Metro Denver's thriving economy continues to attract new residents to the city. Population has grown substantially in recent years, particularly from the in-migration of millennials who are drawn to the employment opportunities and quality of life that Denver provides. These factors are having a significant impact on Denver's manufacturing market.
Our first quarter market statistics indicate vacancy in manufacturing space has fallen to just 2.1 percent. Vacancy plummeted in 2014 and has remained near record lows since.
It's an exciting time to be in Denver. The city's booming economy is providing opportunities for manufacturers to grow their footprint, but clearly it's creating challenges for tenants as available space becomes increasingly competitive.
In many cases, manufacturing companies have opted to construct build-to-suits (BTS) in place of leasing existing space. BTS activity is expected to increase throughout 2016 with the continued demand. A limited amount of manufacturing product is currently under construction, and therefore vacancy is expected to remain incredibly low.
Manufacturing asking rates continue to increase, averaging $8.10 per square foot NNN in the first quarter. This is a 15 percent increase from just last year.
Our main takeaway is that Denver is building a strong and resilient manufacturing community that can compete on a national scale, even though rapid expansion is certainly causing growing pains.
Find our full industrial report here.