A comprehensive analysis of Denver’s industrial market fundamentals, vacancy trends, and investment outlook for 2026.
Executive Summary
Denver’s industrial real estate market enters 2026 in a state of normalization following years of unprecedented growth. Vacancy rates have risen to decade highs as new supply delivered into a market with moderating demand, yet fundamentals remain healthier than many other commercial real estate sectors. For investors, the industrial market offers relative stability with selective opportunities as the market finds its new equilibrium.
This analysis examines current market conditions, key trends shaping the sector, and what investors and tenants should expect in 2026.
Current Market Conditions
Vacancy Rate Analysis
Denver’s industrial vacancy rate reached 7.7-8.1% by late 2025, representing a decade high and a significant increase from the sub-5% levels seen during the pandemic boom years. However, context matters: direct vacancy actually declined 10 basis points quarter-over-quarter in Q4 2025, suggesting the market may be approaching stabilization.
| Metric | Denver Industrial |
| Total Inventory | ~250 million SF |
| Vacancy Rate | 7.7-8.1% |
| 10-Year Average Vacancy | 5.6% |
| Average Asking Rent | $12.32/SF NNN |
| YoY Rent Change | -0.3% |
| Under Construction | Lowest since 2015 |
Source: CoStar, SVN Denver Commercial, CBRE, JLL, Cushman & Wakefield Denver Industrial Reports Q4 2025
Rent Trends
Average asking rents reached $12.32 per square foot on a triple-net basis, essentially flat year-over-year with a slight decline of 0.3%. This represents a notable shift from the double-digit rent growth seen during 2021-2022. Rent performance varies significantly by submarket, with Central Denver commanding $12-14 per square foot while DIA-area product trades at $6-7 per square foot.
Construction Pipeline
Perhaps the most significant development for the 2026 outlook is the dramatic reduction in new construction. The current construction pipeline is at its lowest level since 2015, with developers pulling back sharply in response to higher interest rates, elevated vacancy, and more cautious demand projections. Of the limited construction underway, 41.8% is preleased or build-to-suit, indicating disciplined development rather than speculative building.
Key Market Drivers
E-Commerce and Distribution
E-commerce continues to drive industrial demand, though growth rates have normalized from pandemic peaks. Denver’s central location, strong population growth, and established distribution infrastructure position it well for continued logistics and fulfillment demand. Last-mile distribution facilities near population centers remain particularly sought after.
Manufacturing and Reshoring
Reshoring trends and supply chain diversification are creating new manufacturing demand nationally. While Denver is not a primary manufacturing hub, the region has seen increased interest from companies seeking to establish regional production and assembly operations closer to end consumers.
Data Centers
Data center demand represents a significant growth driver for industrial real estate nationally, with AI applications accelerating requirements. Denver has attracted data center development due to its climate, power availability, and connectivity. However, power and zoning constraints are emerging as limiting factors in some locations.
Submarket Performance
Denver industrial performance varies significantly by submarket:
Central Denver: Tightest vacancy and highest rents ($12-14/SF) due to infill location and last-mile appeal. Limited new supply supports fundamentals.
Northeast/DIA Corridor: Largest concentration of big-box distribution but also highest vacancy due to significant new supply. Rents at $6-7/SF reflect competition.
East I-70 Corridor: Strong logistics location with good highway access. Balanced supply/demand dynamics.
Southwest/Centennial: Smaller bay and flex product performs well. Limited large-format availability.
Small Bay Outperformance
A notable trend in Denver’s industrial market is the outperformance of small bay product. Buildings under 100,000 square feet, and particularly those in the 10,000-50,000 square foot range, have maintained lower vacancy rates of 4.3-5.1% compared to the overall market rate of 8.5%. This segment benefits from:
Diverse tenant demand: Local distributors, contractors, service companies, and small manufacturers provide steady absorption.
Limited new supply: Developers have focused on large-format buildings, creating scarcity in small bay product.
Location preference: Small bay users often prioritize infill locations near customers over lower rents in peripheral areas.
Investment Outlook
Denver industrial real estate offers a relatively favorable risk-return profile compared to other commercial property types in 2026:
Cap rates: Industrial cap rates in Denver range from 5.5-7.5% depending on building quality, location, and lease profile. This represents expansion from 2021-2022 lows but stability over the past year.
Institutional interest: Industrial remains a favored sector for institutional investors, with multifamily and industrial cited as the most attractive property types for 2026.
Supply discipline: The sharp pullback in construction sets up favorable supply/demand dynamics for 2026-2027 as the market absorbs existing inventory without significant new competition.
2026 Forecast
Denver’s industrial market should stabilize in 2026 as reduced construction allows demand to catch up with supply. Vacancy rates are expected to plateau and potentially decline modestly in the second half of the year. Rent growth will remain muted but should turn positive as the market tightens.
Key factors to watch include the pace of e-commerce growth, manufacturing reshoring trends, data center development activity, and any significant economic disruption that could impact tenant demand.
Bottom Line
Denver’s industrial market has normalized from pandemic-era extremes but remains fundamentally sound. The combination of reduced construction, continued demand drivers, and relative value compared to coastal markets positions Denver industrial for gradual improvement in 2026. Investors should focus on quality assets in strong submarkets while being selective about big-box product in areas with elevated vacancy.
About SVN Denver Commercial
SVN Denver Commercial provides comprehensive industrial real estate services including investment sales, tenant representation, and market advisory. Contact us to discuss Denver industrial opportunities.