JLL Q4 2017 Phoenix Industrial reports show steady, healthy mix of demand
PHOENIX, January 15, 2018 – In 2017, the Phoenix industrial market achieved its largest annual net absorption gain in market history, reaching 9.8 million square feet by year end and marking the fourth consecutive year of annual net absorption totaling 6.0 million square feet or more – a feat not reached since 2004 – 2007 – according to the Q4 2017 JLL Phoenix Industrial Market Insight report.
These benchmarks were accompanied by other highly positive market factors including annual rent growth of 4.2 percent and a drop to 7.6 percent in overall vacancy, the lowest in 10 years. And the industrial market shows no sign of slowing.
“This is an exciting time for the industrial real estate in Phoenix,” said JLL Vice President Riley Gilbert. “We’re seeing well-rounded activity across the board, from smaller and mid-size industrial users to big box distribution. And all submarkets throughout the Valley are active with demand from a variety of industries.”
Unlike previous cycles, which relied heavily on the homebuilding industry, the JLL report notes that demand and risk in the current Phoenix industrial market are now spread across a diverse range of growing sectors. Some of the most active of these are e-commerce, food and beverage, logistics services and manufacturing, with growth being generated among companies with footprints already in Phoenix and from new users entering the market.
According to JLL, 2018 could exceed 10.0 million square feet of net absorption along with an increase in speculative development to meet unprecedented demand.
“In the Southeast Valley alone, we expect to see 500,000 to 700,000 square feet of new product break ground this year,” said JLL Senior Vice President Steve Larsen. “This space will provide modern amenities to meet the high demand from technology and advanced manufacturing users in this area. We’re also seeing a notable level of activity from pharmaceutical users.”
To access additional JLL research reports, visit the JLL Phoenix research page at www.jll.com/phoenix/en-us/research.