Following a strong 2018, positive momentum in the Phoenix industrial market carried into the second quarter of 2019.
Industrial users were active across the Valley and became increasingly diverse. Manufacturing, third-party logistics, pharmaceutical, e-commerce, and food and beverage users are particularly active in the metro.
Net absorption totaled 1.1M sq. ft. in the second quarter with 3.4M sq. ft. of gross activity.
At mid-year net absorption is 4.1M sq. ft. with gross activity of 8.0M sq. ft.
The Phoenix industrial vacancy was 6.5% in Q2 2019, down 10 bps when compared to Q4 2018.
The market-wide average asking lease rate in Q2 2019 was $0.64 NNN per sq. ft. asking rates are up slightly from Q4 2019 and remained static over the last twelve months.
In Q2 2019, 2.2M sq. ft. of industrial product delivered in the Phoenix market, with 81.8% dedicated to speculative space.
Currently, 9.0M sq. ft. of industrial space is underway across the market. Distribution space across the market accounts for 55% of all space under construction or 4.9M sq. ft.