Q3 2021: Phoenix Industrial Market Continues to See Explosive Growth
The Phoenix Industrial Market is on pace to outperform last year’s record level of construction, net absorption, and vacancy with no sign of slowing down heading into the final quarter of 2021. Strong demand has compressed vacancy rates to a record low of 5.5% and pushed net absorption to almost 16M square feet, which is nearly double the 10-year average. Intel and TSMC have broken ground on their multi-billion-dollar projects and plan to bring along thousands of sustainable jobs for Phoenix’s future.
Phoenix continued to rank in the top three US cities for new construction with over 26M square feet under construction at the end of the third quarter. Roughly 7M square feet of the current 26M is pre-leased, built-to-suit, or owner occupied. Multiple buildings over 1M square feet are underway from the Northwest to the Southeast for the first time in history. The largest being the The Cubes Glendale 1,200,140 square foot speculative building in the red hot Loop 303 Corridor.
2.7M square feet of new product delivered in Q3 brings the total to over 11M square feet year to date. Amazon continued to expand in the valley delivering three new facilities in the quarter. Half of the 10 buildings delivered in the quarter were built-to-suit facilities averaging 389,926 square feet.
Lease rates continued on their record trajectory ending the quarter at $0.70/SF NNN average across all product types.
Sales volume saw a significant increase over 2020’s Q3 recording $1.7B, the single highest quarter in Phoenix’s history. The average size building that sold was 47,798 square feet up from 39,009 square feet last year at this time. There were 193 sales transactions in the third quarter up 23% compared to Q3 last year.
The Phoenix Industrial Market continues to see growth never experienced before, driven by the accelerated e-commerce trends, microchip shortage and data center demand. The market will continue to see a surge
in development as numerous new large-scale projects have been scheduled and announced for 2022. Developers continue to be attracted to the Phoenix market because of record demand, few development barriers and its thriving local economy.
Read more about the Q3 2021 Market Stats below!