Absorption in 2020, 2021 driven by demand brought on by COVID-19

PHOENIX, Arizona – The onset of COVID-19 is driving industrial demand in Phoenix, with warehouse and distribution space emerging as leaders in an industrial market that is rapidly growing in both popularity and sophistication, according to the new JLL Q3 Phoenix Industrial Insight Report.

Phoenix recorded just over 1.6 million square feet of absorption during the third quarter – up 60 percent from the same time last year, the report says. On the construction front, projects catering to e-commerce, medical supplies and food and beverage dominate the local pipeline, representing nearly 7.2 million square feet of the approximate 8.2 million square feet of new Valley industrial product that is under construction now.

“It’s always important, especially during periods of rapid expansion, to keep our eye on the occupier and demand drivers,” said JLL Managing Director Pat Harlan. “Currently, our strong fundamentals are the result of Phoenix’s steady population growth and a systemic shift in consumer behavior that is creating the need for more industrial space. Developers, in turn, are delivering highly functional speculative product to satisfy demand and keep our market in equilibrium.”

Year-to-date, metro Phoenix has delivered just over 8.5 million square feet of new industrial construction, nearly double that of the first three quarters of 2019. Of that space, warehouse and distribution users have absorbed nearly 6.2 million square feet, with 81 percent of activity occurring in the West Valley.

However, both the West and East Valleys continue to thrive, with overall metro Phoenix industrial asking rents remaining stable at $0.58 per-square-foot quarter-over-quarter. The Southeast Valley enjoyed a $0.02 per-square-foot rental rate jump during the third quarter, with Chandler leading the charge at an average asking rent of $0.79 per-square-foot.

“The Valley’s industrial growth is happening across all product types, size categories and locations,” said Harlan. “Our requirements are also larger than they were even one year ago as companies grow to support the needs of our increased consumer base. There’s a tremendous appetite from companies who want to be here, employees who want to live here and investors who want to buy here.”

That demand is steadily driving down Phoenix’s industrial vacancy rate, now at an average 7.7 percent.

JLL expects industrial to remain highly active and competitive for the remainder of 2020 and into 2021, particularly as ecommerce continues to grow in popularity and an expanding Phoenix population requires more food and beverage and medical support.

To access JLL research for Phoenix and across the U.S., visit the company’s research page at https://www.us.jll.com/en/trends-and-insights#research

TUCSON, ARIZONA  – Vector Launch Inc., a micro-satellite launch company founded in Tucson, Arizona in 2016, announces today that it will restart operations and remain in Tucson after a competitive, multi-state process.

“We actually came to Tucson to close up shop, so to speak, and move the assets out of Southern Arizona,” said Rob Spalding, acting CEO of Vector Launch. “However, we were introduced to Sun Corridor Inc. who convinced us that Tucson has the right workforce and talent in order for us to stay. We are committed to manufacturing jobs in the U.S., and it’s clear we have a strong path forward in Tucson.”

“All the key partners were involved, including private sector CEOs and local leadership in Southern Arizona.” said Sharon Bronson, Pima County Supervisor, District 3. “The County was happy to play a role in providing market-rate space for Vector to re-evaluate, re-establish and grow in the future.”

“Tucson is a great location for emerging space technologies like Vector Launch,” said Joe Snell, president & CEO, Sun Corridor Inc. “This is a true business retention success story. – we demonstrated to Rob and his team that we have the right talent for their needs. Vector had been an integral part of the space cluster of companies here, who rely on each other for talent and future growth of the whole industry. We want Vector to stay here for the long term.”

PHOENIX, ARIZONA –  CBRE announced it arrange the sale of a single-tenant industrial property in the greater Phoenix area for $3.2 million ($413 PSF) to a private capital investor from Southern California in a 1031 Exchange.

Mike Parker of CBRE in Phoenix represented both the Buyer and the Seller, a Canadian investment group in the transaction.

Located at 1410 W Harvard Avenue in Gilbert, Ariz., the 7,740 square-foot building is occupied by Core & Main, which renewed its lease in early 2020. One of the nation’s largest waterworks wholesale suppliers has been a tenant at the property since its construction in 2002. The 3.3-acre site features a large paved fenced yard for storage of water, sewer, storm drain and fire protection products.

“This was a great opportunity for the buyer to recognize increased investment returns in the metro Phoenix market by utilizing proceeds from a multifamily investment sale in Southern California for the purchase of this industrial property,” said Parker.

He added, “This was a natural win-win for both parties. The buyer is transitioning capital from the sale of a Southern California multi-family investment property while for the Canadian seller it was an opportune time to reallocate the equity from this investment into constructing a new industrial project in the southeast valley of Metro Phoenix.”