Colorado Real Estate Journal - January 21, 2015
Colorado’s – and the nation’s – largest owner of distribution facilities expects Denver’s industrial market will be equally robust this year, and it plans to continue to build to satisfy customer demand. “The economy has been really strong, and all of our customers seem to be doing very well,” said Prologis Vice President and Market Officer Wayne Barrett. “ With the economy being as good as it is, more people are buying more things, and they need more warehouse space to store those products. “We’re pretty bullish on what 2015 looks like. You’re going to see continued development and positive growth in Denver. I don’t see anything on the horizon that’s going to stop this growth,” Barrett said. According to Prologis, its its 5.5 million-squarefoot industrial portfolio has been fully leased for six months. The parent company of Udi’s Healthy Foods expanded to 360,000 sf last year, while Czarnowski Display Service and HD Supply preleased big chunks of two new, approximately 400,000- sf buildings Prologis is building at Stapleton Business Center North, located at East 56th Avenue and Havana Street in Denver. At about 260,000 sf each, Czarnowski and HD Supply are indicative of a trend toward larger tenants and larger buildings in Denver, Barrett said. “Our average-size tenant seems to be getting larger in our portfolio,” said Barrett, who noted that may be due in part of the fact that building sizes are increasing. However, “I think that’s the maturing of the Denver market. It’s a larger metropolitan market than it was five or 10 years ago.” While it remains a secondary market, with distribution companies able to service only 5 percent of the nation’s population within a day’s drive (or 500 miles) of the metro area, Barrett said Denver’s growth has attracted more companies that want to serve the Rocky Mountain region. “If you want to service Denver efficiently, you really have to be in Denver from a distribution standpoint,” he said. Without being specific about development plans, Barrett said Prologis will continue to develop new buildings in Denver to meet demand from expanding and new clients. “We are lucky – in Denver, we have land,” he said. “The market has certainly gotten to the point where rents have increased to the extent that you can justify new construction. We feel very positive about the rent growth that we’ve seen locally and the expansion of Denver. That’s why we’re building buildings,” Barrett said, referring to the warehouse/distribution buildings currently under construction. “We’re certainly looking at building more product given the success we’ve already had,” he added. Prologis has approximately 40 acres of developable ground remaining at Stapleton Business Center North and 175 acres at Prologis Park 70, which is located at E-470 and Interstate 70 in Aurora. “We feel like the land we have is strategically located where we can keep growing our portfolio and satisfy our global customers in Denver, and across the United States and around the world,” Barrett said.