Phoenix’s industrial sector has seen a surge in development, with a record 39.5 million square feet of new space delivered over the past year, pushing the vacancy rate from 4.2% in mid-2022 to 10.0% by Q2 2024. Despite this, demand remains strong, particularly from logistics, construction, and manufacturing sectors, highlighted by Amazon’s recent 3.5 million square feet expansion. The bulk of new construction has focused on large properties over 100,000 square feet, significantly increasing available space, while smaller bay products have maintained low vacancies due to limited supply.
Despite the deceleration of rent growth, with a 9.5% increase in asking rents over the past year, Phoenix’s industrial properties remain affordable compared to other markets, attracting companies looking to expand their distribution networks. The current pipeline, predominantly speculative, is expected to maintain high vacancy rates. However, a projected construction slowdown by late 2025 could lead to tighter vacancies and renewed rent growth. Significant investments from leading firms like TSMC, Intel, and Amkor underline Phoenix’s role as a burgeoning hub for industrial and advanced manufacturing activities.
For more detailed projections and in-depth analysis, view the full newsletter below where you can download and share additional insights.
