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June 17, 2024
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Phoenix Industrial Market Breaks Multiple Sales Records


Phoenix’ industrial market broke several all-time highs regarding sales metrics including transaction volume which ended the year at $2.5 bil and with an average price per square foot (sf) of $164.41, per Avison Young’s just released Fourth Quarter 2022 Phoenix Industrial Market Report.

2022 marked the fifth consecutive year in which the industrial market saw a price per sf rise. While the market has steadily increased, the general sentiment is that prices will likely experience a bit of pullback in 2023, given the elevated cost of capital and heightened buyer expectations.

Industrial development in Phoenix reached historic levels in 2022 – recording 26.7 msf in delivered inventory. This is a 95.9% increase in total deliveries compared to 2021’s total of 13.6 msf. Development activity in 2023 is projected to surpass 2022’s record-setting year, as there is already 44.5 msf of industrial space currently under construction.

“Phoenix remains a national leader when it comes to industrial real estate. In 2022 we set new records in new space deliveries; the amount of new space under construction; space absorbed; total sales transaction volume; sales price psf; and eight consecutive years of increasing rental rates,” said David Genovese, Avison Young Principal and Managing Director – Phoenix. “While rising construction costs, costs of capital, and national/global economic conditions will have an impact in 2023, Phoenix’s industrial market is poised to continue its upward trajectory.”

He noted that economic conditions are certain to create some degree of headwinds everywhere, but the strong fundamentals in Phoenix are anticipated to provide a more muted negative impact compared to a number of other major national markets.

Total net absorption in Phoenix’s industrial market was up in 2022 - posting a year-over-year increase of 4.52 msf (22.5%). This increase brought the industrial market’s largest year of positive net absorption on record – totaling 24.64 msf. New developments in Phoenix’s northwest, southwest, and southeast submarkets were large contributors to the growth in net absorption adding a combined 26 msf of inventory in 2022.

The total vacancy rate increased slightly from 6.1% in 2021 to 6.2% in 2022 – ending the year with 11,968,861 sf of vacant inventory. While the year saw very strong absorption, the small increase in total vacancy is primarily due to the delivery of new, unleased buildings.

Total availabilities are up by 12.16 msf (36.7%) year-over-year. The increase brought industrial availabilities to 45.2 msf at the end of Q4 – the most available space to end a calendar year on record. The large increase in total availabilities can be attributed to the record development numbers seen in 2022, as a portion of the 26.7 msf of new inventory is still on market.

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