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Phoenix Industrial Vacancy Falls for 5th Straight Quarter

Article originally posted on Globe St on September 29, 2026

The Phoenix industrial sector is strengthening as it continues to rank among the best cities within the asset class in the country, according to a market report from Colliers.

For one, vacancy has declined for the fifth straight quarter. In the three months from June, it fell by 220 basis points year-over-year to 8.7 percent. The largest compression took place in the Northwest submarket, where the rate was cut in half to 8.1 percent.

“Leasing activity remains ahead of new deliveries, compressing vacancy,” Colliers said.

“The West Valley dominated leasing activity during the second quarter, with the five largest lease transactions occurring along the Loop 303 Corridor.”

The largest overall lease in the second quarter was taken by a confidential tenant (1.18 million square feet). Fluidstack and DHL ranked second and third, respectively, with 1.15 million and 406,027 square feet signings.

Also, demand was ahead of new deliveries. Net absorption nearly outpaced the new supply of 1,922 units by more than double.

Investment activity, meanwhile, was mixed, with sales volume increasing by 8.3 percent year-over-year to $877 million. However, pricing retreated, with the average sale per square foot coming in almost 10 percent lower on a quarterly basis to $209.

Another important trend: construction for Phoenix industrial product increased to 15,576 units compared with 11,288 units seen in the same period of 2025.

“Confidence in construction remains elevated, which is projected to increase through the remainder of the year,” Colliers said.

But overall, Colliers expects the strong momentum seen in the market to continue through 2026. This is in part due to the region’s resilient economy, which added 33,200 jobs in the 12 months through June, Colliers said, citing Bureau of Labor Statistics nonfarm data.

Importantly, the CRE brokerage noted that Phoenix continues to hold its spot among the top industrial markets in the country.

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