Submarket Snapshot_4Q2023_Industrial_Interactive

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