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Since the onset of the COVID-19 pandemic in early 2020, the industrial sector has proved its resilience as many warehouses, distribution centers, data centers and manufacturers were faced with a new demand for e-commerce. Now more than a year later, we’re continuing to see a wild upward swing from the U.S industrial market with no signs of slowing down. In Phoenix alone, nearly 2.8 million SF of new inventory was added in the first quarter of the year, according to recent report from JLL. Furthermore, more than 10 million SF of product is currently underway in the Valley with more projects expected to begin construction later this year. Here is why Phoenix will continue to benefit from the transformation taking place in the market.

1. No Inventory – Rental Rates Are Soaring to New Heights

   Rental rates in the Phoenix Metropolitan Area recently outpaced the national average to a record-breaking $0.65/SF on a triple-net basis. Furthermore, space has been leasing at record absorption. For an industrial tenant to secure warehouse space, more than ever, they need representation. Someone who has a pulse on product that is coming on the market.

   Additionally, your tenant rep must have a strong reputation in the marketplace for a listing broker to give them the time of. In other words, the tenant rep needs to have a track record of closing industrial deals.

2. Vacant Land Brings New Investors

   Metro Phoenix has an industrial base of over 300 million SF, with over 100 million SF of that in the West Valley. The abundance of vacant land will continue to attract investors and provide opportunities for the development of new inventory. Furthermore, the West Valley’s affordable cost of living and availability of land makes it an ideal location for critical industrial facilities. Not to mention, it’s proximity to California allows truckers to make a day trip without having to spend the night in Phoenix.

3. Expansion of Manufacturing and Production

   An influx of companies have moved to the Valley over the last year and we can’t say we’re surprised. With Arizona’s large talent pool, few development barriers and thriving local economy, companies like Intel, Samsung, Amazon, Google and others have announced their plans to expand manufacturing and production to our great state.

4. E-Commerce Will Continue to Surge

   While the worst of the pandemic may be behind us, e-commerce is here to stay. Online grocery shopping has been one of the fastest-growing areas of e-commerce over the last year and let’s face it, once someone starts using an app to deliver their groceries, why would they want to stop? Demand for industrial real estate can reach an additional 1 billion square feet by 2025 to support this surge.

Ready to capitalize on the industrial opportunities in Arizona? More than ever, it’s essential to have the right broker by your side to close the deal.

For more helpful information on buying commercial real estate, look for Simply Own It, the American Dream, coming soon.

About Andrea Davis

Andrea Davis, CCIM, has practiced commercial real estate for over twenty years. Davis’s breadth of knowledge stretches from developers to landlords to buyer/tenant representation and investments. Within the commercial real estate industry, Davis has won numerous awards. The Phoenix Business Journal ranked Andrea Davis CRE in the top 10 of Ranking Arizona for the category of Office Brokerage. Her book, SimpLEASEity™, focuses on leasing and is the first in a series of commercial real estate guidebooks. Her next book, Simply Own It, the American Dream, is forthcoming this year.