While major industrial and logistics markets capture most of the headlines, industrial occupiers and investors know that dozens of secondary markets are essential to supply chains in the U.S.
Of the 81 industrial markets Cushman & Wakefield tracks, the firm selected five emerging industrial real estate markets outside of primary markets that are markets to watch are based on key metrics from 2019 through 2021, including net absorption, new tenant demand, vacancy, rent growth, construction pipeline and deliveries.
Included in the five is Phoenix, which has emerged as one of the fastest growing industrial markets in the country in recent years. The Phoenix metro area boasts a population of 4.7 million and is projected to grow another 5.1% through 2026. Real gross domestic product (GDP) in the metro area in 2020 amounted to $253.5 billion, up 70% from 20 years earlier when its GDP was just $149 billion.
Demand has been vigorous with more than 57 million square feet (msf) of leasing driving 51 msf of absorption from 2019 through 2021, placing the market among the top in the nation for both. Relative to its Q4 2018 inventory, demand over that time was 15.9% — ranking No. 29 nationally. Developers completed nearly 40 msf of new industrial product in that timeframe with another 33.0 msf in the pipeline as of Q1 2022, ranking the the metro area as one of the largest development markets in the U.S.
Offering proximity to West Coast markets and ports makes the Phoenix metro an attractive alternative for occupiers over markets like L.A. and the Inland Empire as rents are less expensive and space options are more abundant. Like the remainder of the nation, rents are on the rise, but remain significantly cheaper than in markets along the West Coast.
For more, check out our “Five Industrial Markets to Watch.”
