Continued Softening Seen in Industrial Market

DENVER-The metro area’s industrial market continues to soften into 2002, with the direct vacancy up slightly to 7.7% from 7.1% at the end of 2001, shows a report by Denver-based Fuller and Co. However, when the nearly 1.8 million sf of sublease space is thrown into the equation, the vacancy rate rises to 8.65%, according to Fuller and Co. industrial veterans Jeff Roemer and R.C. Myles.

The vacancy rate is the highest in about a decade, Myles says.

Multiple large blocks of space have recently come on the market, including a significant amount of subleased space along the Northeast submarket, the largest industrial submarket, they note. Also, year-to-date negative absorption is about 800,00 sf, a reflection of downsizing by most industry sectors.

Developers, however are responding to the market by only breaking ground on 564,000 sf of speculative space since January, a relatively small amount compared to previous years, they note.