1.6 MSF Small-Bay Collection Trades in Denver

Harrison Properties has entered Denver with the acquisition of a 1.6 million-square-foot portfolio of 16 warehouses. CBRE arranged the deal.

This marks the largest industrial deal in Colorado since 2022. The transaction is representative of the investor sentiment characterizing Denver’s industrial market, where the sales volume doubled year-over-year at the end of the third quarter, according to CBRE research.

The assemblage includes the 1 million-square-foot Upland Distribution Portfolio, which comprises 10 shallow-bay warehouses. This collection was 85 percent leased to 27 companies at the time of sale.

Harrison Properties also purchased Denver Business Center, a campus of six small-bay facilities that encompass almost 594,000 square feet. At closing, the park was 92 percent leased to 16 tenants.

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Both collections have average suites between 29,688 and 30,367 square feet. Demand for such spaces is strong, as CBRE puts the Denver vacancies in the 20,000- to 49,999-square-foot range at 5.0 percent, below the market average of 8.4 percent.

The warehouses—which, according to Yardi Matrix data, have a vintage of more than 20 years—are scattered around the intersection of interstates 70 and 225, about 10 miles northeast of downtown Denver. The Colorado Air and Space Port, as well as the Denver International Airport, operate within about 20 miles.

CBRE Executive Vice Presidents Jeremy Ballenger and Tyler Carner, together with Senior Vice President Keiffer Garton and Vice Chairman James Bolt, represented the seller.

Harrison Properties is mostly active in the Phoenix industrial market, where the company owns, leases and manages some 12 million square feet. It also operates in Salt Lake City, Albuquerque, N.M., Midland, Texas, and now Denver, where asking industrial rents were up 5.2 percent year-over-year in September, according to CBRE.

“Denver’s small-bay product continuously showcases some of the strongest industrial fundamentals in the market and is often sought after by investors for this reason,” a CBRE spokesperson told Commercial Property Executive.

Small-bay warehouses attract investor interest

Harrison Properties is only one of the many companies looking to capitalize on the strong fundamentals of small-bay warehouses. The subsector’s popularity is growing due to solid rent growth, tight occupancy and scarcity of supply.

In September, BKM Capital Partners and Kayne Anderson Real Estate purchased an eight-property, light industrial portfolio in Phoenix for nearly $168 million. The collection’s 41 buildings were nearly 90 percent leased at closing.

That same month, Investcorp sold a collection of 23 small-bay warehouses to an undisclosed buyer. The transaction was part of a larger $365 million deal across the Midwest that totaled some 3.5 million square feet.