Colorado Springs, CO Industrial Market Report Q1 2026

Focused Metrics

5K-200K SF | Industrial & Flex Properties

Key Findings

Industrial Capital Re-Engages Ahead of Broader Market Recovery: Q1 2026 activity isn’t just a rebound; it’s a signal that capital is rotating back into the industrial sector ahead of a broader market recovery. With sales volume jumping to roughly $41.0 million from about $20.6 million in Q1 2025, the groups re-entering the market today are doing so before full pricing compression and competition returns. This creates a clear window for investors: acquisitions made in the current environment allow buyers to be selective, and secure well-located assets before bidding dynamics intensify. For owner/users, this same trend suggests that waiting could mean competing against a deeper and more aggressive buyer pool later in the year, particularly for functional, mid-size product
Income Growth Outpaces Risk, Reinforcing Landlord Pricing Power: With rents increasing roughly 14% year-over-year and vacancy moving up only 50 basis points (5.2% to 5.7%), the market is demonstrating an increasingly rare trend in today’s climate: landlord pricing power without meaningful occupancy risk. For investors, this dynamic directly supports NOI growth and provides a hedge against continuously-elevated interest rates and inflation. It also ensures that mark-to-market opportunities remain across existing portfolios. For owner/users, rising rents continue to strengthen the long-term financial argument for ownership, in turn, locking in occupancy costs today versus leasing into a rising rate environment.
Supply Is Expanding, But Not Where Demand Is Deepest: While space under construction has increased significantly (now over 573,000 SF), the key story is where that supply is and, more importantly, where it isn’t. Ongoing pressures from elevated construction costs and financing constraints continue to limit new development in the small- to mid-bay segment (5,000–50,000 SF), with only 46,250 SF currently under construction. This segment remains the most in-demand industrial product type in Colorado Springs, creating a clear imbalance where new supply is not adequately addressing the tightest portion of the market. For investors, this reinforces the durability of rent growth and occupancy in smaller-bay assets. For owner/users, it highlights the increasing difficulty of finding functional space, making existing inventory more valuable and harder to replace as the year progresses.

Colorado Springs Industrial Sales Activity

The Colorado Springs industrial market opened 2026 with a notable resurgence in sales activity, as Q1 volume reached almost $41.0 million, nearly doubling the roughly $20.6 million recorded in Q1 2025. Beyond the year-over-year jump, this marks the strongest Q1 performance since 2022, when transaction velocity was still benefiting from pre-rate hike momentum. In contrast, the past three years (2023–2025) saw materially softer starts to the year as higher borrowing costs sidelined both investors and owner-users. While current volume remains below the peak pandemic-era surge seen in 2021–2022, the rebound signals a clear shift off the cyclical bottom.

For investors, this jump reflects improved clarity around pricing and a growing willingness to transact in the current interest rate environment. For owner-users, it indicates renewed confidence in long-term occupancy costs versus leasing. With more stakeholders re-engaging and deals getting across the finish line, the market appears to be regaining transactional momentum heading further into 2026.