Phoenix industrial market report
Q4 2023
Three key market themes:
Deliveries (sf)
Phoenix continues to lead the nation in industrial deliveries through Q4 2023. In Q4, the Valley delivered over 8.8 million square feet of industrial space, predominantly in the Northwest, Southeast, and Southwest Phoenix submarkets. In addition to this number, 44.3 million square feet are under development. The Valley ranks #1 in inventory under construction, followed by other leaders such as Dallas, Fort Worth, Atlanta, Charlotte, Las Vegas, and Inland Empire, to name a few.
Net absorption activity (sf)
Net absorption declined slightly in Q4 from Q3 but remains positive at 2.3 million square feet. Overall net absorption for 2023 did decline compared to 2022 but continues to outperform pre-pandemic numbers. The growth in industrial construction will continue to temporarily affect the balance between occupied and vacant space through 2024 and into 2025, but demand is expected to remain strong due to the positive net absorption experienced in 2023, along with internationally renowned companies such as Amkor, ASM and TSMC continuing to invest and establish facilities in the Valley.
Vacancy Rate (%)
Q4 concludes 2023 with a spike in vacancy in contrast to the beginning of the year, due almost exclusively to new deliveries. With new developments continually being brought to the market, vacancy has doubled from what it was in Q1 2023, and this trend is anticipated to continue through 2024. Due to the dramatic addition of delivered space in 2023, an increase in vacancy wasn’t expected. For the last two quarters, the Valley has seen a stark increase in vacancy, with an addition of 220 basis points between Q2 and Q3 and an addition of 150 basis points between Q3 and Q4.
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