Q1 2026 - Denver Industrial Properties Newsletter

Industrial Market Outlook: Clearer Improvement Amid Ongoing Uncertainty

Steady Progress, Even as the Market Seeks Clearer Signals When markets lack clarity, they struggle to price upside. Equity seeks upside; lenders protect the downside. Today, lenders are signaling growing comfort with downside risks — and they’re doing so with their wallets. Debt liquidity remains historically wide, and debt capital is driving much of the current market activity.

Interest rates influence cap‑rate movement, but so does credit availability. And on that front, conditions continue to improve

When Credit Availability Rises, Cap Rates Fall, and Vice Versa

Equity investors, by contrast, remain more conservative and increasingly clarity‑driven. Where clarity exists, capital concentrates — and competition intensifies. This dynamic defines today’s industrial landscape. Macro and micro uncertainties persist, creating questions about timing, but they do not change the broader national and local trajectory. Progress rarely announces itself; it accumulates. And across multiple indicators, stabilization is gaining momentum.

Our guidance: focus on the tide, not the waves

Key Market Indicators

CBRE forecasts a 5% YOY increase in U.S. industrial leasing activity in 2026.
Denver’s direct vacancy has declined for four consecutive quarters, reflecting improving demand dynamics.

2024 Q2	2024 Q3	2024 Q4	2025 Q1	2025 Q2	2025 Q3	2025 Q4
Vacancy	Direct
7.9%	7.9%	7.8%	7.9%	7.8%	7.6%	7.5%

Denver recorded 3.6M SF of net absorption in 2025, consistent with the 2015–2020 average.
Construction completions in 2024–2025 were lower than any year since 2016 and are expected to fall further in 2026.
- Only 3.3M SF is currently under construction; 1.1M SF is already pre leased.
Rents continue to grow: asking rents increased 4.8%, achieved rents 2.0% in Q4.
Tenants in the Market: up 8.3% QoQ.
Nationally, Q4 2025 achieved record leasing volume, contributing to the second highest annual leasing total ever (941 MSF).
95% of capital plans to maintain or increase industrial allocations in 2026.
National Partners volume increased 8% YOY, and 2026 investment activity is forecast to rise 16%.
Debt liquidity remains abundant, supporting increased transaction execution.

Collectively, these data points indicate strengthening industrial fundamentals and a measured but growing investor appetite.

How Market Participants Are Navigating Uncertainty

Even with improving fundamentals, tenants and buyers are prioritizing flexibility.

Tenants are increasingly negotiating for:

shorter lease terms
termination options
renewals
expansion rights
phase-in takedown of space

Often, multiple forms of optionality are incorporated into a single transaction.

Investors are concentrating on:

multi tenant assets
easily demised buildings
highly functional product
properties with outsized NOI growth potential

These themes reflect disciplined decision making rather than pessimism.

Key Indicators We Are Monitoring Closely

Corporate decision making cadence: Do occupiers delay commitments, or proceed with lease execution?
Discipline in development pipelines: Does construction remain controlled?
Sublease and giveback trends: Does returned space stay muted?
Re entry of Core+ and Core capital: Does meaningful Capital concentration: Does capital remain crowded in the same opportunities, or expand its focus?

Outlook: A Market Regaining Its Footing

The stability of the industrial sector has always been fundamental to its appeal. Although the market is working through a period of oversupply, its underlying trajectory remains intact. Recovery levels vary by market and submarket, but tightening conditions and renewed industrial expansion are increasingly evident.

2026 is shaping up to be a turning point year for Colorado and many other industrial markets across the country. In Denver we are further along the trajectory of diminishing supply then many markets while demand remains meaningful. The Walker Webcast just pointed out Denver, and a few other markets, as likely to be one of the best industrial markets by the end of 2027 predominantly because of the lack of coming supply.

Please let our team know if there are any questions you’d like to explore, additional data you’d like us to provide, or topics you’d like to discuss further.

Q4 2025 Denver Industrial Marketview

Top Q4 2025 Leases

Tenant	Industry	Sq. Ft.	Submarket	Type
Anheuser-Busch	Food & Beverage MFG	200,000	Airport	Renewal
Advanced Auto Parts	Goods MFG	178,027	Airport	New
Pretred	Goods MFG	152,031	Airport	New
Undisclosed	Transportation and Distribution	149,244	I-76 Corridor	New
Mountain High Appliance	Transportation and Distribution	145,312	North Central	Renewal/Expansion

Team News

Congratulations to our Investment Sales & Leasing Manager Morgan Dunn and her husband Colton on the birth of their baby boy, Walker!

Walker was born on November 1, 2025, weighing in at 6lbs, 6 oz. Mom, Dad, and baby are already sleeping through night and enjoying their time as a new family of three.