Front Range Market Report
Rates turned higher again this fall, and Front Range commercial real estate is repricing to match. Here is what moved in Q3 2026, across industrial and outdoor storage, office, retail and net lease, medical office and land.
Capital costs reset higher
The Fed's September hike, the first since 2023, and a 10-year that topped 5% have pushed cap rates up across most property types. Sellers who price to today's debt are closing. Those waiting for relief are sitting.
Supply is drying up
New construction is at multi-year lows across the Front Range. Costs remain near 2022 peaks and lenders are selective. Colorado Springs had zero industrial starts in Q2. Little new supply supports occupied, well-located buildings.
Quality wins, size matters
Industrial, retail and medical office are holding tight vacancy. Office is the outlier. Downtown Denver vacancy is above 37%, while smaller tenants and Class A space continue to lease.
Rates moved the wrong way for buyers
Benchmark rates set the pricing floor for every deal on the Front Range. Switch between the Fed policy rate and the 10-year Treasury, which most commercial loans are priced from.
- Late 2025Cuts end the year at 3.50–3.75%Borrowing costs eased, and transaction volume picked up into 2026.
- Q3 202610-year breaks above 5%Higher oil and energy prices pushed inflation further from the Fed's 2% goal.
- Sept. 16Fed hikes 25 bps to 3.75–4.00%First increase since July 2023.
- Oct. 28Fed holds, 10–2Two members voted for another hike. The Fed described growth as strong and inflation as elevated.
- Dec. 8–9Next meetingAfter the October meeting, futures markets priced roughly an 83% chance of another 25 bps hike.
Sector by sector
Pick a property type to see its Front Range read and the numbers for each region. Where regional data isn't published for the quarter, we say so instead of estimating.
Front Range industrial demand improved in Q3. Denver absorbed more than 1.5 million SF, above its five-year average, led by a 470,200 SF move-in along the I-76 corridor. Vacancy fell year over year on the large-building measure. The pipeline is shrinking: just under 3.5 million SF is under construction, against a five-year average of 6.2 million.
Industrial outdoor storage (IOS) remains one of the scarcest property types on the Front Range. Many municipalities limit or prohibit outdoor storage as an accessory use, and new zoning is hard to get, so existing permitted yards keep their value even as cap rates rise elsewhere.
Firming Pricing per foot is at records in Denver and Colorado Springs. Expect a temporary vacancy bump as about 1.4 million SF of speculative space delivers by year-end. Then supply tightens.
Denver Metro
Improving- Vacancy
- 7.5%–9.0%*
- Q3 net absorption
- +1.5M SF
- Asking rent (NNN)
- $10.23–$11.64/SF*
- Under construction
- ~3.5M SF
- Avg. cap rate
- 6.78%
- Avg. sale price
- $179/SF
Colorado Springs
Rebalancing- Vacancy (Q2)
- 6.0%
- Q2 sales volume
- $91M (+32% YoY)
- Avg. sale price
- $194/SF (record)
- Under construction
- 391K SF
- New starts (Q2)
- 0 SF
Northern Colorado
Tightening- Vacancy trend
- Down from 9.0% peak (Q4 '25)
- Asking rents
- Near 10-year highs
- Median time to sell
- 8+ months
- Time to lease
- +10% QoQ
- Pipeline
- Down sharply from 2021
*Vacancy and rent vary by survey. The lower figures track larger buildings. The higher figures include smaller industrial and flex buildings.
Denver office vacancy rose to 27.1% in Q3 as large tenants consolidated. Downtown took the hardest hit: one roughly 290,000 SF move-out at 1670 Broadway drove most of the CBD's 521,700 SF of negative absorption. Leasing held up at just over 1.5 million SF, and Class A space made up 61.7% of it.
Sublease space shrank for a sixth straight quarter, to just under 3.7 million SF. Colorado Springs is far healthier at 10.4% vacancy, with no new office construction since 2021.
Soft Two markets in one. Large-block downtown space faces a long recovery. Suburban, well-kept buildings with small suites keep leasing. Buyers with patient capital are finding basis-driven opportunities.
Denver Metro
Softening- Vacancy (metro)
- 27.1%
- Vacancy (CBD)
- 37.1%
- Q3 net absorption
- −395K SF
- Asking rent (FSG)
- $33.80/SF
- Sublease available
- ~3.7M SF
Colorado Springs
Stable- Vacancy (H1)
- 10.4%
- Vacancy (CBD)
- 14.7%
- Net absorption (H1)
- −8K SF
- Direct rent (NNN)
- $17.67/SF
- Class A rent (NNN)
- $21.14/SF (+1.1%)
Northern Colorado
Limited data- Q3 figures
- Not yet published
Denver retail remains one of the tightest property types on the Front Range at 4.5% vacancy. Absorption turned positive in Q3 (+53,000 SF), and new construction is only 1.0% of inventory. Prices hit a record $290/SF even as the average cap rate rose for a 20th straight quarter, to 6.75%.
Nationally, single-tenant net lease cap rates rose 10 bps to 6.92%, the largest quarterly move since 2023. Buyers favor strong credit and long lease terms. The permanent restoration of 100% bonus depreciation is drawing private and family-office buyers to auto service and convenience assets. That helps 1031 exchange buyers and private sellers.
Solid Fundamentals are strong. Pricing is the debate. The bid-ask gap on net lease is only about 25 bps, so realistic sellers are trading. Higher yields give 1031 buyers more income per dollar than a year ago.
Denver Metro
Tight- Vacancy
- 4.5%
- Q3 net absorption
- +53K SF
- Asking rent
- $27.60/SF (+1.1%)
- Avg. cap rate
- 6.75%
- 12-mo sales volume
- $1.6B (+23%)
Colorado Springs
Strong- Vacancy trend
- Falling, led by the north
- Retail sales tax
- Up ~4% YoY (Feb)
- Restaurant sales tax
- Up 3.9% YoY (Feb)
Net lease (national)
Repricing- All single-tenant
- 6.92%
- Retail
- 6.69%
- Industrial
- 7.28%
- Office
- 8.00%
- Top-credit ground leases
- 4.50%
Medical office is the most resilient office segment. Nationally, vacancy fell for a third straight quarter to 9.7%, and absorption rose 20% year over year. Only 264,000 SF of new medical space was completed in Q3, against a historical 2 to 3 million SF per quarter. Investment volume reached $3.1 billion in Q3 (+13.4%), with average pricing up 5.9% to $315/SF.
On the Front Range, health systems keep expanding. UCHealth broke ground on a multi-year expansion of Memorial Hospital North in Colorado Springs, including a new patient tower. New hospital campuses bring demand for nearby outpatient and medical office space.
Steady Little new supply and an aging population keep medical office occupancy high. Cap rates have barely moved, which makes stabilized medical office one of the most reliably financeable assets today.
U.S. medical office
Tightening- Vacancy
- 9.7%
- Q3 net absorption
- 931K SF (+20%)
- Asking rent
- $25.52/SF (+1.3%)
- Avg. cap rate
- 7.15%
- Avg. sale price
- $315/SF
Colorado track record
Recent comps- Inpatient rehab hospital, Inverness
- $36.0M
- Medical office, Colorado Springs
- $11.5M
- Medical office, Broomfield
- $5.85M
Front Range demand drivers
Growing- Health & education jobs, CO
- +13,100 YoY
- Hospital expansion
- Memorial Hospital North
- Veterinary hospital
- 213K SF, Fort Collins
Development is the part of the market most affected by today's rates. Front Range construction costs remain near 2022 peaks because of tariffs, materials and labor. Lenders have raised their return thresholds, especially for speculative projects. Denver's industrial pipeline is 1.5% of inventory, down from 3.9% at the 2022 peak. Retail construction is 1.0% of inventory.
Land buyers are focused on entitled, shovel-ready sites and on redevelopment of obsolete retail and office properties. Construction added 5,900 Colorado jobs over the past year.
Selective Raw land is hard to finance today, which makes entitled sites, covered land plays and redevelopment parcels the most liquid. Owners holding zoning that is hard to replace, such as outdoor storage, fuel or drive-thru, have pricing power.
Denver Metro
Slowing- Industrial under construction
- 1.5% of inventory
- Retail under construction
- 1.0% of inventory
- Spec industrial delivering by YE
- ~1.4M SF
Colorado Springs
Paused- Industrial starts (Q2)
- 0 SF
- Office starts since 2021
- None
- Retail growth
- North & east
Northern Colorado
Measured- Industrial pipeline
- Down sharply from 2021
- Listings
- Rising with loan maturities
Top Front Range news
Fed holds at 3.75–4.00% in a 10–2 vote
Two members wanted another hike. Markets now lean toward a December increase.
Colorado adds 2,400 jobs. Unemployment rises to 4.1%
Construction, professional services and information led September gains. Year-over-year job growth of 0.4% is ahead of the nation.
Fed raises rates for the first time since 2023
The 25 bps hike set off a round of cap-rate repricing, most visible in net lease.
470,200 SF move-in cuts I-76 vacancy by 370 bps
The quarter's largest occupancy drove Denver absorption above its five-year average.
$117M North Central Logistics Center trades in portfolio sale
Institutional capital is back for stabilized Denver distribution, while staying selective.
290,000 SF move-out at 1670 Broadway pushes CBD vacancy to 37.1%
Large-block consolidations continue downtown, even as sublease space shrinks for a sixth quarter.
Memorial Hospital North expansion breaks ground
A multi-year expansion adds a new patient tower, supporting outpatient demand in the north end.
CSU opens 213,000 SF veterinary hospital
A major new institutional anchor in Northern Colorado's research and healthcare economy.
Net lease cap rates post largest rise since 2023
Single-tenant cap rates rose 10 bps to 6.92%. Listings slipped and quality product stays scarce.
Denver retail pricing hits a record $290/SF
Vacancy holds at 4.5% and absorption turned positive, despite five years of rising cap rates.
What to watch next
The dates and signals most likely to move Front Range pricing and leasing in the months ahead.
Fed's December meeting
After October, futures priced about an 83% chance of another 25 bps hike, to 4.00–4.25%. The Fed's updated rate projections will show how many more moves it expects in 2027.
Why it matters: another hike would add pressure on cap rates and loan sizing heading into 2027.
First Fed meeting of 2027
The first chance to see whether December was a pause or part of a series. Watch the statement's language on inflation and energy prices.
Why it matters: sets the tone for spring listing season and for refinancing decisions.
10-year Treasury vs. 5%
The 10-year sat at 4.88% on Nov. 9 after topping 5% in Q3. Most commercial loans are priced off this rate, not the Fed rate.
Why it matters: a sustained move back above 5% would widen bid-ask gaps. A drift toward 4.5% would bring buyers back.
1.4M SF of new industrial space
About 1.4 million SF of speculative industrial space is set to deliver in metro Denver by year-end.
Why it matters: expect a temporary vacancy uptick in Q4 numbers. How fast it leases will set rents for 2027.
Loan maturities and year-end closings
Loans written in 2021–2022 keep coming due, and many sellers aim to close before Dec. 31 for tax reasons.
Why it matters: more motivated sellers in Q1, plus 1031 exchange buyers working against 45- and 180-day deadlines.
Q4 market numbers and jobs data
Q4 vacancy, absorption and cap-rate reports start arriving in January. Colorado's December jobs report follows the same month.
Why it matters: confirms whether office vacancy has peaked and whether Colorado unemployment keeps edging up from 4.1%.
Outlook for Q4 and 2027
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