PHOENIX (APRIL 7, 2026) -- Phoenix’s industrial market opened 2026 with solid leasing and absorption, even as new deliveries slowed sharply from a year earlier, according to Kidder Mathews’ first-quarter market update.
The report said total lease transactions reached 7.5 million square feet in the first quarter, while direct net absorption totaled 4.4 million square feet, signaling continued tenant demand across the metro. At the same time, deliveries dropped 82 percent year over year to just 1.2 million square feet, indicating the market is shifting from rapid new construction toward the absorption of existing inventory.
Kidder Mathews reported that Phoenix’s total vacancy rate fell to 12.4 percent, down 120 basis points from a year ago, while total availability declined 150 basis points to 14.4 percent. Glendale, North Chandler/Gilbert, and Goodyear posted the strongest gains, driven largely by advanced manufacturing and logistics users. Average asking rents for industrial spaces of 10,000 square feet or larger rose 5 percent year over year to $1.18 per square foot, triple-net.
The report also points to Arizona’s broader economic momentum as a major driver. The state ranks first nationally in semiconductors, with more than 60 industry expansions since 2020, and has led the nation in international investment, with more than $195.7 billion announced over the same period. Kidder Mathews noted that the groundbreaking of the $7 billion Halo Vista mixed-use development tied to TSMC is expected to generate thousands of jobs and strengthen long-term industrial demand.
On the labor side, Phoenix metro’s unemployment rate rose to 4.3 percent in December, up 70 basis points year over year, according to the Arizona Office of Economic Opportunity, as semiconductor growth, advanced manufacturing investment, and infrastructure expansion continue to tighten labor supply and lengthen project timelines.
Looking ahead, Kidder Mathews expects vacancy to continue trending downward through the rest of 2026, though West Phoenix remains an active development zone where new warehouse projects could add to space under construction. Overall, the first-quarter data suggest Phoenix industrial fundamentals remain healthy, supported by manufacturing expansion, logistics demand, and a development pipeline that is no longer outrunning absorption.
Read the full report here: Kidder Mathews Phoenix Industrial 1Q 2026