CBRE has released its Colorado Springs H2 2022 reports for office, industrial and retail property market performance for the second half of 2022. According to the findings, industrial availability compressed as activity remained strong to year end, while office fundamentals remained stable as investment sales declined. The retail market remained active as available space continued to tighten.
Industrial Highlights
- Over 485,000 sq. ft. of positive net absorption was recorded in the second half of the year, bringing year-to-date net absorption to 841,000 sq. ft.
- Nearly 240,000 sq. ft. of industrial space was under construction as of year-end 2022, while the market saw over 340,000 sq. ft. of completion volume in the second half of the year.
- The average direct asking lease rate showed a decrease of 9.4% year-over-year to $9.73 per sq. ft. NNN.
- Direct vacancy dropped 120 basis points (bps) year-over-year to 3.2%, while availability also fell 120 bps to 4.1%, both indicating sustained industrial demand in Colorado Springs.
- Sales volume for H2 2022 exceeded $85.5 million and pushed 2022 total sales volume to over $224 million, a 25.2% increase over 2021’s total volume.
Office Highlights
- The Colorado Springs office market continued to improve in the 2nd half of 2022, ending the year with 142,200 sq. ft. of positive net absorption—an increase of 21.6% from the 117,000 sq. ft. of positive net absorption seen in H1 2022.
- Direct vacancy decreased 40 basis points (bps) in H2 2022 and 120 bps year-over-year to 8.5%. Vacancy is highest in the Northwest submarket at 19.9%, while the Greater Downtown submarket saw vacancy decrease to 4.0%.
- The direct average asking lease rate decreased 0.1% year-over-year, reaching $16.65 per sq. ft. NNN. The West Side/Manitou submarket has the highest average lease rate at $19.66 per sq. ft. NNN.
- The development pipeline has increased to 60,000 sq. ft. Two properties delivered in H2 2022, including the 65,000-sq.-ft. Interquest Medical Office Building which has just 16,200 sq. ft. available for lease.
- Investment sales decreased 35.8% compared to H1 2022’s level. Total sales volume was $86.9 million with an average price per sq. ft. of $209.43. After falling 53.5% year-over-year, 2022 sales volume was on par with the five-year historical average seen in 2016-2020.
Retail Highlights
- Nearly 421,000 sq. ft. of annual net absorption was recorded in 2022 following four straight quarters of occupancy growth.
- The average asking lease rate increased 2.9% year-over-year to $15.29 per sq. ft. NNN to end 2022.
- Total availability dropped further in H2 2022, reaching 6.7% or a decrease of 50 basis points (bps) year-over-year. Direct vacancy dropped 60 bps year-over-year to 5.2%.
- Development activity remained active with nearly 386,000 sq. ft. of retail space under construction and 146,000 sq. ft. that was delivered as of year-end 2022.
- Overall sales volume for the second half of 2022 exceeded $177.0 million, a notable increase from the $146.6 million recorded during the same period a year earlier.
