Submarket Snapshot_4Q2023_Industrial_Interactive

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