The Phoenix industrial market had an exceptional ﬁnal quarter of 2015. The improving economy, including consumer conﬁdence, a rising home market and lower unemployment, have fueled the industrial sector’s healthy year. Construction activity remains at a healthy clip and a strong pipeline remains in place. This was the fourth highest quarterly absorption since 1999 with the vacancy rate at its lowest point it’s been since 2007. Asking lease rates are up 3.8% since Q1 and it’s the strongest year for inventory deliveries since 2008. The overall vacancy settled at 11.0%, dropping 80-basis points from Q3. The Southwest and Northwest Valley’s had the highest vacancy decrease of the ﬁve submarket clusters. Net absorption for the quarter posted at 3,100,698 SF. The Northwest Valley led all others in net absorption for Q4; however, the Southwest Valley posted the highest absorption for 2015 with 2,685,976 SF.
Asking rental rates increased to $0.54 per SF, per month, a 1.9 % overall increase compared with no increase in Q3. The Sky Harbor submarket cluster brought in the highest overall rental rates of 4.6%. Construction activity remained strong this quarter with 3,454,071 SF, nearly besting last quarter. Deliveries were modest this quarter at 657,834 SF. Next quarter, many projects are scheduled for completion and deliveries will be signiﬁ cantly higher.
In the largest new lease signed for the quarter, Daikin Applied took 57,000 SF of manufacturing space at Phoenix 51st Avenue Industrial Park, 4940 W. Lower Buckeye Rd., Phoenix. In the largest sales transaction in Q4, Watumull Enterprises, Ltd., Honolulu, Hawaii purchased the Shutterﬂ y building at Discovery Business Campus, 7195 S. Shutterﬂ y Dr., Tempe for $43,100,000 or $181.86, per SF. The building was completed in 2015 and was part of a 1031 exchange. The cap rate was posted at 6.6%.