Phoenix, AZ – Avison Young recently released its Third Quarter 2023 Phoenix Industrial Market Report. Phoenix continues to expand its role as a key industrial market in the national supply chain, as the Valley now ranks in the Top 5 nationally for the following metrics over the past 12 months*: 

• #2 in square feet (sf) under construction 
• #5 in sf delivered 
• #1 in sf under construction as a % of inventory 
• #4 in net absorption 
• #2 in rent growth 

A notable portion of the record-setting development pipeline observed in Q2 2023 was 57.7 million sf was delivered during Q3, with 62 buildings totaling 13.1 million sf of industrial space delivered during the period. 

“The Phoenix Industrial market continues to expand at an impressive rate despite numerous headwinds; however, the robust delivery of new speculative supply is outpacing current demand, setting the stage for potential near-term supply-side concerns,” said Kevin Helland, Senior Vice President, Avison Young. “These new deliveries will continue over the next 12 to 24 months likely lengthening the lease-up periods for landlords while improving a tenant’s negotiating position for the first time in recent years. We expect to see more concessions from landlords in the coming months until deliveries slow.” 

Demand continues to exceed pre-pandemic performance, but has noticeably contracted from 2022 levels. Net absorption has decreased significantly from this time last year, but continues on a pace above historical norms, as evidenced by the 11.1 million sf absorbed year-to-date. Such performance is the fourth highest on record with Q4 still to come. Q3 saw a notable 22.2% increase quarter-over-quarter – rising from 2.7 million sf in Q2 to 3.3 million sf.

The annual growth rate of direct asking rents in the Phoenix market impressively outpaces all major markets nationally except Charlotte, NC. Even with the delivery of 13.1 million sf of primarily class A buildings during the quarter, asking rates increased $0.07 from $0.94/sf per month in Q2 to $1.01/sf per month in Q3 – a 7.4% increase quarter-over-quarter. This is a marked rebound from Q2, which saw the first quarter-over-quarter decrease in asking rent for the first time in three years. 

*Per CoStar based on rankings for U.S. markets in excess of 100 million sf of industrial inventory

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Media Contact: 
Darcie Giacchetto, Media Relations & Content Specialist – Southwest: +1.949.278.6224