Market Reports

By Bill Honsaker, Managing Director, JLL Metro Phoenix recorded more than 7 million square feet of industrial absorption during the second quarter of 2022, setting a quarterly record for the market. The average size of local industrial deals has also ballooned, increasing 25 percent year over year to a new high of 91,095 square feet. The Southwest submarket remains the Valley’s industrial powerhouse, accounting for 68 percent of total leasing volume this past quarter. But as demand for big space continues to swell, so does the pressure on inventory. That leaves the market divided into two groups: those already in the market with land or buildings in their possession, and those who missed the land rush and must now buy out someone else’s position.  In fact, across the Valley’s industrial core (roughly bounded by the Loop 303 to the west, Phoenix Gateway Airport to the east, Deer Valley to the north and the lower 202 to the south), would-be investors, developers and tenants are beginning to ask, “Where do we go next?” This dynamic has become a boon for further-out markets to Phoenix’s east and west, as well as to the south — particularly Central Arizona. With projects like Inland Port Arizona, Pinal …

By Pat Harlan, Managing Director, JLL Labor, geography, population growth and a steady stream of cost-effective, “speed to market” solutions make Phoenix one of the most dynamic industrial markets in the country. Based on existing fundamentals, 2022 is on track to be another record year.  As of third-quarter 2021, Phoenix had landed just under 16 million square feet of net leasing year-to-date. Absorption had improved by more than 28.5 percent in the same 12-month period, to total 8.5 million square feet. Nearly 94 percent of that activity was generated from ecommerce and food and beverage users. Vacancy had also dipped to pre-pandemic levels, falling by 100 basis points year-over-year to just 6.8 percent as of the end of the third quarter of 2021. Construction continues to ramp up, trying to meet a seemingly unending stream of demand. As of the end of the third quarter, there was 16.6 million square feet of metro Phoenix industrial space under development. The West Valley accounts for about 11.3 million square feet of this activity. The Southeast Valley represents an additional 3.4 million square feet. Two of the largest buildings underway in the market right now are the Cubes Glendale, totaling 1.2 million square feet, and Building …

By Rob Martensen, Executive Vice President, Colliers As a racing driver, it is important that my vehicles fire on all cylinders to run their best. In the Phoenix metro area, the engine cylinders of the industrial market are the different industries, as well as the geographic locations around the Valley where these industries conduct business. First, let’s look at advanced manufacturing. Intel, which already has a large presence in the Southeast Valley, just announced a $20 billion expansion of its Price Road facility. This will create hundreds of construction jobs and demand for these contractors to find space, not to mention all the equipment suppliers, etc., that will require space for the long-term. With the huge demand for semiconductors and the supply of land and labor, Taiwan Semiconductor Manufacturing Company (TSMC) has chosen Phoenix to build its next fabrication plant. TSMC will spend $12 billion to build the new factory, which is already under construction in North Phoenix. This will create a huge demand for industrial space in the Deer Valley submarket to support TSMC. Other manufacturing companies like Apel Extrusions, MLILY and Ball Container have either recently completed projects or are under construction on new manufacturing facilities. Food and beverage …