Page 24 — Office & Industrial Quarterly — December 2022 5120 Osage St., Suite 100, Denver, CO 80221 Phone (303) 420-0234 Fax (303) 420-7666 Murray & Stafford and Westfield Company Collaborate on The Pivot Denver at I-25 and 58th Avenue.  30.43 acre development  4 buildings, ± 472,800 SF of Class A industrial  Murray & Stafford’s third industrial park with Westfield  In a 1-mile radius, the team has developed and built 15 buildings totaling over 2 MMSF INDUSTRIAL — MARKET UPDATE T he second Industrial Revolu- tion. Last-mile distribution. The Amazon effect. Over the last five years, these three phrases have echoed across the United States economy. E-commerce growth stemming from changing consumer expectations, an evolving digital network, and the COVID-19 pandemic has led to insa- tiable industrial real estate demand. Businesses across the U.S. have adjusted their distribution space requirements and location strategy in order to compete with the likes of Amazon that are now offering their customers same-day delivery. During this same period, the pan- demic spurred massive population migration from the coastal markets to the Rocky Mountain West and Southwest. This migration was due largely to lifestyle changes, a lower cost of living and a more business friendly environ- ment. Cities such as Denver, Phoe- nix, Las Vegas and Boise, Idaho, are some of the major cities that have reaped the economic ben- efits of this migration. The increas- ing population base in the Rocky Mountain West and Southwest has further driven industrial real estate demand in these regions. Like the rest of the U.S., this increase in ten- ant demand cou- pled with the lack of available sup- ply of industrial product has led to robust industrial real estate funda- mentals in these regions. The industrial real estate supply- demand imbal- ance has led to extreme market tightness across the U.S. over the last five years (2018-2022). During this time, the U.S. industrial market experienced an average annual vacancy rate of 4.7% (1). In comparison, the Den- ver industrial market experienced an average annual vacancy rate of 5.2% (2). Although Denver’s five-year average rate was slightly higher than that of the greater U.S., both Denver and the greater U.S. out- performed the U.S.’s 10-year (2013- 2022) average annual vacancy rate of 5.4% (3). Subsequently, lower vacancy paired with a supply short- fall of industrial product has led to record rent growth. Over the last five years, the greater U.S. and Den- ver industrial markets experienced average annual rent growth of 7.6% and 5.9%, respectively (4). Excellent industrial fundamen- tals in conjunction with greater tenant demand for distribution space has led to increased indus- Real estate outlook in uncertain economic times Drew Lacey Vice president, real estate, Bow River Capital Sam Berman Associate, real estate, Bow River Capital Please see Lacey, Page 34 Industrial Annual Rent Growth (2018 – 2022 YTD) (5) National Construction Cost Index (2018 – 2022 YTD) (6)