Q1 2025 Northern Colorado Industrial Market Report

Market Overview

Highlights

1. Significant Reduction in Sales Volume

Sales volume experienced a 45.90% decline in Q1 2025 compared to Q1 2024. This downturn is likely attributed to reduced investor confidence, driven by several factors including heightened volatility in the debt markets, post-election uncertainty, and ongoing fluctuations in both treasury yields and the stock market. That said, Northern Colorado had a strong Q4 2024, recording $130,944,681 in sales volume—the highest level since Q3 2023—reflecting a renewed sense of optimism in the market. Although the average price per square foot also saw a decline, the decrease was relatively modest at 5.06%.

2. Notable Rise in Vacancy

The average vacancy rate increased by 12.66% in Q1 2025 compared to Q1 2024. However, vacancy levels are anticipated to decline later this year as the construction pipeline continues to shrink. In times of uncertainty, many businesses are opting to renew existing leases rather than expand or consolidate, unless a critical need arises.

3. Substantial Contraction in New Development

Q1 2025 marked the first quarter in over a decade with zero new construction starts to report. The number of projects currently under construction is down 18.67% compared to Q1 2024. This trend is expected to persist, driven by elevated construction financing costs, persistent concerns around tariffs, and rising material prices.

By the Numbers

• Sales Volume: $71,418,350
• Number of Properties Sold: 41
• Sales Price Per SF: $170
• Vacancy Rate: 7.66%
• Rent Growth: 1.6%
• Rent Per SF: $13.58
• Under Construction (SF): 495,914
• Construction Starts (SF): 0
• Net Absorption (SF): (653,151) | All Properties | Source: CoStar Group

Focused Metrics

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

Transaction Volume | YoY Change

5,000-200,000 SF | Source: CoStar Group

The Northern Colorado industrial market entered 2025 with a sharp deceleration in investment activity, reflecting broader macroeconomic uncertainties and waning investor confidence. In Q1 2025, total industrial and flex property sales volume fell to $67.9 million, marking a 45.9% year-over-year decline from $125.6 million in Q1 2024. This drop-off underscores the region’s sensitivity to elevated interest rates, volatile debt markets, and investor hesitancy amid ongoing treasury yield fluctuations and post-election jitters. The pullback was most evident in smaller asset trades under $10 million, which historically dominate this region’s transaction landscape and often involve local and private buyers. While the decline is notable, it follows a particularly strong Q4 2024, when sales volume surged to over $130 million—the highest since mid-2023—suggesting that the current lull may prove temporary.

Despite the fall in total deal volume, average pricing per square foot held up relatively well. The market-wide average landed at $170/SF in Q1 2025, just a 5.06% decline from $178/SF the year prior. Submarket-level transactions reveal a bifurcation in pricing based on asset quality, location, and buyer type. Noteworthy trades included the 46,600-SF asset at 1427 Skyway Drive in Longmont, which sold for $240/SF to a national investor, and 2840 Wilderness Place in Boulder, which commanded $241/SF—one of the highest price points recorded during the quarter. In contract, older or less centrally located assets, such as 501 S Francis St in Longmont ($124/SF) and 12524 County Rd 25 ½ in Fort Lupton ($140/SF), transacted at more modest valuations. These spreads reflect the growing selectivity of buyers and their focus on newer, stabilized properties with strategic locational advantages.

Across the region, private buyers and owner-users dominated transaction activity, continuing a trend that emerged in mid-2023 as institutional capital pulled back. This was particularly evident in Fort Collins and Greeley, where most recent deals involved locally based users or investors acquiring sub-$10 million assets. In Greeley, for instance, the owner-user purchase of a 100,000-SF facility at 1130 Dimond Valley Dr for $172/SF highlights the ongoing appeal of logistics and manufacturing hubs in secondary markets. These buyers are often less reliant on traditional financing and are strategically positioning themselves for long-term expansion, especially in fast-growing industrial corridors with business-friendly infrastructure.

Boulder saw some of the region’s highest sales prices in Q1, but investment momentum has softened considerably. Eight straight quarters of negative net absorption and a rising vacancy rate have tempered enthusiasm, even among the biotech and flex-space investors that had previously helped support valuations. Nonetheless, institutional investors haven’t exited completely. Blue Vista’s recent $49.5 million acquisition of the Bolder Innovation Campus in late 2024 set the tone for potential long-term investment strategies, particularly in well-located, newer campuses with R&D functionality. However, no comparable large-scale institutional trades occurred in Q1 2025, reaffirming the current dominance of smaller-scale transactions and a reduced appetite for speculative acquisitions in the Boulder submarket.

Looking ahead, sales activity in Northern Colorado is expected to remain measured as investors wait for clearer signals from the debt markets and a more predictable interest rate policy. Yet fundamentals in many of the region’s submarkets remain healthy over the long term, supported by steady population growth, infrastructure investment, and diversified employment bases. Fort Collins, bolstered by Colorado State University and its expanding base of Fortune 500 employers, continues to attract strategic private investment. Greeley, meanwhile, remains an active owner-user market with a strong manufacturing and agribusiness foundation. While Boulder may see more volatility due to its reliance on the tech and life sciences sectors, its limited development pipeline and knowledge-based economy make it an enduring target for long-hold institutional buyers. The current sales slowdown may ultimately set the stage for a re-acceleration in the second half of 2025 as investor confidence begins to rebound and pricing expectations realign.

Vacancy, Rents, and Construction

• Vacancy rate: 8.9%
• Average Asking Rents: $14.04/SF
• Asking Rent Growth: 1.81%
• Under Construction (SF): 495,914
• Construction Starts (SF): 0 | Q1 2025 | Source: CoStar Group

Rent growth in Northern Colorado’s industrial market continued to decelerate in Q1 2025, with average asking rates rising just 1.8% year-over-year to $14.04/SF. While this pace of growth marks a significant drop from the gains seen during the post-pandemic boom, rental rates remain near historic highs, particularly in submarkets with strong tenant demand and limited flex or small-bay availability. Boulder, which historically commands premium rents due to its high-tech and R&D tenant base, saw average asking rents push higher in select innovation campuses, while Greeley and Fort Collins maintained a steadier rent environment with average industrial and flex rates hovering between $12.00 and $14.00/SF. This data suggests continued resilience in smaller footprints that cater to $14.04/SF, suggesting continued resilience in smaller footprints that cater to regional users and owner-occupiers. However, landlords are increasingly offering concessions, especially for larger blocks of space, as elevated vacancy exerts pressure on pricing power.

Vacancy continued its upward trend in Q1 2025 across Northern Colorado, rising to 7.66% market-wide, with the 5,000-200,000 SF segment reaching 8.9%, a 12.66% increase over the prior year. Submarkets like Boulder were particularly affected, posting a vacancy rate of 11.6% following eight consecutive quarters of negative absorption. Fort Collins also experienced rising vacancies, now at 6.3%, as new space deliveries outpaced tenant demand. Greeley remined relatively insulated due to its tighter leasing fundamentals and strong owner-user activity, though even there, larger spaces faced longer marketing times. Across the region, tenants have become more cautious amid economic uncertainty, leading many to renew existing leases rather than relocate or expand. This behavior, combined with slower absorption of newly delivered space, has contributed to the broader rise in availabilities. Still, vacancy is expected to stabilize in the second half of 2025 as the development pipeline contracts, and leasing momentum gradually returns.

Northern Colorado’s industrial construction pipeline contracted sharply in Q1 2025, signaling a market-wide pause after several years of robust development. Just under 496,000 SF remained under construction this quarter, an 18.7% decline from the same time last year. Notably, no new construction starts were recorded, marking the first quarter in over a decade without any groundbreakings. The slowdown is attributed to elevated construction financing costs, ongoing concerns over material pricing and tariffs, and a broader rebalancing of supply following the delivery of millions of square feet between 2021 and 2023. In Fort Collins and Boulder, where development had previously surged, mainly small-scale flex or built-to-suit projects like Schuman Companies’ 31,500 SF warehouse in Johnstown are moving forward. Meanwhile, Greeley’s pipeline is nearly built out, with recent deliveries already absorbed by users. This development lull is expected to help restore market equilibrium by curbing further vacancies and giving demand time to catch up to supply over the coming quarters.