Page 20 — Office & Industrial Quarterly — March 2023 INDUSTRIAL — SOUTHEAST SUBURBAN MARKET M etro Denver has experi- enced exponential growth over the past decade, with the Kenan Institute of Private Enterprises placing it on its top 10 list as the sixth-fastest-growing city in the country. With no sign of slowing down, metro Denver’s population of 3.3 million has steadily increased year after year, enticing companies and residents alike with a strong economy, business-friendly policies, diverse culture and vibrant lifestyle. As Denver’s population increases, submarkets surrounding the region have grown as well, with Denver’s southeast submarket garnering national attention from numerous industries and the associated influx of institutional developers and capi- tal groups. It’s a substantial shift for the area, which was once off the radar for many institutional inves- tors that considered the submarket limited to local credit and smaller tenants. Fast forward to 2022, and tenant activity and lease rates within Den- ver’s southeast submarket reached record levels, with the growth experienced on track to continue throughout 2023. From an area deemed uncreditworthy to one that is now top of mind, many wonder: 1 What generated the southeast’s sudden appeal? 2 Is it sustainable? The SES submarket boasts impec- cable access to metro Denver, a highly educated workforce and land parcels ripe for development – fac- tors overlooked a decade ago. The appeal of Denver’s SES sub- market really took hold in 2017, as Denver’s increas- ing population caused investors to take notice of land parcels just outside the city’s limits. With traffic congestion rising in central Denver, they identified the southeast as an ideal location –close enough to Denver to pro- vide immediate access to various points along the supply chain, yet far enough away that operations weren’t beholden to the hustle and bustle of never-ending traffic. But improved traffic conditions weren’t the only draw. The Denver Tech Center, the larg- est office submarket in metro Den- ver and one of the most significant tech hubs in the nation, is less than a 20-minute drive from the SES submarket, providing access to a highly educated and driven work- force. Combine that access with quality, developable land, and it’s no surprise that institutional inves- tors identified the southeast as the perfect hub for manufacturing and light distribution operations. Companies with an existing pres- ence in Denver and those com- pletely new to the region migrated to the southeast, resulting in steady demand for industrial space from 2017 onward. Capital continued to pour in, creating an abundance of ownership and development opportunities. While the pandemic certainly created a pause in tenant demand for this submarket, late in 2021, tenants began to flood the area, signing leases at a record pace. The pause in activity that took place in 2020 in Denver’s SES sub- market created substantial, pent-up demand. Development projects that were already underway before the pan- demic began were delivered as scheduled in 2020, creating an oversupply of industrial space. As a result, the market within the south- east became oversaturated, causing new developments to sit vacant – with little to no activity, which only increased feelings of hesitancy among investors and occupiers. The second half of 2021 was far different, bringing a renewed sense of momentum to the marketplace as the economy stabilized and credit tenants began competing for vacancies. Existing footprints expanded within the southeast, and new industries emerged, with new deals signed exceeding a record 2 million square feet in 2022. This surge in tenant activity wasn’t solely the result of private sector innovation or a shift within the economy but government contracts awarded to numerous Colorado companies, specifically Denver’s southeast market comes into its own Tyler Reed, SIOR Executive managing director, Stream Realty Denver’s Tech Center is the largest office submarket in metro Denver and one of the most significant tech hubs in the nation. Please see Reed, Page 32 BRYANCONSTRUCTION.COM 855.391.5355 DELIVERING PERFORMANCE EXCELLENCE EVERY. TIME. VENTURE X - DENVER, CO TAKE A LOOK AT OUR RECENT PROJECTS