While core industrial markets continue to thrive, Colliers International’s latest research report—10 Emerging U.S. Industrial Markets to Watch in 2017—explores the markets positioned to experience the most robust increases in demand from occupiers and owners. Learn more about one of these markets: Greater Phoenix.
“The Greater Phoenix industrial market has been in expansion mode for the past few years, with large tenants leasing spaces and developers bringing speculative and build-to-suit projects through the pipeline. Even with new projects coming online, vacancies are tightening and rents are on the rise, reflecting the overall strengthening in the industrial market. Local economic expansion should accelerate in the years ahead as housing starts and permits pick up to meet demand driven by population growth and in-migration from other markets.” — Bob Mulhern, Senior Managing Director | Phoenix
The Phoenix industrial market continues to post exceptional growth because of its proximity to a growing population in the Southwest, a strong workforce base, a modernized highway system and more attractive rental rates compared to markets in Southern California.
Phoenix recently expanded its local interstate system, and its location along Interstate 10 gives the market a significant logistical advantage in reaching the Southwest populace.
Leasing activity from a diverse tenant pool accelerated in 2016, driving down the vacancy rate. At 10.2% in 2016, the vacancy rate reached its lowest point since late 2007.
Net absorption has been consistently strong, averaging nearly 7.5 million square feet annually since 2014. The second half of 2016 was on par with this trend, with 4 million square feet absorbed.
While the pace of post-recession development peaked in 2014, a robust 5 million square feet were completed in 2016 with an additional 6.5 million square feet slated to be delivered in 2017.
Asking rents have trended higher over the past five years, with annual growth averaging more than 3.5% over that time period. In 2016, asking rents rose more than 4% in the Greater Phoenix industrial market.
To learn more, explore the 10 Emerging U.S. Industrial Markets to Watch in 2017.