Phoenix logistics market shifts toward modern warehouses

Article originally posted on CoStar on December 12, 2025

Tenant demand for large logistics buildings in Phoenix stayed strong in 2025, but companies are favoring newly built properties over older ones.

From the fourth quarter of 2024 to the third quarter of 2025, the Valley saw about 9.1 million square feet of net absorption for warehouses and distribution centers of at least 100,000 square feet. That’s slower than the 13 million and 10.5 million square feet recorded in 2023 and 2024, but still more than double the pre-pandemic five-year average of 4.4 million square feet.

Almost all this demand was for new buildings. Properties built since 2020 absorbed about 12 million square feet, while older buildings lost 2.9 million square feet of occupancy.

Companies are prioritizing features that modern facilities offer, such as taller ceilings for stacking goods higher and maximizing storage space; strong, level floors to support robotics and heavy automation equipment; reliable power supply and advanced fire safety systems, and amenities such as quality office space, LED lighting and other upgrades.

The recent surge of big-box industrial construction has greatly expanded the supply of new buildings. Since 2020, nearly 114 million square feet of bulk logistics space has been added in the Greater Phoenix area. More than a quarter of that is still available for lease, giving logistics companies plenty of expansion options.