The industrial market continues its recovery, though at a faster pace than the previous year of 2011, as reported in Newmark Grubb Knight Frank’s newly released Q3 2012 Denver industrial research report. The third quarter of 2012 experienced solid absorption of 1.3 million square feet. This was the first time since 2007 that the market posted quarterly absorption over one million square feet. After suffering from several large move-outs in 2011, the warehouse market has made a strong comeback in 2012, with year-to-date absorption of 2.5 million square feet. The R&D/Flex market posted solid absorption of 228,901 square feet. Speculative development continues to remain mostly in the planning stages, with only a few build-to-suits in progress.
Key statistics for the Denver industrial market during the third quarter of 2012 are as follows:
• Vacancy is 7.4%, down year-over-year from 8.9%
• Quarterly absorption was 1.3 million square feet, bringing year-to-date absorption to 2.7 million square feet
• Vast majority of market activity was in the warehouse sector
• Stable rental rates
• Four build-to-suit projects under construction
• User buildings driving sales
“All year, we’ve been talking about a slow recovery in Denver’s commercial real estate market, but as 2012 comes to a close, everything points to a well-established recovery that will really gather momentum in 2013,” said Kevin McCabe, executive vice president and chief operating officer. “Following a flat year in 2011, the industrial sector has roared back to life with strong activity from both large and small users. The large jump in absorption was mostly due to several large individual warehouse move-ins in the East submarket. General Electric, FedEx SmartPost and Fresca Foods all occupied over 100,000 square feet of space in the Majestic Commercenter, which helped propel the East submarket’s absorption to 1.5 million square feet year-to-date.
“Even if the fourth quarter is just average, 2012 will likely be the ‘turn the corner’ year for the industrial market,” said McCabe. “The next element of the market’s true recovery is increasing lease rates (and sale prices), which is expected in 2013.”
To access the full Denver industrial report, visit /research.
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About Newmark Grubb Knight Frank
A part of BGC Partners, Inc. (NASDAQ:BGCP), Newmark Grubb Knight Frank is one of the largest commercial real estate service firms in the U.S. It brings together the strategic consultative approach to creating value for clients and leading position in the New York market that are hallmarks of Newmark; the complementary strengths of Grubb & Ellis in leasing and management, investment sales, valuation and capital markets services; and BGC’s financial strength, proprietary technology, expertise in global capital markets and deep relationships with many of the world’s leading financial institutions.
Newmark Grubb Knight Frank, together with its affiliates and London-based partner Knight Frank employ more than 11,000 professionals, operating from more than 300 offices in established and emerging property markets on five continents. This major force in real estate is meeting the local and global needs of tenants, owners, investors and developers worldwide.