Q225 Northern Colorado Industrial Market Report

Market Overview

By the Numbers

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

 

• Sales Volume: $166,042,375
• Number of Properties Sold: 67
• Average Sale Price Per SF: $165
• Vacancy Rate: 7.8%
• Rent Growth: 1.2%
• Rent Per SF: $13.45
• Under Construction (SF): 393,704
• Construction Starts (SF): 10,004
• Net Absorption (SF): -233,101

 

Significant Sales

 

Key Highlights

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

1. Massive Spike in Sales Volume

In Q2 2025, Northern Colorado saw a significant surge in sales volume, hitting $159.2 million—a 60.6% increase compared to the same period last year, and a remarkable 125.8% rise from the previous quarter. This growth highlights strong market momentum, fueled by sellers adjusting pricing expectations more realistically and responding better to current market conditions. As sellers aligned more closely with buyer expectations, transactions volume nearly doubled from Q1’s $70.5 million, signaling a robust upward trend in market activity.

2. Record High Vacancy Beginning to Stabilize

Vacancy rates have risen year-over-year by 16.2%, reaching 8.6% in Q2 2025—a ten year peak. However, the rate of increase has slowed to previous quarters, indicating that vacancy levels may be nearing a plateau. With Q1 2025 at 8.5% and only a slight increase in Q2 2025, the market shows signs of stabilization. Moving forward, vacancy is expected to level off in the latter half of the year and may even begin to decline as supply and demand continue to rebalance.

3. Rent Growth Slowing Down

Northern Colorado posted a rent growth of 1.1%—a notable decline from 3.7% this time last year, and down significantly from its peak of 6.5% in 2022. Despite the slowdown, the region still recorded positive growth for the quarter, outperforming the Denver metro area to the south, which has begun to see negative rent growth. Rent growth in Northern Colorado is expected to continue tapering off throughout the remainder of the year, with a rebound anticipated after it bottoms out toward year-end.

 

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	$159,167,375	$99,135,800
Sales Price Per SF	$162	$150

 

Sales Volume & Sales Price Per SF

Source: CoStar Group, Inc.

 

Sales Activity

The Northern Colorado industrial market experienced a sharp acceleration in transactional activity in Q2 2025, marking one of its strongest quarters in recent years. Sales volume reached $159.17 million, representing a 60.6% increase year-over-year from $99.14 million in Q2 2024 and an impressive 125.8% jump from the $70.50 million posted in Q1 2025. This surge positions the quarter as the second-highest in total sales since 2022, suggesting that investor sentiment is shifting, with buyers displaying increased willingness to deploy capital and sellers willing to play ball.

 

This heightened momentum is being fueled by a growing pool of active participants across both private and institutional capital sources. These figures also point to a market where confidence is returning in tandem with a more favorable alignment between buyer expectations and seller pricing strategies. As demand firms, competitive bidding on select assets is becoming more common, further supporting transaction velocity.

 

On the pricing front, the average sales price per square foot in Q2 2025 landed at $162/SF, an 8.0% increase from $150/SF a year earlier. While this marks an improvement from 2024 levels, it also represents a modest 3.6% decline from the $168/SF recorded in Q1 2025. This quarterly dip is less a sign of softening fundamentals and more reflective of natural variability in the composition of traded assets. In fact, pricing has become notably more consistent over recent quarters, suggesting sellers are increasingly calibrating their expectations to align with current market conditions. This adjustment has likely been instrumental in unlocking deals that might otherwise have stalled in negotiation.

 

Altogether, the combination of substantial gains in sales volume, pricing stability, and expanding buyer activity paints a picture of a market on the upswing. With fundamentals stabilizing and liquidity improving, Northern Colorado’s industrial sector appears well-positioned to sustain its momentum into the second half of 2025. This is particularly true if macroeconomic conditions remain favorable to investment, and demand continues to track upward.

 

Vacancy, Rents, and Construction

• Vacancy Rate: 8.6%
• Average Asking Rents: $13.86/SF
• Under Construction (SF): 385,204
• Construction Starts (SF): 28,050

 

Northern Colorado’s industrial vacancy edged up to 8.6% in Q2 2025, rising 120 basis points year-over-year from 7.4% in Q2 2024, and a modest 10 basis points from the 8.5% recorded in Q1 2025. This 16.2% annual increase places vacancy at its highest point in the past decade. A key factor in this increased rate is the marked shift in tenant behavior, underscoring a period of adjustment between occupier demand and available supply. Contributing factors to the current vacancy dynamics include:

 

• Companies/tenants are more reluctant to relocate amid ongoing market uncertainties, leading to an increase in lease renewals over new moves.
• Tenants have gained greater leverage in choosing their space while landlords have shifted their focus toward maintaining occupancy rather than aggressively pursuing higher rents.

 

On the rental side, market asking rent growth decelerated sharply to 1.1% in Q2 2025, down from 3.7% a year earlier and 2.5% in the prior quarter—a 70.27% drop year-over-year and a 56.0% decline quarter-over-quarter. This slowdown reflects the greater leverage tenants currently hold in negotiations, as elevated vacancy gives them more choice and bargaining power. Average asking rents held relatively steady at $13.86/SF—up 0.6% year-over-year but down 1.3% quarter-over-quarter —signaling greater stability than the national average. This trends also hints that, despite softer growth, the market is gradually rebalancing toward healthier fundamentals.

 

Vacancy Rate

Source: CoStar Group, Inc.

 

Asking Rent Per SF

Source: CoStar Group, Inc.

 

Asking Rent Growth (YOY)

Source: CoStar Group, Inc.

 

The Northern Colorado industrial construction pipeline continues to contract in Q2 2025. 385,204 square feet were under construction for properties between 5,000 and 200,000 SF—down 23.42% year-over-year from 502,987 square feet in Q2 2024 and down 9.5% from the 425,450 square feet recorded last quarter. This marks the latest step in a steady quarterly decline, as the pipeline of new developments narrows in the wake of muted demand and heightened market caution.

 

New construction starts were minimal, totaling just 10,004 square feet in Q2 2025 for properties between 5,000 and 200,000 SF, a 64.3% decrease from the 28,050 square feet launched in the same quarter last year. While this represents a modest rebound from zero starts in Q1 2025, activity remains far below historical norms. Developers are holding back on speculative projects as a result of persistently high vacancy rates, elevated financing costs, and ongoing pressure from material pricing. While the few speculative projects in the pipeline are down significantly, demand for pre-leased or build-to-suit projects is higher.

 

The combination of a shrinking pipeline and limited new starts points to a more disciplined development environment, one in which only the most viable, strategically located projects are moving forward. In the near term, this measured approach is likely to keep future supply additions in check, allowing the market additional time to absorb existing vacancies before the next meaningful wave of deliveries.

 

Under Construction (SF)

Source: CoStar Group, Inc.

 

Construction Starts (SF)

Source: CoStar Group, Inc.

 

Submarket Overview

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