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DENVER-The Denver-area industrial market isn’t setting the world on fire, but it is fairly stable, shows a mid-year report and projection by Mitch Zatz, an industrial broker and associate director at Cushman & Wakefield Colorado Inc.

At the end of the second quarter, the direct vacancy rate was 7%, virtually unchanged from 7.1% in 2002, for the warehouse/distribution market, Zatz notes.

The average rental rate was $4.34 per sf, compared with $4.77 in 2002.

For flex space, the direct vacancy rate was 11.1%, compared with 11.2% in 2002, and the average rental rate per sf dropped slightly to $8.22 from $8.77.

In the second quarter, there was 1.64 million sf, compared with 2.04 million sf. The net absorption in the second quarter was 910,00 sf, compared with 940,000 sf a year earlier.

Zatz says Denver’s cost of living, especially high residential prices, makes it difficult to attract companies and manufacturers that would help the industrial market recover.

Also, industrial landlords are losing tenants, as users, taking advantage of low interest rates, buy their own buildings.

On the other hand, large developers that make up the lion’s share of the ownership along the northeast corridor–the biggest industrial submarket, have been extremely responsible by not overbuilding, he says.

Only 810,000 sf of space is being built in the second quarter, compared with 3.53 million sf last year, he notes.

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