Well-rounded activity could help market surpass absorption record set in 2005
The Phoenix industrial market is on pace to hit an all-time high absorption record, according to the new Q3 Phoenix Industrial Insight report just released by the Phoenix office of JLL. The last peak came in 2005, when the market absorbed 7.9 million square feet of industrial space during a single calendar year.
As of Q3, the Phoenix industrial market has recorded more than 6.1 million square feet of positive net absorption, making 2017 the fourth consecutive year of at least 6.0 million square feet of space absorbed. According to JLL, another 1.1 million square feet of pre-leased space is expected to deliver by the end of the year.
Combined with any new deals that emerge during Q4 2017, this brings the year-end forecast for total absorption very close to the market’s all-time high of 7.9 million square feet.
JLL Managing Director Pat Harlan credits the momentum to well-rounded market activity from sectors that include, but are not limited to, manufacturing, high-tech aerospace, e-commerce, food packaging, nutraceuticals and logistics and distribution.
“Never before have we seen activity from such a well-diversified tenant pool,” said Harlan. “The companies leasing space in Phoenix are extremely diverse and run the full spectrum – from smaller users of 30,000 square feet to large build-to-suit users of 150,000 square feet. We’re very excited about this time in the Phoenix industrial real estate market.”
Conair was the largest contributor to Q3 2017 absorption, taking down 1.0 million square feet in northwest Phoenix. Four other companies also ranked high on this list, all leasing space in the Southwest submarket:
· Updike Distribution Logistics – 226,436 square feet
· Staples – 150,000 square feet
· Performance Designed Products – 116,769 square feet
· Home Brands – 114,132 square feet
“The Southeast valley is seeing the largest deals it ever has, primarily from manufacturing, high-tech and aerospace companies,” said Harlan. “We are tracking 136 active requirements valleywide, with no signs of activity slowing down.”
With absorption continuing to outpace construction, there remains a steady demand for new space – a need that will be filled, in part, by 4.4 million square feet of new industrial space currently under development across the Valley.
To access the complete JLL Q3 2017 Phoenix Industrial Insight and Q3 2017 Phoenix Industrial Statistics reports, visit the JLL Phoenix research page at www.jll.com/phoenix.