Phoenix Emerges as Leading Market for Logistics Investment

US gateway markets are no longer top targets for investment. According to a recent report from CBRE, there are plenty of industrial and logistics options outside of the gateway markets, and the report names the top 14, including Reno, Greenville-Spartanburg and Salt Lake City. Unsurprisingly, considering its recent run, Phoenix made the cut. Since 2013, the market has absorbed 54.4 million square feet of industrial space, outpacing the 43.3 million square feet of new product built in the same time period, making it a top emerging market for investment.

“Phoenix has more than 5 million people, but it is still really young,” Rusty Kennedy of CBRE in Phoenix tells GlobeSt.com. “We have a lot of great case studies over the past three or four years of major incorporations selecting Phoenix, and we are getting a lot more diverse. If you are an investor looking to go where the puck is headed, Phoenix is one of those markets.”

The industrial sector has become the top investment asset this cycle, but top-tier markets have quickly seen a run-up in pricing and competition. Now investors are looking for places to find yield. “The core markets have really become saturated, and cap rates have been chased down to historical lows,” explains Kennedy. “That has forced investors to look outside of the typical sand box, and when they do that, they look at where users are going and where there are up-and-coming markets. We looked at what factors investors watch to determine those emerging markets, and that is how we came up with this list.”