Greater Phoenix has emerged into a “tier one” industrial and logistics market in the U.S.
The Sun Belt city ranked sixth in the nation for the largest leases and renewals signed this year, with five deals making the top 100 list in the first six months, the Phoenix Business Journal reported, citing figures from CBRE Group.
Companies inked five industrial deals for a total of 4.6 million square feet.
“It’s not surprising to me,” Cooper Fratt, executive vice president of CBRE, told the Business Journal. “It would have been 10 years ago.
“But if you just look at the evolution of the Phoenix industrial market, the continued diversity — growing by more than 170 million square feet in 10 years — I think it shows that Phoenix has continued to evolve into a tier one industrial and logistics market.”
Major leases this year include three by Seattle-based e-commerce giant Amazon.com, which total 1 million square feet. They include the Cubes at Glendale, Prologis 303 Business Park in Goodyear and the Paloma Vista Logistics Center in Buckeye.
Sub-Zero Group, a manufacturer of high-end kitchen appliances, signed a lease for a nearly 600,000-square-foot industrial facility in Goodyear, bringing its total commitment to the west Phoenix Valley to 1.3 million square feet.
Logistics Plus, a third-party logistics company based in Pennsylvania, signed a nearly 600,000-square-foot lease at the Reems Ranch 303 in Glendale, bringing its Valley footprint to 2.2 million square feet.
The Phoenix industrial sector has boomed since the pandemic, as manufacturing has expanded along with population growth, according to the Business Journal. While it’s beginning to stabilize, big companies want to piggyback on the region’s growth, business-friendly climate and proximity to ports in California.
Greater Phoenix had 27 leases this year of 100,000 square feet or more, most in the west Valley, made by companies involved in solar, automotive, packaging, mining, semiconductors, electric vehicles, oil and gas and food and beverage.
Leasing has been healthy, but an oversupply of industrial buildings has led to more vacancies — a trend that has mostly impacted the southeast and west Valley.
“Our infill industrial markets are still supply constrained,” Fratt of CBRE told the newspaper.
Across the nation, the industrial sector has cooled, but major markets are still seeing mega leases signed in the retail and wholesale, logistics and e-commerce industries.
The top 100 leases totaled 81.4 million square feet in the first half of the year, an increase from 79.1 million square feet year over year. The average lease size rose to 814,000 square feet.
Markets with the largest industrial deals this year included the Inland Empire in Southern California, which had 13.5 million square feet across 15 new leases and renewals, and Dallas-Fort Worth, which saw nine deals totaling 8 million square feet, according to CBRE.
Other strong markets included Memphis, Chicago, Atlanta and the Pennsylvania Interstate 78 corridor.
This year, industrial sales across greater Phoenix have totaled $1.3 billion, a 22.5 percent increase compared to the first half of last year, according to Colliers.
From April through June, sales of industrial properties in the region were $843 million, a 45 percent jump from the same period last year and the highest sales of the past six quarters.
— Dana Bartholomew
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