Denver Industrial Market on Track to Set Record as Office Looks to Recover
CBRE just released its Q3 reports for metro Denver’s office and industrial sectors. Industrial net absorption and delivery volume are both on track for the highest annual totals on record, while leasing and investment sale momentum is pacing the office market toward recovery.
Metro Denver Q3 Office Highlights
- Metro Denver posted 194,000 sq. ft. of direct negative net absorption in Q3 2021—while it’s the sixth consecutive quarter of negative net absorption, this is the best absorption has performed since Q2 2020.
- The average direct asking lease rate increased $0.31 quarter-over-quarter to $31.47 per sq. ft. FSG.
- Leasing activity totaled over 1.4 million sq. ft. in Q3 2021, marking two straight quarters of the highest leasing activity since Q1 2020.
- Total vacancy rose marginally on a quarter-over-quarter basis, increasing 20 bps to 19.4%.
- Investment sales recorded a robust quarter of activity, posting a total volume of $1.1 billion across 19 transactions for an average price per sq. ft. of $344.00.
Metro Denver Q3 Industrial Highlights
- Nearly 2.3 million sq. ft. of positive net absorption was recorded in Q3 2021, up 70.7% quarter-over-quarter and almost triple the amount recorded in Q3 2020.
- Year-to-date net absorption reached nearly 4.5 million sq. ft., up 66.9% year-over-year.
- The average achieved lease rate for Q3 2021 increased 7.6% quarter-over-quarter to $9.03 per sq. ft. NNN.
- Total availability fell 31 bps quarter-over-quarter to 8.7% while direct vacancy was stable at 6.8%.
- Construction activity remained elevated with 9.7 million sq. ft. underway. Eleven buildings totaling 2.6 million sq. ft. delivered in Q3 2021.
- Overall sale volume reached $449.2 million in Q3 2021, 48.5% higher than the volume recorded in Q3 2020.