TL/DR –
Industrial space in the Phoenix metro area now has a vacancy rate of 8%, the highest it’s been in four years, according to real estate analysts at Colliers. The areas with the highest vacancies are the Northwest and Southeast Valley, both with vacancies above 10%. Analysts expect the vacancy rate to increase in the coming months as more buildings that were started in 2023 are finished.
Phoenix Industrial Space Vacancy Spikes
The industrial space vacancy rate in the Phoenix metro area has increased to 8%, a notable rise compared to the last four years according to Colliers real estate analysts.
The Northwest and Southeast Valley are the areas with the highest vacancies, both surpassing 10% according to the Colliers report.
The significance of empty industrial buildings lies in their potential to provide new jobs when bought or leased. However, vacant buildings offer no employment opportunities.
In East Mesa, Brinkmann Construction is developing a new industrial building that already has a tenant. “The demand has shifted to a different product,” says Joe Strobbe of Brinkmann Construction. He observes that spec buildings are still being occupied, albeit at a slower pace.
Strobbe further explains that most contracts are now for custom-built buildings required by companies that know their specific needs. Demand has moved towards smaller products with ready tenants.
Despite more supply than current demand leading to unused buildings, experts predict that demand will soon catch up. “We have space to work through but it’s very healthy,” says Rusty Kennedy of CBRE real estate firm.
Although there’s a delay between the completion and occupation of a building, Kennedy states that’s normal. The recent building boom simply didn’t have this lag.
Colliers analysts project the vacancy rate will climb as more buildings begun in 2023 are completed.
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