E-commerce “coming in a major way” to add to Denver’s rising warehouse prices

Colorado’s $1 billion cannabis industry helped jump-start the demand for warehouse space, but only represents a small slice of businesses, according to one expert.

The USPS parcel sorting facility in Stapleton. (Kevin J. Beaty/Denverite)

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The US Postal Service parcel sorting warehouse in Stapleton. (Kevin J. Beaty/Denverite)

Companies are eager to put marijuana, food, homes and other products in front of Denver’s rapidly growing population.

In order to do that, businesses need somewhere to store their materials, making now a good time to be a warehouse owner in Denver, said Jeremy Ballenger, vice president with CBRE Group Inc.

Partly due to a budding marijuana industry, the value and rents for warehouses in Denver started rising in 2012, Ballenger said. The real estate analyst doesn’t foresee prices going down anytime soon, especially now that e-commerce companies like Amazon.com are entering the market.

Colorado’s $1 billion cannabis industry helped jump-start the demand for warehouse space, but only represents a small slice of businesses — 2 percent — occupying industrial space, Ballenger said.

“The marijuana industry did come in and purchase a lot of old functionally-obsolete, inexpensive buildings five or six years ago,” he said. “But the big drivers so far in this cycle have been food producers as well as building supplies and construction-related industries.”

“E-commerce is just coming into Denver now, but it’s coming in a major way.”

In 2015, $507 million was generated from 244 warehouse transactions in Denver. That’s compared to the $73 million from 162 transactions in 2012, according to a Denverite analysis.

Fasteners Inc. in Englewood. (Kevin J. Beaty/Denverite) warehouse; development; economics; economy; real estate; kevinjbeaty; denver; colorado; denverite;
Fasteners Inc. in Englewood. (Kevin J. Beaty/Denverite)

“We’ve seen enormous growth in both volume of sales and record pricing of warehouses,” Ballenger said. “Part of that certainly is that we’re coming off of a recession, but really it’s larger than that. We’re seeing this national draw toward industrial real estate.”

National demand for big-box warehouses during the start of the year pushed the average asking price for industrial space to $6.21 per square foot — up 3.5 percent from the start of 2015, according to CBRE Research.

A Dish Network training facility in Englewood. (Kevin J. Beaty/Denverite) warehouse; development; economics; economy; real estate; kevinjbeaty; denver; colorado; denverite;
A Dish Network training facility in Englewood. (Kevin J. Beaty/Denverite)

The research shows the number of available industrial properties reached a 15-year low,  9.2 percent, during the first quarter of the year.

The availability rate was lower in Denver — 7.4 percent — allowing property owners to ask for more than the national average, $7.29 per square foot.

Business & data reporter Adrian D. Garcia can be reached via email at agarcia@denverite.com or twitter.com/adriandgarcia.

Adrian D. Garcia

Author: Adrian D. Garcia

Adrian D. Garcia is on business and trends for Denverite, serves as treasurer for the Colorado chapter of the Society of Professional Journalists and on the board of the Denver Press Club. He can be reached at agarcia@denverite.com.