REPORT: Colorado Ranks 9th In Commercial Warehouse Development
Colorado ranks No. 9 in the U.S. for warehouse development, according to a new report from NAIOP, the commercial development advocacy group.
Overall, more than 8.1M SF of industrial was under construction in the Denver metro area as of Q4 2022, with most of that activity coming from the northeast submarket, according to data from Cushman & Wakefield. That's up from 6.6M SF one year earlier.
Warehouse development in Colorado supported more than 44,000 jobs and personal earnings of more than $2.69B in 2022, the report found. Industrial projects also contributed about $6.8B to the state’s gross domestic product, representing about 2% of the state’s total economic production for last year.
Nationwide, warehouse development contributed more than $2.3T to the U.S. GDP, supported more than 15 million jobs, and generated more than $831B in personal earnings, the report found.
“The construction sector ended 2022 with positive momentum that we hope will continue into the new year,” Dodge Construction Network Chief Economist Richard Branch said in a press release. “As we look ahead, growth in sectors such as life sciences, data centers and manufacturing will be important for seeing the potential amid the economic slowdown in 2023.”
The report was released as Colorado’s commercial real estate market finds its new normal in the wake of the pandemic. Vacancy rates for industrial properties in the Denver metropolitan area increased by about 90 basis points year-over-year to 6.9% as of Q4 2022, according to Cushman & Wakefield.
That 6.9% vacancy rate is also the highest rate recorded in the last five years and was primarily driven by a flush of new buildings hitting the market, Cushman & Wakefield found. About 84% of all industrial properties delivered were built on a speculative basis while just 17% were pre-leased.
Trammell Crow Co. and Clarion Partners recently completed Phase 1 of a 1.2M SF warehouse project along Colorado’s I-76 corridor known as 104 Commerce Park, the Denver Gazette reported. Industrial developers have also targeted northern Colorado cities like Loveland and Mead to build large warehouses, according to the Boulder Daily Camera.
Looking ahead, NAIOP CEO Marc Selvitelli said there are still headwinds like inflation, workforce constraints and high interest rates that could impact future warehouse development.
