In the Southeast Valley… There is balanced recovery with small user activity.
The Southeast Valley has seen a much more balanced recovery including large, mid-sized, and small, local users.
Over 1.0 million square feet of leases were signed in the first quarter, largely comprised of small deals under 5,000 square feet.
In the Southwest Valley… The market is still going strong with large users.
After averaging nearly 675,000 square feet of net absorption per quarter in 2015, the Southwest Valley saw a healthy bump in the first quarter of 2016, recording over 830,000 square feet of net absorption.
There are currently over 13 million square feet of tenants in the market evaluating, touring or negotiating for space in the Southwest Valley.
Who’s occupying what? A bulk of absorption is coming from design-build.
The number of owner-user sales transactions is down 25.7 percent, and sales volume is also down 28.0 percent, as large users with buying power are finding design-build options more attractive for specialized needs.
Just under 50 percent of the year-to-date absorption has been a direct result of design-build completions, concentrated in just four buildings. Looking forward, there are nearly 1.1 million square feet of design-builds expected to deliver throughout 2016.
Here’s what JLL Managing Director Anthony Lydon has to say about trends among larger industrial users…
“Our demographics and job growth profile keep large industrial users coming to Phoenix. Corporate site visits and RFPs are up approximately 25 percent from one year ago. Compared to California, we offer the headcount- and energy-centric employer tremendous value. Our business friendlier proposition also provides a competitive alternative to the ‘thousand cuts’ of incremental expenses found in other markets.”