Phoenix industrial market report
Q2 2025
Phoenix's industrial market is grappling with a record wave of new construction, pushing overall vacancy to 12.4%. In the past year, 24.3 million square feet of new space was delivered, significantly above the pre-pandemic average. Demand has not kept pace with supply, leading to a vacancy rate among buildings larger than 100,000 square feet reaching a 15-year high of over 16%. An additional 8 million square feet of unleased space is underway in that size category. Despite healthy leasing activity of 11.4 million square feet signed through midyear, rent growth has slowed and asking rates have stabilized as tenants find more options. Small bay and infill assets are faring better than larger spaces in the metro's outer areas.
14.9 msf
Development activity
The construction pipeline has dropped to 14.9 million SF as developers respond to elevated vacancy and recent delivery saturation, but a robust proposed pipeline remains poised for future cycles.
11.4 msf
Industrial demand
With 11.4 million SF leased YTD, Phoenix is on track to match recent years' demand levels, driven by steady expansion in logistics, retail, and industrial sectors.
$1.08 psf
Asking rents
Asking rents reached $1.08/SF per month, showing stabilized growth with stronger pricing power in smaller infill submarkets versus larger peripheral developments.
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