The Phoenix industrial market faced rising vacancy in Q1 2025, reaching 12.4% as 31.1 million SF of new supply outpaced demand. While net absorption remained strong at 14.4 million SF, rent growth slowed to 2.6% year-over-year. Large-bay logistics properties are seeing growing sublease availability, but smaller bay and infill assets remain resilient due to limited new competition.
Investment activity totaled $4.6 billion over the past year, 140% above the pre-pandemic average, despite rising cap rates. With 18.1 million SF still under construction, mostly in outer submarkets like Goodyear and Glendale, developers are beginning to scale back. As supply levels normalize, well-located and smaller industrial properties offer solid long-term potential for investors.
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