Industrial Market to Finish Year Strong

PHOENIX-It looks as though the industrial market in Metro area will finish the year with a vacancy rate below double digits for the seventh consecutive time.

Although final numbers are yet to be posted, market experts expect that the vacancy rate for industrial properties in the Valley to be well below 10%. At the start of the fourth quarter, the vacancy rate was 7.7%.

“All of the indicators show that the fourth quarter will be strong,” says Mark Krison, an industrial and office specialist with CB Richard Ellis. Between 1 million and 2 million sf of industrial space was leased during the fourth quarter, adds: If it’s near the high end of that range, more than 11 million square feet will have been absorbed during the year.

“The net absorption has been more aggressive than we thought,” Krison says. CB Richard Ellis had predicted that 2000 would see an absorption of approximately 9 million sf.

Strong demand for space from companies looking to expand and those coming into the market sparked plenty of development during the entire year. At the start of the fourth quarter, nearly 5 million sf of new space had been completed and another 5.4 million sf was under construction.

The West Valley was the prime beneficiary of the pumped up demand for industrial space. By year-end, more than 2 million sf of new space was expected to have been completed in the West Valley, in suburbs of Phoenix such as Tolleson and Goodyear. Developers are attracted to the cheaper land and more accommodating municipalities, as well as the easy access to Interstate 10 and rail lines.