Denver Industrial Market Report Q1 2020
The COVID-19 pandemic is having an unprecedented impact on the national and local economies. Colorado jobless claims have surged by more than 230,000 since mid-March as stay-at-home orders force non-essential businesses to shutter across the state. The health of commercial real estate and the economy virtually hinges on the mitigation efforts to slow the spread of the virus.
Coronavirus shutdowns will have less of a negative impact on the industrial sector than in the retail or office segments. Many industrial tenants conduct operations are considered essential and are more likely to stay open amid widespread shutdowns. E-commerce and 3PL tenants are likely to see an uptick in activity due to the stay-at-home nature of consumers during the pandemic. For example, Amazon leased 700,000 SF in Aurora in mid-March as part of its plan to hire an additional 175,000 workers across the U.S.
Industrial rents are more than 60% above the peak of the previous cycle, one of the best performances in the nation. However, rent growth in 2019 noticeably moderated from outsized figures in previous years, when the market routinely posted annual gains of more than 7%.