Phoenix industrial market report

Q4 2022

24.6 msf

Net absorption

Total net absorption in Phoenix’s industrial market was up in 2022 - posting a year-over-year increase of 4,521,502 sf (22.5%). This increase brought the industrial market’s largest year of positive net absorption on record – totaling 24,636,878 sf.

New developments in Phoenix’s northwest, southwest, & southeast submarkets were large contributors to the growth in net absorption over the past year – adding a combined 26 msf of inventory in 2022.
26.7 msf

Development activity

Industrial development in Phoenix reached historic levels in 2022 – recording 26.7 msf in delivered inventory. This is a 95.9% increase in total deliveries compared to 2021’s total of 13.6 msf.

2023’s development activity is projected to surpass 2022’s record-setting year, as there is already 44.5 msf of industrial space currently under construction.

Sales activity

The Valley’s industrial market broke several all-time highs in regard to sales metrics. Including transaction volume by $, which ended the year at $2.5B and average price per sf on closed transactions ($164.41 psf).

2022 marked the 5th consecutive year in which the industrial market saw a price per square foot increase. Though the market has steadily increased, the general sentiment is that prices will likely experience a bit of pullback in 2023, given the rising cost of capital and heightened buyer expectations.

Vacancy rate

The total vacancy rate in Phoenix increased slightly from 6.1% in 2021 to 6.2% in 2022 – ending the year with 11,968,861 sf of vacant inventory, up from 11,688,038 sf the year prior. The increase in total vacancy is primarily due to the delivery of new, unleased buildings. 
$11.15 psf

Asking rent

Rental rates for industrial properties have increased to $11.15 in 2022 – up $1.74 (18.5%) over 2021’s average asking rate of $9.41. Despite the increase, rents may appear deflated – as the $11.15 asking rate is heavily weighted by warehouse and distribution availabilities.
45.2 msf

Total availabilities

Total availabilities are up by 12,157,569 sf (36.7%) year-over-year. The increase brought industrial availabilities to 45.2 msf at the end of Q4 – the most available space to end a calendar year on record.

The large increase in total availabilities can be attributed to the record development numbers seen in 2022, as a portion of the 26.7 msf of new inventory is still on market. 
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