Commercial Real Estate News / General CRE / Q2 2022 Commercial Real Estate Market Report: Colorado Springs, CO

Q2 2022 Commercial Real Estate Market Report: Colorado Springs, CO

Published: 08-23-22 Category: General CRE

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Even though the national real estate market is finally beginning to cool, Colorado Springs agents, buyers, and sellers are as busy as ever.

Let’s have a closer look at Colorado Springs’ commercial real estate numbers, together with a general overview of the city and why it’s popular with commercial real estate investors.

General Area Overview & Demographics

Founded in 1871, Colorado Springs, Colorado’s second-largest city, has evolved into a sophisticated, growing city with a population of nearly 685,000, a 1.18% increase from 2021.

Colorado Springs currently ranks as the nation’s No. 2 city in the US News and World Report’s annual Best Places to Live list.

Home to a highly educated workforce, Colorado Springs has been ranked as one of America’s 30 smartest cities, and was recently ranked by Forbes as the #12 best place for business and careers.

General Commercial Real Estate Performance in Colorado Springs in Q2 2022

Unlike many other major cities, Colorado Springs’ commercial real estate market has remained stable throughout 2020 to 2022.

2021 ended with an overall commercial vacancy rate of 12.68% and an average asking lease rate of $17.20 per square foot.
However, a look at Q2 2022 activity shows that the area’s vacancy numbers have decreased to 11.30%.
During the first half of 2022, average asking rates for commercial real estate rose to $17.51 per square foot.

Most tenant activity in the last 36 months has been from users in the under-7,000-square-foot range, except for transactions with the Department of Defense (DoD) tenants that have remained extremely active for several years.

Colorado Springs Office Market Activity in Q2 2022

The Colorado Springs office market finished the first six months of 2022 with 150,000 sq. ft. of positive net absorption, up from -233,000 sq. ft. of net absorption recorded during the first six months of 2021.

Sales volume during the first half of 2022 totaled $135.3 million, with an overall average price per sq. ft. of $171.96.
Vacancies in the Greater Downtown submarket remained low at 4.5%, and continued to increase in the Northwest submarket to 20.5%.
The direct average asking lease rate remained stable in H1 2022, dropping by just 1.4% since the end of last year to $16.41 per sq. ft. NNN. (With a NNN lease, tenants pay the lease, plus property taxes, property insurance, and common area maintenance.)
The Northeast submarket posted the highest average lease rate at $18.54 per. sq. ft. NNN.

Keep an eye on Colorado Springs office activity as more employers make the push for a return to the office.

Notable Office Market Deals in Colorado Springs in Q2 2022

The largest lease and purchase deals happened at Interquest on Federal Drive, a prestigious Class A office complex.

The largest lease transaction was for 165,831 sq. ft. at the Interquest Office at 10125 Federal Drive.
The largest sale transaction was an investor purchase of space within Interquest I-IV at 9925-9960 Federal Drive. Total purchase price was $32,700,000, which was equal to $135.55 per sq. ft.

These are some among many notable office market deals in Colorado Springs in Q2 2022.

Colorado Springs Industrial Market Activity in Q2 2022

Industrial real estate sales volume for the first six months of 2022 exceeded $133.7 million, a record-breaking number for the Colorado Springs industrial market.

When compared year-over-year, the 2022 numbers add up to more than triple the volume recorded during the first half of 2021.
Annually, rents have increased by 6.9%.
Consistent demand, combined with minimal supply pressure, has kept vacancies at a low 5.0%.

This positive trend of growth is expected to continue throughout the rest of 2022.

Notable Industrial Market Deals in Colorado Springs in Q2 2022

Years of preliminary groundwork at Colorado Springs Airport (COS) are coming to fruition as Peak Innovation Park gains altitude.

Annual revenue for 2022 is estimated at $3.5 million, with subsequent increases as more development occurs.
Peak Innovation Park has attracted a variety of tenants including Amazon, which is leasing a 4 million sq. ft. distribution and sorting center completed in 2021.
Other Park tenants: the U.S. Forest Service and companies supporting the aerospace and defense industries.

This is some among plenty of noticeable industrial market activity in Colorado Springs in Q2 2022.

Colorado Springs Retail Market Activity in Q2 2022

Consumers continued to spend at a record clip during the first months of 2022, sending total sales volume in Colorado Springs to $233.8 million during the first six months of 2022 — a big year-over-year jump from the $73.7 million posted during H1 2021.

The market price now sits at $194/SF, slightly below the national average
of $220/SF.
Development activity remained active, with nearly 362,000 sq. ft. of retail space under construction as of mid-year 2022.
Over 308,000 sq. ft. of annual net absorption was recorded in 2022, the third consecutive half of positive absorption.

With more consumers preferring to go back to shopping in person, retail growth is expected to remain stable throughout H2 2022.

Notable Retail Leases in Colorado Springs in 2022

While no 2022 retail lease has beaten 2021’s mega-deal — 25,876 sq. ft. lease deal by Caliber Collision on Garden of the Gods Road — several notable leases were finalized during the second quarter of 2022. They include:

Mega-playground Kids’ Empire, leasing 15,000 sq. ft. at Broadmoore Towne Center.
Specialty discount store Five Below, leasing 12,096 sq. ft. at Citadel Crossing Shopping Center.

Keep an eye out for more notable retail acquisitions and leases in H2 2022.

Takeaways for Colorado Springs Commercial Real Estate Investors

Colorado Springs has seen much in the way of notable commercial real estate activity in Q2 2022.

It’s emerged as a highly sought-after growth market in the western United States for commercial real estate investment.

Investors appreciate the region’s skilled and educated talent, world-class education and research sectors, and recreational offerings.

And the area’s median household income continues to rise at a higher level than national income levels, which is more positive news for commercial real estate investors as Colorado Springs consumers earn more discretionary income even among inflationary environments.

Methodology

All figures presented in this article are based on MyEListing.com’s commercial real estate listing data in corroboration with other freely available data and information covering the commercial real estate industry.

List & Browse Commercial Real Estate in Colorado for Free on MyEListing.com!

You can list and browse commercial real estate in Colorado for free right here on MyEListing.com.

Simply sign up for a free account and get unlimited access to accurate local market intelligence, customized property type alerts, comp software, and more.