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2022 Q1 Greater Phoenix Industrial Market Report

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Q1 2022 Phoenix Industrial Hero

Q1 2022 Industrial Market

Strong demand for industrial space compressed vacancy to the lowest level ever witnessed in the market, ending at 4.0 percent, all while delivering 5.6 million square feet of new inventory. Net absorption reached 7.8 million square feet, on pace to top 30 million square feet during 2022. The amount of projects under construction increased 12.3 percent during the past three months to 33.9 million square feet. Rental rates jumped 15.2 percent year-over-year, ending at $0.74 per square foot.

Key Takeaways:
  • Rental rates have increased over 15.2 percent year-over-year
  • The amount of product under construction increased 12.3 percent quarter-over-quarter to 33.9 million square feet
  • Median price per SF is up nearly 28.3 percent year-over-year to $161 per square foot
The Phoenix industrial market remains red hot and consistently performs better each quarter. The industrial labor market is running parallel to the commercial growth. As of February 2022, Phoenix metro had grown its labor force by 89,600 employees compared to February 2021, which represents a 4.1 percent increase. Transportation, Warehousing and Utilities supersector jobs have increased by 4.03 percent, Manufacturing jobs have increased by 3.9 percent, and the Construction supersector jobs increased 3.0 percent over the same period.

Outlook:
The pace of escalating rental rates is making it hard for existing tenant to renew in their existing space, and new to market tenants are having a difficult time finding space. The majority of vacant spaces are receiving multiple offers because of the tight vacancy. With the price gap between the Phoenix market and California markets, developers, tenants, and investors are still seeing the potential growth of industrial product.

 


Q1 2022 Phoenix Industrial SRC

2022 Q1 Greater Phoenix Industrial Market Report

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Phillip Hernandez

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Prior to joining Colliers, he served as a business analyst at CBRE, where he specialized in creating tailored research reports, as well as unique and interactive applications and dashboards that elevated the market position of assets. Phillip delivered weekly research updates, with relevant lease and sale comps, custom competitive sets and current market activity.

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