2024 Year-End Summary Southern Colorado Industrial Market Report

Market Overview

Key Highlights

• Transaction volume in 2024 was approximately 16.5% lower than 2023.
• Vacancy rates remain below the national average, with a limited construction pipeline further constraining new supply and keeping competition high.
• Sales volume was predominantly driven by national buyers, accounting for 61% of transactions while local investors made up just 38% of market activity.
• The strong military and government presence, anchored by multiple bases and major defense contractors, continues to drive demand for flex space.

By the Numbers

All Properties | 2024 | Industrial + Flex Properties | Source: CoStar Group

• Sales Volume: $153.37M
• Number of Properties Sold: 124
• Market Sale Price Per SF: $105.67
• Vacancy Rate: 3.91%
• Rent Growth: 1.6%
• Average Rent Per SF: $10.58
• Under Construction (SF): 606K
• Construction Starts (SF): 556K
• Net Absorption (SF): 532K

Focused Metrics

Transaction Volume

5,000-200,000SF | Industrial + Flex Properties | Source: CoStar Group

Comprised of Colorado Springs and Pueblo, sales activity in Southern Colorado’s industrial market amounted to $121M for 5,000 – 200,000 SF properties in 2024, a decline compared to the previous year and falling below the five-year average. In the past year, 78 sales have occurred, averaging $136 per square foot, a 30% increase compared to 2023 price per square foot averages. Despite these challenges, the region experienced strategic transactions as institutional investors, private equity firms, and local developers seized opportunities particularly in the strong logistics and flex property sectors. In Colorado Springs, the Southeast submarket led in overall sales volume at $34M, driven by high demand for logistics space, while Pueblo as a whole saw just over $7.7 million in sales.

Logistics and flex space transactions remain the most frequent, driven by strong demand from the military and government job sectors. Colorado Springs is a hub for several thriving industries, including aerospace, military technology, life sciences, and medical innovation. The market’s economy is heavily influenced by the military and defense sectors, home to three Army and Air Force bases, along with the U.S. Air Force Academy and Space Force. Additionally, major defense contractors such as Northrop Grumman and Lockheed Martin maintain a strong presence in the region.

The concentration of these industries has significantly increased the demand for industrial flex space, making it a highly valuable asset. Pueblo has experienced a 5.3% population increase within the past decade, making it the ninth most populous city in Colorado. With deep roots in ore production, Pueblo is also one of the largest steel-producing cities in the county. The industrial sector has grown by approximately 17.6% over the past decade, while government jobs have seen the highest growth rate in the market, increasing by 3.5% in the past year.

Vacancy, Rents, and Construction

5,000-200,000 SF | 2024 | Source: CoStar Group

• Vacancy Rate: 4.70%
• Average Asking Rent: $11.28/SF
• Under Construction (SF): 606,918
• Construction Starts (SF): 556,750

Southern Colorado’s industrial market experienced moderate rent growth in 2024, with submarket trends highlighting the region’s diversity. Market rents varied widely, averaging $9.72/SF in Pueblo and $11.69/SF in Colorado Springs, and overall rent growth across Southern Colorado was slower than historical averages, reflecting broader national trends. In Colorado Springs, certain submarkets, such as Northeast Colorado Springs, saw rental rates reach as high as $14.32 per square foot on average. Logistics properties maintained steady rent appreciation, with annual rent growth reaching up to 2.0% in Southeast Colorado Springs and steady increases observed in the North and Southwest submarkets. While areas like the Greater CBD and Southeast experienced rent increases over 1%, Northwest Colorado Springs saw slight declines, particularly in specialized asset categories.

Vacancy rates remained tight, with Pueblo reporting 5.16% and Colorado Springs at 4.63%. Several submarkets in Colorado Springs recorded levels well below the national average, with the Colorado Springs’ Greater CBD reaching a low of 1.7%, respectively. However, vacancy rates were higher in certain areas, with Northwest and Southeast reporting 5.2% and 5.3%, respectively, due to new developments and slower absorption.

The construction pipeline across Southern Colorado remains below the national average, contributing to constrained supply and lower vacancy rates. Most submarkets reported little to no new deliveries in 2024, with Pueblo and Colorado Springs’ Greater CBD, Southwest, CBD, and North submarkets seeing no active construction projects. However, Southeast Colorado Springs stood out with 306,750 square feet under construction near the Colorado Springs Airport. This highlights a strategic focus on logistics and distribution needs, even as construction in Southern Colorado lags national trends.

Despite the limited pipeline, developers remain focused on targeted projects that align with tenant demand for modern facilities. And, the region’s vacancy trends reflect overall market stability, particularly near transportation hubs and distribution corridors, where space remains highly competitive.