Phoenix Sees Surge in Warehouse Activity in Q1

Phoenix had a first quarter surge in warehouse activity, undeterred by the onset of the coronavirus pandemic and subsequent shelter-in-doors restrictions. According to a report from Colliers International, Phoenix had its third strongest quarter performance in industrial sales volumes since 3Q10 with $833 million in sales volume. Price-per-square foot increased to $106 and cap rates compressed to the low 7%. Overall, it was a tremendous quarter of activity even after the virus caused national business closures and stay-at-home orders in the final two weeks of the quarter.

“The stay home stay safe call was not activated until mid-March. Greater Phoenix has continued to bring in new companies and expanding existing ones,” Phil Hernandez, research manager for Colliers International, tells GlobeSt.com. “Following a very strong and healthy 2019, the first quarter continued with the same momentum.”

Jobs has been the biggest driver of growth in the Phoenix market. In the first quarter, Maricopa County added 89,000 new jobs, the most of any county in the nation. That turned abruptly when shelter measures were set in place. During the week ending March 28, the county lost nearly 89,000 jobs, a 203% increase from the previous week. However, Hernandez doesn’t see job loss derailing the market’s growth. “Everyone will feel the effect of the pandemic one way or another; however, Phoenix is in a unique position to benefit not only geographically but also the business advocacy which has attracted so many companies to previously move here,” says Hernandez. “Phoenix is starting to get even more recognition from investors as a strong distribution market because of the access to California and the close proximity to the Mexico border.”