Submarket Snapshot_4Q2023_Industrial_Interactive

DENVER INDUSTRIAL Q4 2023 SUBMARKET SNAPSHOTS

BOULDER

In Q4 2023 we spotlight the three most active Denver Industrial Submarkets, CLICK BELOW TO OPEN THE REPORTS!

I-76 CORRIDOR

NORTH

E470

76 INTERSTATE

NORTH CENTRAL North Central Denver

AIRPORT

NORTHWEST

25 INTERSTATE

NORTH CENTRAL

NORTH North Denver

70 INTERSTATE

70 INTERSTATE

SOUTH CENTRAL

AIRPORT Northeast Denver

25 INTERSTATE

SOUTHWEST

SOUTHEAST

E470

DENVER METRO

INDUSTRIAL 4Q23 SUBMARKET SNAPSHOT NORTH CENTRAL

KEY TAKEAWAYS

4Q23 LEASING & ABSORPTION

Though sustained demand for strategic infill locations coupled with rising construction costs have contributed to rent growth in the North Central submarket over the last several years, the direct asking rate experienced a contraction of $0.30 QOQ in Q4 2023. Following a significantly higher-than-average leasing performance in Q2 2023 (814,000 sf), the North Central submarket experienced a drop-off in leasing volume in Q3 and Q4 2023, recording just over 210,000 sf in leases signed in Q4. However, with 1.7 msf in leasing activity through 2023, North Central remains the second most-active submarket in the Denver Metro. The North Central submarket recorded negative absorption for the second consecutive quarter, resulting in a 17-bps increase in overall vacancy QOQ. However, due to steady demand and the relative lack of supply, North Central vacancy remains 320 bps below the market-wide average. With the commencement of Phase I of Quantum 56--which features 3 buildings totaling over 580,000 sf—the North Central pipeline has grown to just over 1.4 msf. However, while several fully-capitalized speculative projects remain in the pipeline, construction activity is likely nearing it’s peak due to rising costs and lack of available land. ASKING RENTS

20,500 4Q23 LARGEST LEASE 123,100 4Q23 LARGEST MOVE-OUT

-105,900 4Q23 ABSORPTION 212,100 4Q23 LEASING ACTIVITY

2023 INVESTMENT ACTIVITY

LARGEST SALES TRANSACTION

TOTAL SALES TRANSACTION

AVERAGE CAP RATE

AVG. DIRECT NNN RENTS $11.06 (ALL TYPES) AVG. DIRECT NNN RENTS $10.67 ( W/D ) AVG. DIRECT NNN RENTS $13.72 (FLEX)

CONSTRUCTION ACTIVITY

Q4 2023

QOQ CHANGE

DIRECT VACANCY (ALL CLASSES)

3.4%

NO CHANGE

UNDER CONSTRUCTION 1,415,500 SF

3.6%

20 bps

VACANCY (W/D)

6.6%

130 bps

VACANCY (FLEX)

PROPOSED INDUSTRIAL 733,800 SF*

SUBLEASE AVAILABILITY

433.1 KSF

36.4 ksf

*buildings estimated to deliver in the next 5 years

INDUSTRIAL 4Q23 SUBMARKET SNAPSHOT NORTH CENTRAL

NORTH CENTRAL MARKET

4Q 2023

3Q 2023

4Q 2022

Inventory (SF)

59,652,910

59,652,910

59,652,910

Under Construction (SF)

645,676

1,415,460

1,411,397

Direct Vacancy (all product types)

4.4%

3.4%

3.4%

Direct Vacancy – Warehouse/Distribution

3.6%

3.4%

5.0%

Direct Vacancy – Flex

6.6%

7.9%

6.1%

Sublease Availability

239,531

433,125

396,705

Avg. Direct NNN Asking Rate (all product types)

$10.10

$11.06

$11.36

Avg. Direct NNN Asking Rate – Warehouse/Distribution

$9.48

$10.67

$11.00

Avg. Direct NNN Asking Rate – Flex

$13.82

$13.72

$13.61

Net Absorption – Current Qtr. (SF)

-105,908

-55,123

273,236

Net Absorption – YTD (SF)

813,425

508,533

614,441

Leasing Activity – Current Qtr. (SF)

320,180

212,333

288,576

Leasing Activity – YTD (SF)

1,940,817

1,691,082

1,478,749

RENTAL RATE VS. VACANCY RATE

LEASING ACTIVITY VS. ABSORPTION

(400,000) (200,000) - 200,000 400,000 600,000 800,000 1,000,000

$8.00 $9.00 $10.00 $11.00 $12.00

3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%

Direct Gross Rental Rate

Overall Rental Rate (NNN)

Leasing Activity Net Absorption

Direct Vacancy

Overall Vacancy

INDUSTRIAL 4Q23 SUBMARKET SNAPSHOT NORTH CENTRAL

KEY LEASE TRANSACTIONS 4Q 2023

CARA STAMP Research Manager Tel: +1 303 218 3258 cara.stamp@cushwake.com ETHAN WESLAR Research Analyst Tel: +1 720 560 8970 ethan.weslar@cushwake.com

DATE LEASED

PROPERTY

TENANT

SIZE (SF)

DEAL TYPE

LEASE TYPE

Nov-23

5501 E. 47th Avenue

Snyder’s

36,100

Renewal

Direct

Oct-23

5151 N. Bannock Street

Frozen Food Express

33,100

Renewal

Direct

Jul-23

Freeway Industrial Center

The Beautiful Opco, LLC

30,000

New Lease

Direct

KEY SALES TRANSACTIONS YTD 2023 DATE SOLD PROPERTY BUYER / SELLER

SIZE (SF)

SALE PRICE

PRICE/SF

May-23

Central Connection Comunale Properties / EverWest Real Estate Investors 194,700

$39.6M

$203/SF

KEY UNDER CONSTRUCTION PROJECTS

EST. COMPLETION

PROPERTY

OWNER / DEVELOPER SIZE (SF)

MAJOR TENANTS

Quantum 56 - Phase I, Bldgs. 1-3

Hines

Sep-24

580,000

N/A

Broadway Logistics Center

Lovett Industrial

Feb-24

201,300

N/A

Pivot Denver - Bldgs. 1-4

Westfield

Feb-24

472,800

Total Tool

A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000employees in over 400 offices and approximately 60 countries. In 2021, the firm had revenue of $9.4 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter. ©2023 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

HISTORICAL LEASING ACTIVITY

2,500,000

2,000,000

1,500,000

1,000,000

cushmanwakefield.com

500,000

0

2018

2019

2020

2021

2022

2023

Q1 Q2 Q3 Q4

INDUSTRIAL 4Q23 SUBMARKET SNAPSHOT NORTH DENVER

KEY TAKEAWAYS With just 86,500 sf in new construction completions in Q4 2023, the direct vacancy rate remained flat QOQ, but ended 500 bps higher than Q2 2023. The size of the submarket is only 10.7 MSF, so any significant amount of new spec product that delivers will noticeably increase vacancy. The North submarket experienced a considerable decrease in leasing activity QOQ, recording just 32,600 sf in Q4 2023. However, the submarket remains active, with a number of new leases expected to be completed in Q1 2024. The construction pipeline in the North submarket increased to just over 1.4 msf in Q4 2023, driven by the commencement of three buildings each at Innovate 25 and 25 Commerce Park totaling 300,500 and 454,000 square feet, respectively. ASKING RENTS Nearly 2.3 msf of new product has delivered in the North submarket over the past two years. This, coupled with steady demand, continues to push lease rates up as more tenants look to relocate to new, highly desirable Class A product. Although material shortages and build-out delays continue to impact commencement dates, net absorption in the North submarket recovered slightly, posting 121,651 sf after negative absorption in Q3 2023.

4Q23 LEASING & ABSORPTION

25,100 4Q23 LARGEST LEASE 20,500 4Q23 LARGEST MOVE-OUT

121,700 4Q23 ABSORPTION 32,600 4Q23 LEASING ACTIVITY

2023 INVESTMENT ACTIVITY

LARGEST SALES TRANSACTION

TOTAL SALES TRANSACTION

AVERAGE CAP RATE

AVG. DIRECT NNN RENTS $11.35 (ALL TYPES) AVG. DIRECT NNN RENTS $11.50 ( W/D) AVG. DIRECT NNN RENTS $12.83 (FLEX)

CONSTRUCTION ACTIVITY

Q4 2023

QOQ CHANGE

DIRECT VACANCY (ALL TYPES)

UNDER CONSTRUCTION 1,414,000 SF

13.7%

30 bps

16.8%

60 bps

VACANCY (W/D)

3.0%

20 bps

VACANCY (FLEX)

PROPOSED INDUSTRIAL 190,100 SF*

SUBLEASE AVAILABILITY

93.9K

41.5K

*buildings estimated to deliver in the next 5 years

INDUSTRIAL 2Q23 SUBMARKET SNAPSHOT NORTH DENVER 4

NORTH MARKET

2Q 2023 4

1Q 2023 3

2Q 2022 4

Inventory (SF)

8,189,918 76 322

10,145,003 7 7, 29

9,775,681 10 660,579

Under Construction (SF)

949,972 1, 13, 83

1,147,944 221 833

527,140 1,364,669

Direct Vacancy (all Classes)

11.3% 8 8

product types)

9.6% 13.7

7.9%

14.0

Direct Vacancy – Warehouse/Distribution

13.9% 7.8

9.3% 16.8

7.8% 16.2

Direct Vacancy – Flex

3.7% 2 2

2.1% 3.0

3.9% 2 8

Sublease Availability

68,707 83 5

155,943 93, 11

137,417 5 39

Avg. Direct NNN Asking Rate (all product types)

$12.71 1.35

$11.68 9

$14.84 11.2

Avg. Direct NNN Asking Rate – Warehouse/Distribution

$10.65 00

$10.96 1.50

$10.00 11.5

Avg. Direct NNN Asking Rate – Flex

$15.76 2 57

$14.41 1.49

$14.46 3 8

Net Absorption – Current Qtr. (SF)

63,479 4 121

136,015 121 651

188,131 -6,316

Net Absorption – YTD (SF)

375,909 287 855

448,970 52 5 5

224,194 330 92

Leasing Activity – Current Qtr. (SF)

132,211 4 ,632

224,776 32,598

224,194 10 ,3 6

Leasing Activity – YTD (SF)

82,787 568,430

324,146 1,107 982

188,131 1,075, 84

RENTAL RATE VS. VACANCY RATE

LEASING ACTIVITY VS. ABSORPTION LEASING ACTIVITY VS. ABSORPTION

(150,000) (50,000) 50,000 150,000 250,000 350,000 , 2 4 650,00 8

7.0% 8.0% 9.0% 10.0% 11.0% 12.0% .5 10.0% 11.5% 13.0% 14.5%

$8.00 $9.50 $11.00 $12.50 $14.00 $14.00

Direct Gross Rental Rate

Overall Rental Rate (NNN)

Leasing Activity Net Absorption

Direct Vacancy

Overall Vacancy

INDUSTRIAL 2Q23 SUBMARKET SNAPSHOT NORTH DENVER 4

KEY LEASE TRANSACTIONS Q2 2023 KEY LEASE TRANSACTIONS Q4 2023

SIZE

DATE LEASED DATE LEASED

PROPERTY

TENANT

TYPE

LEASE TYPE LEASE TYPE

CARA STAMP Research Manager Tel: +1 303 218 3258 cara.stamp@cushwake.com MINH NGO Research Analyst Tel: +1 303 312 4293 Minh.ngo@cushwake.com ETHA WESLAR 720 560 8 70 ethan.weslar@cushwake.com

(SF)

PROPERTY

TENANT

SIZE (SF)

TYPE

Apr-23 Oct-23 Nov-23 Apr-23 Dec-23 Apr-23

Allegro Coffee Company Undisclosed

12777 Claude Court Park 12 Hundred - Building 1

25,000

Renewal Renewal New Lease

Direct Direct Direct Direct Direct Direct

138,200

North Washington Commerce Center - Bldg. B Park Centre - Paragon

Undisclosed

6,300

Frito-Lay

75,700

New

25 North – Bldg. 5 3656 Stagecoach Road

Vivacity Tech PBC Brian Wirtz

1,200

New Lease

38,800

New

May-23 KEY SALES TRANSACTIONS YTD 2023 DATE SOLD PROPERTY BUYER / SELLER North Washington Commerce Center - Bldg. Santa Monica Seafood

33,300

New

Direct

SIZE

SALE

PRICE/SF

(SF)

PRICE

555 West 112 th Avenue

Aug-23

Crow Holdings / North Express LLC

65,400

$11.0M

$168/SF

Glacier Business Park

5035 Chaparral LLC / Associated Building Specialties

14,700

$2.7M

$183/SF

Nov-23

PROPERTY 25 North – Bldgs. 6-8 KEY UNDER CONSTRUCTION PROJECTS EverWest Real Estate Investors 288,000 KEY UNDER CONSTRUCTION PROJECTS Dec-23 250 Perry Lane OWNER / DEVELOPER SIZE (SF)

Summit Creek Investments / Smith Environmental & Engineering

9,800

$2.3M

$237/SF

MAJOR TENANTS

EST. COMPLETION

Ferguson Enterprises

Jan-24

SIZE (SF)

Connect 25 – Bldgs. 1-4 PROPERTY

OWNER / DEVELOPER

MAJOR TENANTS

EST. COMPLETION

SunCap JV GID

462,700

N/A

Jul-23

5280 Logistics Park - Target BTS

523,900

Hillwood

Target

Mar-25

25 Commerce Park – Bldgs. 1-3

Confluent Development

454,600

N/A

Jul-24

A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000employees in over 400 offices and approximately 60 countries. In 2021, the firm had revenue of $9.4 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter. ©2023 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

Innovate 25 – Bldgs. 1A-3A

Brennan investment Group 300,500

N/A

Oct-24

HISTORICAL LEASING ACTIVITY HISTORICAL LEASING ACTIVITY 700,000

1,200,000

600,000

1,000,000

500,000

8 ,000

400,000

300,000

6 ,000

200,000

400,000

100,000

cushmanwakefield.com

200,000

0

0

2018

2019

2020

2021

2022

2023

2018

2019

2020

2021

2022

2023

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

AIRPORT INDUSTRIAL 4Q23 SUBMARKET SNAPSHOT

KEY TAKEAWAYS Leasing activity recovered in Q4 2023, recording 1.1 msf (million square feet) in leasing volume, up from just 227,000 in Q3 2023. With a vast supply of industrial-zoned land and proximity to I-70 & Denver International Airport, activity within the submarket will likely continue to pace the Denver Metro area through 2024. Net absorption figures also experienced a quarterly increase, jumping to 1.5 msf, a 102.9% improvement QOQ. Home Depot and Dollar General’s build-to-suit completions accounted for 1.4 msf of the Airport submarket’s positive absorption while build-out delays and material shortages continued to lead to deferred move-ins. The Airport submarket continued to dominate construction completions in Q4 2023, with 5 buildings totaling 2.2 msf delivering, 64% pre-leased. Additionally, 2.8 msf remains under construction, most notably is Pepsi’s build-to-suit for 1.2 msf. With changing economic conditions, the submarket may begin to see a further decline in speculative development in 2024. Average asking rates in the Airport submarket experienced a slight contraction across all product types in Q4 2023, falling 3.1% to $6.83 NNN. With vacancy in buildings greater than 100,000 square feet reaching nearly 8.9%, decreased leasing activity from larger tenants and higher operating costs has created downward pressure on the submarket’s average rental rates.

4Q23 LEASING & ABSORPTION

338,500 4Q23 LARGEST LEASE 78,900 4Q23 LARGEST MOVE-OUT

1,537,400 4Q23 ABSORPTION 1,055,100 4Q23 LEASING ACTIVITY

2023 INVESTMENT ACTIVITY LARGEST SALES TRANSACTION TOTAL SALES TRANSACTION

ASKING RENTS AVG. DIRECT NNN RENTS $6.83 (ALL TYPES)

AVERAGE CAP RATE

CONSTRUCTION ACTIVITY

Q4 2023

QOQ CHANGE

AVG. DIRECT NNN RENTS $6.48 ( W/D ) AVG. DIRECT NNN RENTS $13.04 (FLEX)

UNDER CONSTRUCTION 2,785,900 SF

DIRECT VACANCY (ALL CLASSES)

7.7%

80 bps

8.0%

70 bps

VACANCY (W/D)

PROPOSED INDUSTRIAL 6,670,800 SF*

3.2%

NO CHANGE

VACANCY (FLEX)

SUBLEASE AVAILABILITY

825.4 KSF

115.1 ksf

*buildings estimated to deliver in the next 5 years

AIRPORT INDUSTRIAL 4Q23 SUBMARKET SNAPSHOT

AIRPORT MARKET

4Q 2023

3Q 2023

4Q 2022

Inventory (SF)

77,723,894

82,176,468

79,429,076

Under Construction (SF)

2,785,920

5,023,550

4,334,745

Direct Vacancy (all product types)

7.3%

7.7%

6.9%

Direct Vacancy – Warehouse/ Distribution

7.6%

8.0%

7.3%

Direct Vacancy – Flex

3.3%

3.2%

3.2%

Sublease Availability

684,369

825,406

710,354

Avg. Direct NNN Asking Rate (all product types)

$6.86

$6.83

$7.05

Avg. Direct NNN Asking Rate – Warehouse/Distribution

$6.77

$6.48

$6.77

Avg. Direct NNN Asking Rate – Flex

$9.80

$13.04

$11.90

Net Absorption – Current Qtr. (SF)

354,932

1,537,386

757,654

Net Absorption – YTD (SF)

3,178,624

3,222,993

1,685,607

Leasing Activity – Current Qtr. (SF)

938,305

1,055,127

226,428

Leasing Activity – YTD (SF)

5,933,069

4,379,725

3,324,598

RENTAL RATE VS. VACANCY RATE

LEASING ACTIVITY VS. ABSORPTION

3,500,000

$5.00 $6.00 $7.00 $8.00 $9.00

4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

2,500,000

1,500,000

500,000

(500,000)

Direct Rental Rate (NNN)

Overall Rental Rate (NNN)

Leasing Activity Net Absorption

Direct Vacancy

Overall Vacancy

AIRPORT INDUSTRIAL 4Q23 SUBMARKET SNAPSHOT

KEY LEASE TRANSACTIONS Q4 2023

SIZE (SF)

DATE LEASED

PROPERTY

TENANT

DEAL TYPE LEASE TYPE

CARA STAMP Research Manager Tel: +1 303 218 3258 cara.stamp@cushwake.com ETHAN WESLAR Research Analyst Tel: +1 720 560 8970 ethan.weslar@cushwake.com

Dec-23

Discount Tire

338,500

Central Park Logistics Center – Bldg. 2

Direct

New

Nov-23

Victory Packaging

200,000

Majestic Commercenter – Bldg. 3

Direct

Renewal

Nov-23

Marcone Group

155,900

Central Park Logistics Center – Bldg. 2

Direct

New

KEY SALES TRANSACTIONS YTD 2023

DATE SOLD

PROPERTY

BUYER / SELLER

SIZE

SALE

PRICE/SF

(SF)

PRICE

Jan-23

Fedex BTS – 5805 N. Jackson Gap Street

Stonemont Financial / Scannell

482,700 $72,000,000

$150/SF

Aug-23

Crescent Electric / Scout Cold

170,500 $26,500,000

Nexus at DIA – Bldg. D

$155/SF

KEY UNDER CONSTRUCTION PROJECTS

SIZE (SF)

MAJOR TENANTS

EST. COMPLETION

PROPERTY

OWNER

Pepsi

1,200,000

Pepsi

Apr-24

Pepsi Bottling BTS

Opus

826,300

N/A

March-24

Sun Empire – Bldgs. A & B

Hines

759,000

N/A

February-24

Denali Logistics Park – Bldgs. 1-3

A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000employees in over 400 offices and approximately 60 countries. In 2021, the firm had revenue of $9.4 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter. ©2023 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

HISTORICAL LEASING ACTIVITY

0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000

cushmanwakefield.com

2018

2019

2020

2021

2022

2023

Q1 Q2 Q3 Q4