PHOENIX (April 28, 2025) – The Phoenix industrial real estate market continued to show resilience in Q1 2025, according to the latest figures released by CBRE. Despite a slight uptick in vacancy rates from the previous quarter, the market remains well-positioned for long-term growth, fueled by strong demand from logistics, manufacturing, and e-commerce sectors.
Phoenix's industrial vacancy rate rose modestly, reflecting a market adjusting to a wave of new supply deliveries. However, leasing activity remained solid, underpinned by sustained tenant demand for Class A logistics and distribution space, particularly in key submarkets such as the West Valley and Southeast Valley.
Key Highlights from CBRE's Phoenix Industrial Q1 2025 Report:
-
Vacancy rates increased slightly but remain below historic averages.
-
Leasing velocity remained healthy, particularly for spaces under 300,000 square feet.
-
Construction completions added significant new inventory, but much of it is already pre-leased or under negotiation.
-
Rental rates held firm, supported by ongoing tenant competition for premium space.
-
Investment sales volume showed resilience, driven by institutional interest in well-located logistics assets.
Looking ahead, CBRE anticipates continued tenant demand throughout 2025, although the market will likely see a greater emphasis on flight-to-quality trends as tenants seek highly efficient, modern facilities.
CBRE’s full Q1 2025 Phoenix Industrial Market report is available here.