year to $468.8 million. A strong fourth quarter marked the highest Q4 performance since 2021, signaling renewed buyer confidence.
• Tenants Grow More Selective, Yet Rents Remain Resilient: Vacancy and leasing timelines increased in 2025 as tenants exercised greater caution, but asking rents continued to rise. Demand for well-located, high-quality space and limited new supply supported rent growth, with landlords offering greater flexibility through incentives.
• Development Activity Pulls Back: Construction starts and under construction inventory declined year-over-year, resulting in the lowest development pipeline in a decade. New activity remains focused on pre-leased and build-to-suit projects, reflecting ongoing caution amid elevated construction costs and adapting market demand.

 

Focused Metrics

5K-200K SF | Industrial & Flex Properties

 

Northern Colorado Industrial Sales Activity

Sales performance shows a clear rebound pattern marked by volatility early in the year and strength towards the end. In 2025, total sales reached $468.8 million, representing a 6.5% year-over-year increase in comparison to $440.2 million in 2024, despite a notably slow first quarter. Sales fell sharply from $137.8 million in Q1 2024 to $71.5 million in Q1 2025, suggesting early year headwinds, likely tied to delayed market demand from tighter financial conditions and macroeconomic uncertainty. However, momentum accelerated significantly as the year progressed, highlighted by a 124.4% increase from Q3 2025, signaling a strong recovery in buyer activity. The surge in Q4 2025 to $165.6 million marks the highest fourth quarter performance since 2021, prior to the onset of interest rate hikes, indicating renewed market confidence from improving financing conditions and market fundamentals. Overall, the data suggests that while macroeconomic pressures constrained early sales, pent-up demand and improving conditions fueled a strong fourth quarter recovery, positioning the market for continued growth into 2026.

 

Northern Colorado Industrial Sales Volume

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

 

Sale price per square foot data indicates a continued pricing adjustment toward market equilibrium, reflecting shifting seller and buyer expectations. In 2025, the quarterly average sale price declined to $157 per square foot, representing a 4.8% decrease from $165 per square foot in 2024, alongside a 9.9% quarter-over-quarter decline. Unlike the pronounced volatility seen in 2024, 2025 showcased relatively steady and consistent pricing throughout the year, signaling the emergence of a “new normal.” The decline to $145 per square foot in Q4 2025, the lowest quarterly average of the year, should not be interpreted necessarily as market weakness. Rather, this reflects a narrowing price dislocation gap as sellers continue to recalibrate expectations, in response to sustained higher interest rates and shifting demand dynamics.

 

Sales Price Per SF

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

 

Average time on market continued to rise in 2025, reflecting a more selective buyer mindset as users and investors apply greater scrutiny and caution in evaluating potential transactions. In 2025, properties averaged 7.25 months on market, reflecting a 10.7% year-over-year increase from 2024. Marketing timelines lengthened steadily throughout the year, peaking at 7.9 months in Q4, a 16.2% increase from the prior quarter and tying for the longest quarterly average since 2016, underscoring the persistence of buyer selectivity. This extended exposure period suggests that investors are underwriting more conservatively, while prioritizing stability, stronger fundamentals, and mitigating risk exposure in an environment shaped by persistently high interest rates and lingering economic uncertainty.

 

Months on Market

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

 

Northern Colorado Industrial Vacancy & Rents

Vacancy rates continued to rise in 2025, reflecting heightened caution among tenants navigating market headwinds and evolving workplace strategies. The average vacancy rate increased to 8.83% in 2025, up from 7.50% in 2024, representing a staggering 17.7% year-over-year increase and reaching a decade high. While the 1.1% increase from Q3 appears modest, vacancy trended upward throughout the year, peaking at 9.1% in Q4, indicating sustained hesitation in leasing decisions and an imbalance between supply and demand. Many occupiers remain reluctant to commit to long-term space needs as they reassess growth, hybrid work policies, and broader business conditions.

 

While industrial vacancy across Northern Colorado has increased in recent years, smaller-bay product continues to outperform the broader market. In the fourth quarter of 2025, vacancy for unit sizes ranging from 5,000 – 20,000 square feet measured at just 6.4%, sitting 270 basis points below the overall industrial average and reinforcing sustained demand with limited new supply entering the market.

 

Although vacancy is expected to begin moderating in 2026, levels are likely to remain elevated by historical standards, suggesting that caution and adapting workplace dynamics will continue to shape leasing activity in the near term.

 

Northern Colorado Industrial Vacancy Rate

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

 

Asking rents averaged $14.02 per square foot in 2025, reflecting a 1.7% rise compared to 2024’s average of $13.79 per square foot and a 5.4% quarter-over-quarter increase after Q4’s jump to $14.49 per square foot. Despite vacancy levels continuing to trend upward, asking rents have shown resilience and continued growth, underscoring sustained pricing power in the market. This performance suggests that while overall availability has expanded, tenant demand remains strong for well-located, high-quality assets. Landlords have demonstrated increased flexibility by offering more creative incentive structures to support rent growth while maintaining stable occupancy levels. These concessions often include extended rent abatement periods, enhanced tenant improvement allowances, and competitive broker incentives, allowing owners to remain attractive to tenants in an increasingly selective leasing environment.

 

Asking Rent Per SF

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

 

Months to lease averaged 5.53 months in 2025, showcasing a significant 33.3% rise year-over-year compared to the 2024 average of 4.15 months. Time on market peaked in the fourth quarter of 2025 at 5.9 months. While a slight increase of only 1.7% from Q3, this marks the highest quarterly level in more than four years. This prolonged leasing timeline reflects a more cautious tenant base, as occupiers carefully evaluate relocation and expansion decisions amid broader economic volatility and an adapting workforce. Similar to buyer behavior, tenants are prioritizing flexibility and cost efficiency, contributing to an increase in lease renewals and slower absorption of available space.

 

Months to Lease

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

 

Northern Colorado Industrial Construction

Construction starts totaled 215,629 square feet in 2025 for industrial/flex between 5,000 – 200,000 square feet, highlighted by a significant surge in the fourth quarter, which posted 156,075 square feet and marked a substantial increase both quarter-over-quarter and year-over-year. While the strong year-end activity signals renewed momentum, it did not fully offset the slow start to the year, resulting in total construction starts remaining below the 262,802 square feet delivered in 2024. However, fourth quarter activity represented the highest quarterly volume since Q1 2023, underscoring improving developer confidence. This uptick in activity has been driven largely by preleased developments and build-to-suit projects, as developers continue to limit speculative construction in response to evolving market conditions.

 

SF Construction Starts

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

 

Under construction inventory averaged 427,486 square feet per quarter in 2025. Although a strong fourth quarter, totaling 475,879 square feet, drove an 18.9% increase from Q3, overall construction activity declined 22.3% year-over-year compared to the 2024 quarterly average of 550,003 square feet. This late year acceleration was not enough to offset the slower pace of development earlier in the year, resulting in the lowest annual under construction volume recorded over the past decade. The contraction in the development pipeline reflects a sustained pullback in new construction as developers remain cautious amid shifting demand conditions and persistently elevated construction costs.

 

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.