Denver’s Industrial Repositioning
Why investors are reassessing Denver industrial assets through a cash flow lens
By: Tangia Zheng
Jan. 21, 2026
Denver’s industrial market has historically been shaped by logistics, regional distribution, and light manufacturing. What has changed is how the market is being evaluated by operators and capital. Increasingly, industrial assets are assessed on infrastructure characteristics such as power availability, connectivity, and the durability of contracted cash flows.
The result is a gradual repositioning. Denver is not becoming a primary logistics hub overnight, nor is it emerging as a hyperscale data center market. Instead, it is being underwritten as a stable, mid-continent platform where industrial real estate intersects with digital infrastructure.
Denver’s industrial market continues to exhibit demand resilience. Net absorption in 2025 totaled approximately 3.6 million SF, an increase of roughly 33% from 2024. Vacancy has stabilized in the 7- 8% range, a normalization from pandemic-era lows rather than a sign of structural weakness. Asking rents have largely held, with modest YOY growth concentrated in infill submarkets and smaller-bay facilities.
Net Absorption (2025) 3.6 million SF
Vacancy Rate (Q4 2025) 7.50%
Vacancy Rate (mid-2025) ~7.9 %
Asking Rents (Q3 2025) $11.49 / SF
Construction Under Way 3,139,388 SFT
These metrics point to a market that is functioning. Space is being absorbed. Tenants remain active. Supply is no longer severely constrained, but neither is it excessive. This stability provides the base layer that allows more specialized uses to emerge without destabilizing the broader market.
Where Data Centers Fit Into the Industrial Equation
Data centers occupy industrial-zoned real estate, but their economics differ materially from traditional warehouse or manufacturing users. From a business standpoint, data center operators sell a bundled service that includes power, cooling, security, connectivity, and uptime guarantees. Revenue is generated through long-term contracts tied to power consumption and capacity commitments rather than purely square footage.
Nationally, the U.S. data center colocation market is growing at an estimated 14 to 15 percent annually through the end of the decade. Vacancy across major North American data center markets has compressed into the low single digits over the past two years as demand from cloud computing, artificial intelligence workloads, and enterprise users has outpaced new supply.
Denver’s data center inventory remains limited relative to primary markets. That constraint, combined with stable power infrastructure and geographic diversification benefits, has begun to attract attention from operators and investors looking beyond coastal markets.
The distinction between industrial real estate and digital infrastructure becomes most apparent when examining operating metrics. Large, publicly traded data center operators report adjusted EBITDA margins near 49 %-52%. These margins reflect operating leverage, power cost pass-throughs, and the contracted nature of revenues.
Business Type EBITDA Margin (%) Demand Sensitivity
Data Center Colocation ~49 % Lower
Industrial Service Provider ~7–8 % Higher
Traditional Industrial Tenant — Cyclical
By comparison, industrial service providers such as third-party logistics operators typically operate at adjusted EBITDA margins in the 6-8% range. These businesses depend more heavily on labor, transportation costs, and volume-based contracts, which introduces cyclicality and compresses margins.
This divergence matters for valuation. Data center platforms often trade at enterprise value to EBITDA multiples in the high teens to mid-20s, and in some cases higher for scaled, highly interconnected assets. Traditional industrial real estate and logistics businesses trade at meaningfully lower multiples, reflecting shorter lease terms and greater exposure to economic cycles.
From a finance standpoint, this is why data centers are increasingly classified as infrastructure rather than real estate. Cash flows resemble those of utilities or regulated networks more than warehouse portfolios.
Implications for Denver Industrial Assets
For Denver, the relevance of data center economics lies less in scale and more in optionality. Industrial assets with access to power, fiber proximity, and favorable zoning can be underwritten with infrastructure upside even if they currently serve conventional tenants. In a market where traditional industrial fundamentals remain sound, this optionality enhances downside protection.
Manufacturing and logistics users continue to anchor the market. Advanced manufacturing and power-intensive users, in particular, share infrastructure requirements with data centers and tend to sign longer leases with higher switching costs. These tenants reinforce the broader shift toward valuing reliability and system capacity alongside location and rent.
A Market Defined by Cash Flow Quality
Denver’s industrial market is no longer evaluated solely by vacancy rates and rent growth. Those metrics still matter, but increasingly, the focus is on the quality, duration, and predictability of cash flows.
In that framework, Denver’s appeal is stability. Industrial absorption remains positive. Vacancy has normalized. At the same time, infrastructure-oriented users are introducing higher-margin, service-based revenue models into a market built on traditional real estate fundamentals.
That combination is subtle and durable. Markets that evolve this way tend to attract patient capital, not speculative capital. Those shifts rarely make headlines. They tend to show up first in underwriting assumptions.
