Phoenix Industrial Market Report

Construction slows as California restrictions pique interest in Phoenix. Despite softer leasing in 2025 amid tariff-related uncertainty, minimal tenant move-outs and a steep drop in deliveries are poised to ease vacancy pressures. In the East Valley, tapering new supply and large upcoming move-ins, including from several food and beverage distributors, as well as LG Energy Solutions’ 1 million-square-foot battery plant, will help maintain stable occupancy. Fewer completions along the Interstate 10 and Loop 303 corridors should also limit the increase in available space, as occupiers remain drawn to the area’s strong highway access. In May 2025, many California cities implemented stricter warehouse development rules, keeping firms seeking modern space drawn to Phoenix, which offers more post-2020-built supply than Los Angeles, Orange County and the Inland Empire combined. Semiconductor manufacturing is also emerging as a durable demand driver, led by TSMC’s $100 billion plan to build three additional fabrication plants.