Q1 2024 Phoenix Industrial Market Report

A deluge of new development completions continues to drive Phoenix’s industrial vacancy rate higher, a condition that could persist into early 2025. The opening three months of the year marked the third consecutive quarter with 10+ million square feet of net deliveries, bringing the total over the past 12 months to an unprecedented 39.5 million square feet. For comparison, Phoenix averaged 8 million square feet of annual net deliveries in the three years leading up to the onset of the pandemic.

The wave of construction overshadows a resilient demand picture. While demand has eased from the frenetic pace seen in 2021 and 2022, leasing volume is 20 percent above 2019 levels as occupiers related to logistics, construction, and manufacturing continue to expand. For example, Amazon made a splash to start the year, signing three 1+ million square foot leases for a total of 3.5 million square feet at newly built industrial properties in the West Valley, reiterating the area’s attractiveness as a logistics option. These factors, along with advanced manufacturing momentum, drove 11.7 million square feet of net absorption over the past 12 months, the fourth most in the nation.

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