The Phoenix industrial market saw rising vacancies in Q4 2024 as new supply outpaced demand. The vacancy rate hit 12.0%, up from 4.1% in mid-2022, with 34.5 million SF delivered over the past year. Despite this, tenant demand remained solid, with 15.7 million SF absorbed, led by logistics and manufacturing users like Amazon, which leased 3.5 million SF.
Construction remains focused on large properties, with nearly 90% of new deliveries exceeding 100,000 SF, pushing vacancies higher in this segment. Smaller bay spaces under 50,000 SF continue to perform well, maintaining lower vacancy rates. Rent growth slowed to 2.5% in 2024, down from double-digit increases in 2022, though infill properties and strong submarkets like the West Valley still see pricing strength as new speculative construction slows.
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