Phoenix industrial market report
Q2 2024
11.5m
Deliveries (sf)
The Phoenix industrial market continues to deliver new inventory at record levels, but the pipeline is starting to slow down as many projects under construction are nearing completion. By the end of Q2 2024, 11.5 million square feet were added to the market, with an additional 30.6 million square feet still in the pipeline. Significant development is occurring in the Northwest, Southeast, and Southwest submarkets. Notably, the Northwest submarket alone delivered 5.5 million square feet in Q2, with 16.1 million square feet currently under construction.
6.5m
Net absorption (sf)
The Phoenix industrial market continues to demonstrate strong performance in Q2 2024, with direct absorption reaching 6,875,763 square feet. This notable positive absorption highlights the market's strength and ongoing demand for industrial space, even amid inventory growth. The market's capacity to absorb substantial amounts of newly constructed space will be muted with more deliveries, but the overall market health and occupier demand set the stage for strong results in the foreseeable future.
11.9%
Vacancy rate (%)
The Phoenix industrial market has an 11.9% vacancy rate, up from pre-pandemic levels primarily as a result of new deliveries. In Q2 2024, there was a gap of 400 basis points between vacant and available space. This is a significant change from Q2 2020 when the gap was 170 basis points, highlighting the impact of new developments. With many construction projects nearing completion and new starts reducing, the market’s vacancy rates should stabilize soon and begin to trend lower.
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