Phoenix Maintained Industrial Strength in 2024
Phoenix’s industrial market continued to thrive in 2024, maintaining its status as the nation’s most active construction market since the end of 2023.
The city’s development pipeline, although reduced from 42.5 million square feet to 22.4 million square feet at the end of December, still showcased a robust industrial activity.
Phoenix’s industrial investment volume reached approximately $3.2 billion in 2024, highlighting its continued attractiveness to investors. However, at the end of 2024, the metro’s vacancy rate increased by 500 basis points year-over-year to 8.4 percent, likely due to excess supply, according to CommercialEdge data.
Deliveries slow, but still ahead of other markets
Phoenix continued to be a hotspot for industrial development at the end of 2024. However, its pipeline shrank significantly year-over-year, decreasing from 42.5 million square feet to 22.4 million as of December.
Despite the drop, Phoenix still led the nation in industrial development on a percentage-of-stock basis, with projects accounting for 5.3 percent of its total stock. Dallas-Fort Worth ranked second, with an 18.9-million-square-foot pipeline, while Houston and and Kansas City followed with 12.4 million and 11.5 million square feet, respectively.
Nearly 36 million square feet of industrial space came online in the metro last year, across 169 properties and representing 8.5 percent of total stock—much higher than the 1.9 percent national average.
Taiwan Semiconductor Manufacturing Co. has finally delivered the largest industrial property in Greater Phoenix. Located at 5088 W. Innovation Circle in the metro’s North Gateway submarket, the 3.8 million-square-foot facility is considered to be the most advanced semiconductor fabrication plant on U.S. soil.
Construction pipeline still strong in 2025
At the end of January, Phoenix’s industrial sector had 15 million square feet under construction across 76 properties—more than double the 7.3 million recorded in the same period of last year. The pipeline represented 3.5 percent of total stock, exceeding by far the 1.7 percent national average and other peer markets such as Chicago (0.6 percent), New Jersey (1.1 percent) and Atlanta (1.5 percent).
One of the largest projects under construction in the metro is Meta Mesa Data Center – Building 3, a 1.5 million-square-foot facility at the Meta Mesa Data Center in Mesa. Located on 200 acres at 3841 S. Ellsworth Road, the industrial development is expected to come online in early 2026. Upon completion, the $1 billion Meta Mesa Data Center will be one of the most advanced, energy- and water-efficient operating data centers in the country.
Industrial sales underscore ongoing investor appeal
Last year, Phoenix led the region in total industrial sales volume, with deals totaling approximately $3.4 billion at the end of December—a significant increase from the $2 billion recorded in 2023. A total of 226 properties—amounting to approximately 21.5 million square feet—changed hands in the metro in 2024.
Assets in the metro traded at an average of $167 per square foot. Among peers, only New Jersey ($210 per square foot) posted a higher average price, while Kansas City ($45 per square foot), Indianapolis ($73 per square foot) and Chicago ($92 per square foot) recorded lower figures.
In July 2024, CRG sold The Cubes at Glendale – Building B, a more than 1.2 million-square-foot industrial warehouse in Glendale, Ariz. Multiple funds and accounts managed by BlackRock acquired the Amazon-leased asset for $128.1 million. The warehouse is part of a 335-acre industrial park with both speculative and build-to-suit projects.
In last year’s second largest transaction, BGO paid $118.3 million for Paloma Vista Logistics Center – Building 1, a Class A warehouse and distribution building in Buckeye, Ariz., on behalf of an institutional investor. Located at 18900 W. McDowell Road in Phoenix’s Southwest Valley submarket, the facility is fully occupied by Amazon.
Phoenix vacancy rates increase
Phoenix’s industrial vacancy rate clocked in at 8.4 percent at the end of 2024, marking a 5 percent increase year-over-year. The rate fell to 7.9 percent at the end of January 2025, according to CommercialEdge data.
Among peer markets, Chicago (10 percent), Dallas (9.3 percent), Indianapolis (9.1 percent) and New Jersey (9.1 percent) recorded higher numbers in January.
In one of the largest leases signed last year, Amazon committed to a newly built 1.2 million-square-foot industrial facility at The Cubes at Glendale in Phoenix’ West Valley. The 10-year deal is considered to be the largest known industrial lease in the metro since 2022.
In October of last year, GTI Fabrication expanded its energy storage business in the Phoenix industrial market with a full-building lease at a 530,307-square-foot facility within Lakin Park in Goodyear, Ariz.
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