By Margaret Jackson / NewsBreak
(Denver, Colo.) Demand for industrial real estate increased in most areas of the country — including Denver — in the last 10 years, with new space doubling in 25 of the 30 markets, according to an industrial real estate report from Yardi’s commercial real estate listing platform CommercialSearch.
These days, the largest projects are regional distribution centers operated by e-commerce giants and considerably larger than projects completed just 10 years ago – much of the demand driven by the pandemic prompting more people to shop online.
Large industrial space — at least 1 million square feet — is now the standard in Denver, PrimeWest Vice president of Industrial Development Megan (Turner) Kranichfeld said during an Urban Land Institute (ULI) Colorado conference earlier this week.
“Explosion of demand”
“There’s been an explosion of demand,” Kranichfeld said. “There’s a lot of capital that wants to be placed in industrial, and that’s triggered more competition for (development) companies wanting to get into industrial.”
More than 12 million square feet of industrial space was completed in Denver during 2021 — over five times the amount built during 2012. Denver has added 46.7 million square feet of industrial space over the last 10 years.
The boom in industrial construction comes despite contractors not guaranteeing pricing for long, Kranichfeld said. And higher costs have translated into increased rents — some up as much as 15%.
“There’s a lot of volatility in the construction industry,” she said. “Subs are ripping up contract saying they can’t hold this number, and you might not get a roof for your building. It’s not just a supply issue, it’s a cost issue.”
Industrial sales volume steadily increased in most markets between 2012 and 2020 before spiking sharply in 2021 in high-transit port markets because of global supply chain issues.
Industrial sales in Denver followed that trend, reaching $1.75 billion after steadily rising each year since 2012, except in 2015.