Q2 2022 Industrial Real Estate Report: Colorado Springs, CO
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.
Colorado Springs, a midsized industrial market boosted by its proximity to Denver and heavy defense contracting presence, saw positive industrial performance in Q2 2022.
The average industrial property in Colorado Springs, CO cost $130 per square foot to buy in the second quarter of 2022.
Regarding rent, the average asking rent per square foot of industrial real estate in Colorado Springs in Q2 2022 was about $10.00.
Both rates are expected to grow throughout the rest of 2022 as economic uncertainty slows new development projects, forcing tenants to assess what’s already on the market.
General Area Overview & Demographics
As of July 2022, the population of Colorado Springs was about 500,000, and the average age is 34.8 years old.
The racial makeup of the city is 78.1% White, 11.9% Hispanic or Latino, 5.6% African American, and 4.4% Asian.
The median income for a household in Colorado Springs is $67,000 as of 2020.
The cost of living in Colorado Springs is about 4.5% higher than the national average and the unemployment rate is about 4%.
How much did warehouse space cost in Colorado Springs in Q2 2022?
In Q2 2022, the average cost to rent warehouse space in Colorado Springs was about $9.90 per square foot, about a 7.0% year-over-year increase.
To purchase warehouse space in Colorado Springs in Q2 2022, the average price per square foot was about $130, with $12 being the low and nearly $900 being the high.
The median price per square foot to purchase Colorado Springs warehouse space was about $145.
Vacancy & Occupancy
The overall vacancy rate for industrial real estate in Colorado Springs in Q2 2022 was about 5.0%, below Q1 2022’s average of about 5.4%.
Colorado Springs’ industrial vacancies are moving opposite to the national industrial vacancy average: While the national average increases, Colorado Springs’ falls.
Colorado Springs’ industrial vacancy rate falls on the backs of its growing population, 4.2 million square feet of year-to-date net absorption, and decreasing availability rates.
Colorado Springs’ Industrial Real Estate Net Absorption in Q2 2022
Twelve-month net absorption of Colorado Springs industrial real estate was about 4.2 million as of July 2022.
More businesses in Colorado Springs are re-evaluating their supply chains and logistics strategies as the rise of e-commerce becomes a challenge for largely brick-and-mortar retailers.
This is leading to growth in industrial net absorption as organizations look to store inventories closer to consumers in Colorado Springs for faster shipping and delivery times.
The Pacing of Industrial Rents in Colorado Springs
While year-over-year industrial rent growth in Colorado Springs was about 7%, the national average of about 12% outperformed it.
Q2 2020 average industrial rent per square foot sat at about $9.00 flat; since then, industrial rents have grown by about 10% and are forecasted to continue growing closer to $11.00 by the end of 2022.
About 110,000 square feet of new industrial projects are under construction with nothing pre-leased, and these new projects live only in two of Colorado Springs’ eight different submarkets: Southeast and Northwest.
This puts an even tighter squeeze on tenants as availability rates drop, net absorption increases, and rents grow.
Industrial Leasing Activity in Colorado Springs in Q2 2022
Amazon has shown notable activity in Colorado Springs in recent years, leasing a 4-million square foot distrubtion center that was delivered in 2021. They plan to hire nearly 3,300 people across Colorado Springs’ metro.
Other notable industrial leasing activity in Colorado Springs in Q2 2022 includes:
- Eagle Rock Distributing Co.’s leasing of about 60,000 square feet in the North submarket.
- Tri-Labs Venture’s leasing of about 45,000 square feet in the Southeast submarket.
- Aspen View Homes’ leasing of about 16,000 square feet in the Northwest submarket.
These are among many notable Colorado Springs industrial lease transactions in Q2 2022.
Notable Industrial Real Estate Sales in Colorado Springs in Q2 2022
The most expensive industrial real estate transaction that took place in Colorado Springs in Q2 2022 was for nearly $14 million total at about $150 per square feet. The building was located at 2460 Waynoka Place.
The second most expensive transaction was for nearly $13.8 million total at about $213 per square feet, located at 1555 North Newport Road.
The third most expensive transaction was for nearly $12.5 million total at about $147 per square feet, located at 4615 Foreign Trade Zone.
Takeaways for Colorado Springs Industrial Real Estate Investors
Like other hotspot industrial markets across the United States, Colorado Springs is seeing notable rent growth, drops in vacancy rates, and notable companies entering the market.
The Fed’s aggressive approach to interest rate hikes and other economic uncertainty around inflation will likely continue to slow down development projects, and Colorado Springs isn’t currently seeing much in the way of new development anyway.
Availability rates are expected to continue to drop throughout the rest of 2022.
Do your research, stay diligent, and happy investing.
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.
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