Q225 Colorado Springs Industrial Market Report

Market Overview

By the Numbers

All Properties | Q2 2025 | Industrial + Flex Properties | Source: CoStar Group, Inc.

Sales Volume: $72,470,000
Number of Properties Sold: 24
Average Sale Price Per SF: $130
Vacancy Rate: 5.5%
Rent Growth: 0.5%
Rent Per SF: $11.64
Under Construction (SF): 713,706
Construction Starts (SF): 468,915
Net Absorption (SF): -470,502

Key Highlights

5,000-200,000 SF | Industrial + Flex Properties

1. Industrial Sales Spiked: Second-Highest Quarter in 10 Years

In Q2 2025, Colorado Springs industrial sales totaled $62.6 million, up 72.61% YOY, the highest volume since the Q2 2022 peak and the second-highest quarter in the past decade. This surge reﬂects renewed buyer conﬁdence, driven by a mix of local and national investors pursuing larger portfolio deals. While the average price per square foot dropped 12.5%, that decline underscores sellers’ growing realism with pricing in today’s market and suggests the bid-ask spread is starting to close. For owners, this indicates a highly active market with strong liquidity, a compelling time to reassess property value or consider strategic moves.

2. Vacancy is Tightening, Supporting Rent Growth

Vacancy dropped from 5.2% to 4.4%, signaling increased tenant conﬁdence. Asking rents rose +4.15% YOY, above inﬂation and suggests pricing leverage for landlords. For owner-users, the cost of leasing space is rising; for landlords or investors, it’s a favorable rent growth environment that supports income gains.

3. Sharp Recovery in Net Absorption

Net absorption rose from -26,471 square feet in Q2 2024 to +155,986 square feet in Q2 2025, a positive shift in market demand. This indicates occupier conﬁdence and potentially expanding tenant footprints, particularly in logistics, light manufacturing, or ﬂex uses.

Focused Metrics | 5,000-200,000 SF | Industrial & Flex Properties

Transaction Volume | 2025 vs 2024

Source: CoStar Group, Inc.

	Q2 2025	Q2 2024
Sales Volume	$62,630,000	$36,284,000
Sales Price Per SF	$126	$144

Sales Volume & Sales Price Per SF

Source: CoStar Group, Inc.

Sales Activity

The Colorado Springs industrial market for mid-sized assets registered a signiﬁcant rebound in Q2 2025, with sales volume skyrocketing 72.61% year-over-year (from $36.28 million in Q2 2024 to $62.63 million in Q2 2025). This marks the strongest quarter since the Q2 2022 peak and stands as the third-highest quarterly total of the past decade. Amid national capital market constraints, this resurgence signals renewed investor conﬁdence, particularly among regional private buyers and owner-users, who continue to dominate the market’s transactional landscape. Together, these groups account for roughly 90% of industrial ownership in the area, while institutional and REIT participation remains marginal.

The recent uptick in volume has been powered by a wave of portfolio activity and trades involving larger industrial footprints, such as the $19.95 million sale of 150,335 square feet at 1051 Synthes Avenue and an $8.5 million three-property portfolio on 5015-5061 North 30th Street. These transactions reﬂect a trend toward scale and consolidation, attracting a mix of local and national capital.

Despite the surge in activity, the average sales price per square foot declined by 12.5% year-over-year to $126/SF, a shift attributable more to the changing mix of traded assets than to softening demand fundamentals. Indeed, the presence of Class B and older vintage properties within recent deal ﬂow has tempered pricing metrics, but this also indicates that sellers are increasingly aligning their pricing expectations with the realities of today’s market. However, assets like the 901 Synthes Avenue sale, which fetched $184.23/SF, suggest pricing power remains intact for high-quality buildings.

Investor appetite continues to coalesce around assets under 50,000 square feet, particularly in the logistics subtype. Sales velocity and pricing trends suggest that capital remains available for the right deals, especially those aligned with occupier demands from aerospace, defense, and advanced manufacturing users.

Vacancy, Rents, and Construction in Colorado Springs

Vacancy Rate: 4.4%
Average Asking Rents: $11.54/SF
Under Construction (SF): 459,113
Construction Starts (SF): 214,322

Vacancy in the Colorado Springs industrial market tightened to 4.4% in Q2 2025, down from 5.2% in Q2 2024. This 80-basis-point improvement reﬂects rising occupier demand and a rebound in net absorption. The compression in vacancy is notable given the broader national trend of softening industrial occupancy and highlights Colorado Springs’ relative stability. Contributing factors include:

Continued leasing momentum in well-located submarkets, especially near the Colorado Springs Airport and within the Northern corridor.
Limited speculative deliveries, as developers face ﬁnancing constraints and proceed cautiously in the current interest rate environment.
Steady backﬁlling of second-generation space as tenant turnover is met with healthy replacement demand.

With vacancy trending below long-term averages, the market continues to face supply constraints. This supply-demand imbalance is helping to maintain pricing power for landlords. The average asking rent per square foot increased to $11.54 in Q2 2025, up from $11.08 in Q2 2024, a gain of 4.15%. This marks a meaningful acceleration compared to the 1.4% increase recorded in Q1 2025, and suggests a modest recovery in rental appreciation. While rent growth remains below peak levels observed in 2022, the current trajectory indicates that landlords are regaining leverage, particularly for functional, well-located space. Overall, the combination of lower vacancy and improved rent gains underscores the market’s resilience and continued attractiveness to both occupiers and investors.

Vacancy Rate

Source: CoStar Group, Inc.

Asking Rent per SF

Source: CoStar Group, Inc.

The Colorado Springs industrial construction pipeline remains volatile as developers continue to face capital constraints in the current high interest rate environment. As of Q2 2025, there were approximately 459,113 square feet of industrial space under construction across the market, an 11.2% decline from the same period last year. While this ﬁgure includes a few notable build-to-suit projects, particularly near the Colorado Springs Airport, speculative development remains limited. New construction starts totaled 214,322 square feet in Q2, despite representing a 257% year-over-year increase from a very low base in Q2 2024. This uptick reﬂects selective developer conﬁdence in certain submarkets, but it is far from signaling a broader wave of new supply.

Much of the pipeline continues to be concentrated in the Southeast and Northwest submarket, anchored by the economic momentum generated by Amazon’s 4-million-SF distribution center, which remains a catalyst for adjacent development. Still, most developers remain cautious. The combination of elevated construction costs, tighter ﬁnancing conditions, ongoing unknowns with tariﬀs, and a more disciplined lending environment has tempered speculative starts. As a result, the overall pipeline remains modest at just 1.7% of total inventory. This constrained new supply, paired with tightening vacancy and sustained tenant demand, is likely to preserve landlord pricing power in the near term.