The sale of a 165K SF industrial property in Johnstown, at the farthest reaches of the north metro Denver market but really not that far away, helps illustrate how tough it can be for industrial users looking for space closer to metro Denver.
Canyon Bakehouse, a gluten-free bread maker, acquired the 17-acre property at 3600 Ronald Reagan Blvd. for more than $14.7M from Rochester, New York-based Broadstone Real Estate.
The baker plans to consolidate several of its locations currently operating in Loveland.
Andrew Sandquist, J.C. Asensio and Briggs Goldberg of CBRE’s Corporate Capital Markets practice represented Broadstone. As part of the sale, the CBRE team facilitated a buyout of the existing tenant’s eight-year lease to clear the way for the building to be sold to Canyon Bakehouse.
“Through this transaction, Johnstown gets a local Colorado manufacturer to operate in the building, which had been vacated," Sandquist said.
"This manufacturing facility, in the midst of Colorado’s dynamic industrial market, generated significant interest from national users and investors.”
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In some ways, Canyon Bakehouse was fortunate to be able to find a facility that meets its needs not far from its existing facilities. Much of the rest of the metro Denver/northern Colorado industrial market is tightening, and not only because of demand from the marijuana industry, but also because of the region's robust economic growth.
The market experienced positive net absorption of 759K SF during Q2, pushing year-to-date net absorption over 1.1M SF, according to CBRE data. Denver industrial has now recorded positive net absorption for 29 consecutive quarters.
Much of the demand is for large blocks of space, and while developers are busy trying to supply it — 1.4M SF of new industrial space was delivered in greater Denver in Q2 — it can still be tough for users to find space. Of that new space delivered in Q2, almost 80% of it was pre-leased, CBRE reported.
Also, a shortage of construction laborers and higher construction costs is affecting the pace of construction. Many smaller tenants are having to make do with their existing space.
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