Phoenix Industrial Construction Hits Peak Levels

Industrial development in Phoenix is hitting peak levels. According to research from CBRE, new industrial development, including both speculative and build-to-suit, is at its highest levels since the third quarter 2007. Through the third quarter, 5.9 million square feet of new product delivered with 8.4 million square feet of net absorption, compared to 7.8 million square feet in 2007, the prior peak, with only 6.4 million square feet of absorption.

“A number of factors are contributing to the high level of industrial construction in Phoenix,” Cooper Fratt, an industrial VP at CBRE, tells GlobeSt.com. “There continues to be pent up demand in certain submarkets throughout Metro Phoenix, which are still undersupplied with new, modern industrial space. Relative to other major markets throughout the West Coast, Phoenix experienced a delayed and slow recovery from the last recession, so while other markets are peaking, Phoenix is still has plenty of room to grow.”

The population growth and net migration is a major factor in the industrial activity as well. Phoenix has the second highest population growth in the country, creating more logistics and ecommerce warehouse demand. “Healthy in-migration has led to a very strong housing market and new construction throughout both single and multifamily projects. Several industries are growing due to the new residential construction—many of which store their product in warehouse spaces throughout the Valley,” says Fratt.