Phoenix Industrial Market Report
Market Overview
The Phoenix metro has stood out nationally for its employment growth, adding 57,300 jobs during the 12-month period through July 2024. Population growth and relative affordability compared to other cities in the U.S. make Phoenix an attractive location for companies to expand to. Taiwan Semiconductor Manufacturing Company (TSMC) is one such firm that sought Phoenix to expand its fabrication plants. The firm was previously set to build two fab facilities, but now it will open three fab plants. Once the third fab opens, it will add around 6,000 jobs to Phoenix’s employment market.
Phoenix Industrial Performance
The large number of deliveries to the Phoenix metro led the vacancy rate to rise to 11.1% as of Q3 2024. Vacancy is currently highest for properties over 100,000 square feet. However, leasing activity remains positive, with 13.8 million square feet of absorption noted over the past 12 months. Amazon aided leasing activity earlier in 2024 when it signed three 10-year leases that totaled 3.5 million square feet in West Phoenix. Also in the first half of 2024, Phoenix noted the highest quarter of sales volume in Q2 2024 since the peak reached in Q3 2022. A total $875 million sold in Q2 2024, aiding the metro’s industrial sector.
By the Numbers
- Market Rent/SF: $13.48
- Vacancy Rate: 11.1%
- 12 Month Net Absorption: 13.8M SF
- Average Building SF: 40,335
- Under Construction: 190,357 SF
- Market Cap Rate: 6.2%
- Market Sale Price/SF: $161
- Average Market Sale Price: $6.6M
- Population: 5,133,443
- Households: 1,941,018
Source: CoStar
