Phoenix Industrial Market Report

Demand catches up to new supply. For several years, deliveries outpaced demand as Phoenix underwent one of the nation’s most aggressive industrial build-outs. That imbalance is now narrowing. The metro posted the third-largest vacancy decline among major markets in the year ended March, led by properties above 250,000 square feet, where vacancy dropped more than 500 basis points to below 12 percent. Leasing in that tier rose to at least 25 deals from 11 a year earlier, suggesting large users are finally acting on delayed decisions. The strongest gains emerged along Interstate 10 and Loop 303 in the northwest and southwest, where third-party logistics firms and retailers such as Walmart cut vacancy by more than 150 basis points in the first quarter alone. Vacancy in the southeast also tightened as firms like Hadrian and Axon added to the area’s high-tech industrial base. Completions falling to a decade low in 2026 should extend this progress, though slower hiring and energy volatility could pressure tenants.