Out-of-state relocations, an ongoing economic recovery and job growth were all contributing factors in lowering the Phoenix industrial vacancy rate to 9.2% while rental rates ended the second quarter at $.59, which is an increase over the previous quarter, according to DAUM’s second quarter market report.
During the quarter, net absorption for the overall Phoenix industrial market was 1.2 million square feet, which compares to positive 3.1 million square feet in the first quarter of 2017. Eleven buildings totaling more than 810,000 square feet were completed in the Phoenix market area, while new construction activity increased with 4.2 million square feet currently underway.
Total year-to-date industrial building sales activity is up compared to the previous year. In the first three months of 2017, the market saw 48 industrial sales transactions with a total volume of $196 million. The first three months of 2016 posted 35 transactions with a total volume of $127 million.
“The Phoenix industrial market continues to expand and we saw that happening through the first two quarters of 2017,” said Steve McKendry, executive vice president/principal of Daum Phoenix. “Job growth is the foundation for industrial absorption and job growth for metropolitan Phoenix is projected to be near 3%, double its growth rate in 2016. With this growth rate, Phoenix will be among the top 10 best job markets.
A notable 2017 industrial building delivery was a 618,350-square-foot lease signed by UPS at 16601 W Sells St. and is now 100% occupied. The largest projects under construction at the end of second quarter which includes the 1,000,000-square-foot Conair building at 7101 N Glen Harbor Blvd –in the Glendale Airpark and a 540,349-square-foot facility located at 16811 W Commerce Dr. being developed by The OPUS Group in the Goodyear Airpark.