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Who’s The Top U.S. Metro For Industrial Growth? Greater Phoenix!

Industrial Development In Greater Phoenix

Greater Phoenix has hit the ground running in 2024, leading the charge in industrial development. The region's robust construction pipeline is setting the pace for industrial real estate growth nationwide. Despite some warnings of market volatility and increasing vacancy rates, the overarching narrative for 'The Valley' is one of expansion and economic vitality.

The Transwestern Report Findings

Transwestern Real Estate Services has shed light on the region's impressive growth. With 8.9 million square feet of new industrial space delivered in the last quarter of 2023 alone, the Phoenix Metro region is witnessing a historic influx of industrial facilities. Even with a slight deceleration in construction, over 40 million square feet of industrial space is anticipated to roll out in the next one to two years. Yet, this expansion has its challenges. Vacancy rates have risen, particularly in the West Valley, with Glendale hitting a 20% vacancy rate. In contrast, the East Valley maintains a healthier vacancy rate, with specific areas like Chandler/Loop 202 and Tempe outperforming the average.

Rendering of industrial buildings.

Transwestern Highlights Impressive Growth In Greater Phoenix

A Surge In Industrial Construction

The current landscape of industrial construction is a testament to the economic momentum of Greater Phoenix. The city has outstripped other major metropolises in industrial space development, and the figures are impressive. Here's a snapshot of industrial space supply under construction nationally, with Greater Phoenix at the pinnacle:

  • Greater Phoenix: 42.5 million square feet
  • Dallas: 33.6 million square feet
  • Savannah: 29.8 million square feet
  • Inland Empire: 19.4 million square feet
  • Austin: 18.2 million square feet
  • Chicago: 13.2 million square feet
  • Houston: 12.5 million square feet
  • Charlotte: 11.5 million square feet
  • Las Vegas: 11.1 million square feet
  • Kansas City: 10.8 million square feet
  • Memphis: 10.7 million square feet
  • Philadelphia: 9.2 million square feet
  • Denver: 8.1 million square feet
  • Raleigh: 8.1 million square feet
  • Miami: 8.1 million square feet
  • New Jersey: 8.0 million square feet
  • Detroit: 7.9 million square feet
  • Washington D.C.: 7.7 million square feet
  • Indianapolis: 7.2 million square feet

The data demonstrates that Greater Phoenix leads the chart in industrial space currently under construction, outpacing all other listed cities.

Rental Rates & Vacancies

Scottsdale is a leader in rental rates, commanding $17.88 per square foot, while the Valley-wide average stands at $13.17. The diversity in rates and vacancies across regions underscores the varied industrial landscape within Greater Phoenix. North/Central Phoenix and the Grand Avenue area exhibit contrasting vacancy rates, reflecting the dynamic nature of the market.

Also Read: Optima McDowell Mountain Village Has Fully Broken Ground!

Rendering of industrial buildings.

Greater Phoenix Leads With 42.5 Million Square Feet Under Construction

The Big Picture has placed the Phoenix Metro region among the top markets with the most industrial real estate under construction. This includes noteworthy projects like the expansion of electric vehicle manufacturer Lucid Motors. Not to mention First Industrial Realty Trust's large-scale complex in the West Valley. These projects are part of a national trend of 463 million square feet of industrial space under construction. This equates to 2.4% of the current industrial stock.

Final Thoughts

As we go through 2024, the industrial landscape of Greater Phoenix presents a mix of opportunity. And caution. With significant development underway, the region is poised to solidify its position as an industrial powerhouse. However, stakeholders must remain vigilant, balancing growth with market stability to maintain the positive trajectory of 'The Valley's' industrial sector. We hope you enjoyed today's edition of LUXE BLOG. Keep checking back for more news.

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