Peak Performance Newsletter – Mid-Year 2026

Peak Performance Newsletter

Colorado Springs Commercial Real Estate Update

Mid-Year 2026 | August 2026

The Bottom Line
Colorado Springs enters the second half of 2026 pulled in two directions. Federal defense investment is accelerating in the Pikes Peak region even as the state’s broader business climate continues to soften. For commercial real estate, the tailwind is local and sector specific (aerospace and defense); the headwind is statewide and structural (regulation and cost of doing business).

Defense Momentum
Federal investment in the Pikes Peak Region is accelerating

$798M contract to Sierra Space for missile-warning satellites
$250M Space Force Operations Facility planned at Schriever (~2,500 civilian jobs)
Kratos & Auria awarded nearly $500M in ground systems contracts for Golden Dome

Statewide Headwinds
Colorado’s business climate continues to weaken

Rising costs, regulation and permitting requirements
Largest drop ever in state competitiveness ranking
Slower business relocation and expansion

What it means for the Market
The net effect is likely uneven rather than uniform. Defense and aerospace related demand should continue to support industrial and specialized office users tied to Schriever and Golden Dome contractors. Meanwhile, the statewide regulatory and cost environment may continue to weigh on broader business relocation and expansion decisions outside the defense sector, reinforcing the “grind sideways” pattern already noted in the office market.

LOOKING AHEAD
Colorado Springs continues investing ahead of anticipated growth. Utilities is expanding energy, water and wastewater capacity, while aerospace recruitment remains active, including SelectTech Services Corporation’s El Paso County expansion.

Together, infrastructure investment, defense-sector recruitment and regional marketing efforts provide a measure of local confidence despite Colorado’s broader competitiveness challenges.

Office Market Signal: Stabilizing
Large defense and technology leases are supporting demand, but vacancy and negative absorption continue to reflect broader weakness. With no construction underway, recovery is expected to remain gradual.

Industrial Market Signal: Moderating
Industrial demand moderated after several years of strong growth, rising vacancy and negative absorption reflect a slower pace, while limited construction helps contain additional supply pressure.

Retail Market Signal: Strong
Retail remains one of the market’s strongest sectors with tight availability and positive absorption. Limited new supply continues to restrict options in desirable locations.

Multi-Family Market Signal: Rebalancing
Vacancy is trending lower from late-2024 highs as absorption outpaces new deliveries. The construction pipeline has declined sharply.

Colorado Springs Commercial Real Estate Update

Peak Performance_2nd Half 2026