As seen on CoStar
Large-scale projects are fueling a surge in Denver’s industrial construction pipeline, though development still falls well short of the market’s record-breaking peak in 2022.
Roughly 6 million square feet of industrial space is under construction, according to CoStar data. That represents a 25% increase from the trough in 2024, when 4.8 million square feet was underway at year-end. At that time, developers were struggling with high construction costs and challenges in securing financing.
While those challenges persist today, industry professionals noted that financing for new projects is slowly thawing, though on a case-by-case basis.
Groundbreakings have slowed on speculative developments, or properties that begin construction without a tenant in place. In today’s environment, a building typically needs to be partially leased before developers move forward on a project, particularly for buildings larger than 200,000 square feet.
For example, Trammell Crow Co. and PCCP broke ground on phase one of the Crossroads 25 industrial park in Thornton. Collectively, buildings one, two and three total roughly 800,000 square feet and were 50% preleased when construction began.
Build-to-suit developments continue to make up a sizable portion of Denver’s development pipeline. PepsiCo is wrapping up construction on its 1.2 million-square-foot manufacturing plant near Denver International Airport, slated to be its largest plant in North America when it opens this fall.
The shift away from speculative development is boosting Denver’s preleasing rate.
About 47% of Denver’s industrial pipeline is preleased midway through 2026, CoStar data shows. In comparison, at the height of the building boom in 2022, the figure was 14%. That ranked among the lowest preleasing rates of any major market in the country.
In the near term, roughly 4.1 million square feet is scheduled to be completed this year. That will outpace demand for the fifth year in a row, CoStar projects. Vacancies will likely peak early next year, near 10%, before declining later.
