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Avison Young releases its Fourth Quarter 2022 Industrial Market Report for Phoenix
Phoenix, AZ – Avison Young recently released its Fourth Quarter 2022 Phoenix Industrial Market Report. The Valley’s industrial market broke several all-time highs regarding sales metrics including transaction volume which ended the year at $2.5 billion and with an average price per square foot (sf) of $164.41.
2022 marked the fifth consecutive year in which the industrial market saw a price per sf rise. While the market has steadily increased, the general sentiment is that prices will likely experience a bit of pullback in 2023, given the elevated cost of capital and heightened buyer expectations.
Industrial development in Phoenix reached historic levels in 2022 – recording 26.7 million sf in delivered inventory. This is a 95.9% increase in total deliveries compared to 2021’s total of 13.6 msf. Development activity in 2023 is projected to surpass 2022’s record-setting year, as there is already 44.5 million sf of industrial space currently under construction.
“Phoenix remains a national leader when it comes to industrial real estate. In 2022 we set new records in new space deliveries; the amount of new space under construction; space absorbed; total sales transaction volume; sales price psf; and eight consecutive years of increasing rental rates,” said David Genovese, Avison Young Principal and Managing Director – Phoenix. “While rising construction costs, costs of capital, and national/global economic conditions will have an impact in 2023, Phoenix’s industrial market is poised to continue its upward trajectory.”
He noted that economic conditions are certain to create some degree of headwinds everywhere, but the strong fundamentals in Phoenix are anticipated to provide a more muted negative impact compared to a number of other major national markets.
Total net absorption in Phoenix’s industrial market was up in 2022 - posting a year-over-year increase of 4,521,502 sf (22.5%). This increase brought the industrial market’s largest year of positive net absorption on record – totaling 24,636,878 sf. New developments in Phoenix’s northwest, southwest, and southeast submarkets were large contributors to the growth in net absorption adding a combined 26 million sf of inventory in 2022.
The total vacancy rate increased slightly from 6.1% in 2021 to 6.2% in 2022 – ending the year with 11,968,861 sf of vacant inventory. While the year saw very strong absorption, the small increase in total vacancy is primarily due to the delivery of new, unleased buildings.
Total availabilities are up by 12,157,569 sf (36.7%) year-over-year. The increase brought industrial availabilities to 45.2 msf at the end of Q4 – the most available space to end a calendar year on record. The large increase in total availabilities can be attributed to the record development numbers seen in 2022, as a portion of the 26.7 msf of new inventory is still on market.
Avison Young creates real economic, social and environmental value as a global real estate advisor, powered by people. As a private company, our clients collaborate with an empowered partner who is invested in their success. Our integrated talent realizes the full potential of real estate by using global intelligence platforms that provide clients with insights and advantage. Together, we can create healthy, productive workplaces for employees, cities that are centers for prosperity for their citizens, and built spaces and places that create a net benefit to the economy, the environment and the community.
Avison Young is a 2022 winner of the Canada's Best Managed Companies Platinum Club designation, having retained its Best Managed designation for 11 consecutive years.
www.avisonyoung.com
For more information:
Media Contact:
Darcie Giacchetto, Media Relations Specialist – Southwest: +1.949.278.6224
2022 marked the fifth consecutive year in which the industrial market saw a price per sf rise. While the market has steadily increased, the general sentiment is that prices will likely experience a bit of pullback in 2023, given the elevated cost of capital and heightened buyer expectations.
Industrial development in Phoenix reached historic levels in 2022 – recording 26.7 million sf in delivered inventory. This is a 95.9% increase in total deliveries compared to 2021’s total of 13.6 msf. Development activity in 2023 is projected to surpass 2022’s record-setting year, as there is already 44.5 million sf of industrial space currently under construction.
“Phoenix remains a national leader when it comes to industrial real estate. In 2022 we set new records in new space deliveries; the amount of new space under construction; space absorbed; total sales transaction volume; sales price psf; and eight consecutive years of increasing rental rates,” said David Genovese, Avison Young Principal and Managing Director – Phoenix. “While rising construction costs, costs of capital, and national/global economic conditions will have an impact in 2023, Phoenix’s industrial market is poised to continue its upward trajectory.”
He noted that economic conditions are certain to create some degree of headwinds everywhere, but the strong fundamentals in Phoenix are anticipated to provide a more muted negative impact compared to a number of other major national markets.
Total net absorption in Phoenix’s industrial market was up in 2022 - posting a year-over-year increase of 4,521,502 sf (22.5%). This increase brought the industrial market’s largest year of positive net absorption on record – totaling 24,636,878 sf. New developments in Phoenix’s northwest, southwest, and southeast submarkets were large contributors to the growth in net absorption adding a combined 26 million sf of inventory in 2022.
The total vacancy rate increased slightly from 6.1% in 2021 to 6.2% in 2022 – ending the year with 11,968,861 sf of vacant inventory. While the year saw very strong absorption, the small increase in total vacancy is primarily due to the delivery of new, unleased buildings.
Total availabilities are up by 12,157,569 sf (36.7%) year-over-year. The increase brought industrial availabilities to 45.2 msf at the end of Q4 – the most available space to end a calendar year on record. The large increase in total availabilities can be attributed to the record development numbers seen in 2022, as a portion of the 26.7 msf of new inventory is still on market.
Avison Young creates real economic, social and environmental value as a global real estate advisor, powered by people. As a private company, our clients collaborate with an empowered partner who is invested in their success. Our integrated talent realizes the full potential of real estate by using global intelligence platforms that provide clients with insights and advantage. Together, we can create healthy, productive workplaces for employees, cities that are centers for prosperity for their citizens, and built spaces and places that create a net benefit to the economy, the environment and the community.
Avison Young is a 2022 winner of the Canada's Best Managed Companies Platinum Club designation, having retained its Best Managed designation for 11 consecutive years.
www.avisonyoung.com
For more information:
Media Contact:
Darcie Giacchetto, Media Relations Specialist – Southwest: +1.949.278.6224