Major development projects continue to support market growth
Denver’s industrial construction market is showing renewed momentum, driven largely by large-scale developments. Even with this improvement, overall construction activity remains well below the record levels reached in 2022.
According to CoStar data, approximately 6 million square feet of industrial space is currently under construction across the Denver area. This marks a 25% increase compared to the end of 2024, when the construction pipeline had dropped to about 4.8 million square feet as developers faced rising building costs and limited access to financing.
Although those challenges have not completely disappeared, industry experts say financing conditions are gradually improving. However, funding approvals are still being evaluated on a project-by-project basis rather than becoming broadly available.
Speculative industrial developments, where construction begins before tenants are secured, have slowed considerably. Developers are now more cautious, typically requiring a portion of a project to be leased before breaking ground, especially for facilities exceeding 200,000 square feet.
One example is the first phase of the Crossroads 25 industrial park in Thornton, developed by Trammell Crow Co. and PCCP. The initial three buildings will provide nearly 800,000 square feet of industrial space and were already 50% preleased before construction started.
Build-to-suit projects continue to account for a significant share of Denver’s industrial development pipeline. PepsiCo is nearing completion of its 1.2 million-square-foot manufacturing facility near Denver International Airport, which is expected to become the company’s largest manufacturing plant in North America when it opens this fall.
The reduced focus on speculative construction has also led to stronger preleasing performance across the market.
CoStar data indicates that around 47% of Denver’s industrial construction pipeline is preleased as of mid-2026. By comparison, during the construction boom in 2022, only 14% of projects had secured tenants before completion, one of the lowest preleasing rates among major U.S. markets at the time.
Looking ahead, approximately 4.1 million square feet of industrial space is expected to be delivered by the end of this year. CoStar forecasts that new supply will exceed demand for the fifth consecutive year. Vacancy rates are projected to reach their highest point at around 10% early next year before gradually declining as market conditions stabilize.
Source: Original reporting by Jeannie Tobin, CoStar News.
