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May 6, 2021
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Year-End 2020 Highlights of Phoenix’ Industrial and Office Markets

1/27/21

Here is a quick summary of year-end 2020 numbers for the Phoenix office and industrial markets. These highlights were provided by real estate services firm CBRE and were taken from the firm’s more extensive 2020 final reports for the region.

PHOENIX INDUSTRIAL:

Vacancy Rates: The Phoenix industrial market’s vacancy decreased quarter-over-quarter from 6.1% to 6.0%.

Asking Lease Rates: The average monthly NNN asking lease rate increased to $0.70/sf/mo NNN from $0.68/sf/mo NNN in Q3 2020, the highest rate on record.

Construction Activity: There were 4.74 msf of completed industrial space brought online during Q4 2020 bringing YTD completions to 13.3 msf, the highest on record.

Major Completions:

• SPEC BuildingsElwood Logistics Center | 1.3 msf | South Goodyear
• PV3030 West III | 643.8k sf | North Goodyear
• Opus Goodyear Airport | 450k sf | South Goodyear

Build-to-Suit Buildings:

• Mark Anthony Brewing | 916k sf | North Goodyear
• RRB | 722.3k sf | North Goodyear

Under Construction: There is currently 11.1m sf of industrial space under construction. Roughly 88% of all industrial under construction product is in the Southwest Valley.

Planned: At the end of the 4th quarter there were 74 planned buildings, totaling a projected 15.96 msf.

Absorption: During Q4 2020, there were 5.09 msf of net absorption and 8.04 msf of gross absorption in the Phoenix market, bringing the YTD net absorption total to 13.14 msf and the YTD gross absorption total to 23.66 msf. This is the highest net absorption on record for the Phoenix industrial market.


PHOENIX OFFICE:

Vacancy Rates: Valley-wide vacancy increased quarter-over-quarter in Q4 to 17.4%.

Asking Lease Rates: The market’s average asking rental rate at the end of the fourth quarter increased to $28.11 (FSG), up 16 cents from $27.95 (FSG) in Q3.

Construction Activity:

Completions:

Multi-Tenant Leased Buildings:
• Wexford Innovation Center – 227.1k sf (Downtown) -- Notable Pre-Leasing: 123.6k sf by ASU
• One Chandler Corporate Center – Phase III – 117.4k sf (Chandler)
• Verde Grove A – 15.4k sf (Scottsdale Airpark)

Single-Tenant Owner-User Buildings:
• Harkins Theatres HQ – 65k sf (South Scottsdale)

Under Construction: There is currently 2.3 msf of office leased construction underway across the Valley, 38% of which is pre-leased.

Absorption: During 4Q 2020, we saw -326k sf of negative absorption and 888k sf in gross absorption. Net and gross absorption year-end totals stand at -1.05 msf and 3.87 msf, respectively.






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