In the Denver area, leasing for industrial spaces seeing a rebound

Published: Monday, October 20, 2025 at 12:00 pm

Denver's Industrial Market Shows Signs of Rebound

Denver's industrial real estate market is experiencing a resurgence, according to recent reports from CBRE and JLL. After a brief slowdown, the third quarter saw over 2 million square feet of warehouse and industrial space leased, driven by major tenant deals and a growing demand for custom-built facilities. This rebound is particularly notable given the lowest amount of industrial space under construction in a decade.

The surge in leasing activity was primarily fueled by PepsiCo's occupancy of a newly completed bottling facility. Additionally, Trader Joe's and CEMCO acquired significant vacant buildings. However, the industrial development pipeline has reached a five-year low, potentially benefiting landlords as they seek to fill recently completed spaces. Tenants are also gaining leverage, seeking upgrades as lease renewals approach.

Construction activity has decreased, with build-to-suit and preleased projects dominating the current landscape. Notable projects underway include the Aero 70 industrial complex, Catalyst Industrial, and a new distribution center for the Food Bank of the Rockies, all slated for completion in early 2026. Philip Morris International is also expected to complete a large manufacturing plant this year.

The direct vacancy rate in the Denver metro area is at 7.6%, slightly down from the previous year. The market is also seeing a shift in tenant behavior, with a preference for customized facilities. Emerging industries like health, aerospace, and professional services are contributing to this trend, creating diverse space demands.

WareSpace, a company specializing in converting large warehouses into smaller units, is addressing the needs of smaller businesses. They recently acquired a property in Denver's Park Hill neighborhood, offering flexible industrial spaces with amenities and short-term leases. The company aims to expand in Denver and explore opportunities in Colorado Springs. Average rent in Denver has increased, with the southwest metro area seeing the most significant rise.

BNN's Perspective:

The Denver industrial market's recovery is a positive sign for the local economy. While the slowdown in construction may raise concerns, the focus on build-to-suit projects and the emergence of companies like WareSpace, catering to smaller businesses, suggests a more sustainable and adaptable market. The increasing rents and the shift in tenant preferences highlight the evolving needs of businesses in the region.

Keywords: Denver, industrial real estate, leasing, warehouse space, construction, build-to-suit, vacancy rate, PepsiCo, Trader Joe's, WareSpace, small businesses, rent, market trends

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