High construction costs impact Denver's industrial market
- As Denver's construction pipeline peaked in 2022-2023, material demand surged alongside it, pushing construction costs to record highs and directly tying elevated pricing to the intensity of development activity during that period.
- Even as the industrial market gradually absorbed new supply into the present day, construction costs have remained elevated, driven by lingering material pricing pressures, tariffs, and labor constraints, keeping costs near their 2022 peak levels.
- With construction costs still near peak and financing conditions tight, developers are becoming more selective, leading to project delays, underwriting scrutiny, and a higher hurdle rate for new starts, particularly for speculative development.