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DENVER-The Denver-area industrial market in the third quarter held its own, with its overall vacancy rate rising to a ”very respectable” 6.7%, shows a report by Grubb & Ellis. The overall vacancy rate is up by only 1%, the report notes, but warns that the R&D/flex market’s vacancy rate is 15.6% and is ”beginning to exhibit more than just similar building characteristics with the office market.”

“Unlike other property types, the industrial market is weathering the storm because lenders and developers have done an admirable job maintaining the balance between supply and demand,” the Grubb & Ellis report adds.

Much of the R&D/flex space, where the higher vacancies are found, is found in the Southeast and Northwest submarkets. ”Despite the R&D/flex woes (in those submarkets), the dynamics between supply and demand appear to be in balance for the market in general,” Grubb & Ellis notes.

However, it warns that the rise in sublease industrial space is a cause for concern.

”In just three quarters, the amount of sublease space has increased by almost 65% and is now at 2.24 million sf., of which 1.4 million sf of that space is vacant.”

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