Submarket Snapshot_4Q2023_Industrial_Interactive

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