Future Cities
Phoenix Market
2025 North America Industrial Big-Box Review & Outlook
April 16, 2025 5 Minute Read
Supply & Demand
Phoenix’s industrial big-box market had a significantly higher vacancy rate in 2023 due to a mix of less leasing activity and continued major new development. 7.9 million sq. ft. was leased last year, 52.2% lower than 2022’s record 16.5 million sq. ft. This reduction in leasing also halved net absorption to 10.1 million sq. ft. Combined with the completion of 17.2 million sq. ft. of construction, the vacancy rate surged to 10.7%, from 3.4% in 2022. Despite increased vacancies, rental rates kept growing, with average taking rents reaching $9.21 psf/yr, a 27% increase from 2022.
Currently, around 23 million sq. ft. of space is under construction, with only 26.4% preleased. Phoenix has the second-highest construction activity in North America, which is expected to further increase vacancies in 2024. However, the region’s population growth and a strong labor market will continue to attract regional occupiers. Construction starts significantly declined at the end of 2023. The rise in vacancy rates is projected to stop by late 2024 and start to decrease by 2025.
Figure 4: Share of 2023 Leasing by Occupier Type
Source: CBRE Research.
Figure 5: Lease Transaction Volume by Size Range
Source: CBRE Research.
Figure 6: 2023 Construction Completions vs. Overall Net Absorption by Size Range
Figure 7: Direct Vacancy Rate by Size Range
Figure 8: Under Construction & Percentage Preleased
Figure 9: First Year Taking Rents (psf/yr)
Source: CBRE Research.
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Industrial & Logistics Research
James Breeze
Vice President, Global Industrial and Retail Research
John Morris
President, Americas Industrial & Logistics, Advisory Services
