While some of the country's manufacturing sector continues to struggle, the Denver market is thriving at the midyear point. New residents are moving to Denver at a fast pace, driving much of the growth in manufacturing. The University of Colorado Boulder's Leeds School of Business recently came out with a midyear review. According to the analysis, more than 75,000 people have moved to Colorado in just the past year. Population in the state grew by 1.9 percent, making Colorado the second fastest-growing state in the country. Manufacturing growth is following population growth. Manufacturing jobs fell for nearly a decade before finally toughing in early 2010. Since then, 10,000 new manufacturing jobs have been created in the Denver Metro.
Our second quarter market statistics indicate that vacancy in manufacturing space continues to fall, registering just 2 percent at mid-year 2016. A limited amount of manufacturing product is under construction; therefore, vacancy is expected to remain incredibly low throughout the remainder of the year. Asking rates for available manufacturing space rose significantly from the first quarter, increasing by $0.38 per square foot (psf) to $8.48 psf. Limited availability in the market coupled with strong demand indicates that rates will continue to rise in the short term.
The impact that the Brexit vote will have on Denver's manufacturing market remains unclear. Denver's manufacturers are benefitting from a surge in local demand, but those wishing to export their goods internationally will face additional challenges in the near-term. The Brexit vote triggered the value of the dollar to spike, causing American exports to become more expensive. As a result, fewer goods are sold internationally. According to Avison Young CEO Mark Rose, "History points to downward trends in the short term and a recovery in the medium term, but anyone who claims to know the details or the exact outcome over the long term is foolish. Brexit will play out in real time before us. The ending to this story is unknown." Although Brexit could potentially be a bump in the road, Denver's strong and resilient manufacturing community should continue to rise on a national and international scale.
Read the 2Q16 Denver Industrial Research Report from Avison Young here.