My View: Understanding The Surge. How the Valley’s Rush to Build Will Play Out For Real Estate Tenants

Article originally posted on Phoenix Business Journal on May 6, 2024

As the industrial real estate market in Arizona experiences a monumental transformation, it’s crucial for tenants and occupiers of space to understand how the current surge in new construction deliveries and ongoing developments can impact them and their real estate strategy going forward.

Arizona’s industrial market, particularly in the Phoenix metro, has been inundated with historic levels of supply, most of which is being built on a speculative basis. In the latter half of 2023 alone, developers delivered over 23 million square feet of new space, surpassing the completion totals from 2017 to 2019 combined. This has caused the vacancy rate to surge from 4% to over 9% as of Q1 2024.

Despite the spike in supply, Arizona continues to lure tenants with its strong labor force, strategic location, and positive long-term outlooks. Industries such as logistics, manufacturing, semiconductors, construction as well as food and beverage remain the driving forces behind the absorption of space. Headlines tend to focus on big players such as Amazon, TSMC, and Intel, but there is a diverse mix of exciting new occupiers continuing to enter Arizona or expand within.

Read complete article here: https://www.bizjournals.com/phoenix/news/2024/05/06/commercial-real-estate-building-surge.html