Q2 2020 Industrial Market
- Net absorption peaked over 2.6 MSF during second quarter, marking the fifth consecutive quarter above 1 MSF, with YTD positive absorption of 3.7 MSF
- Vacancy increased over the quarter by 10 bps, and over-the-year vacancy increased only 70 bps to 7.7%
- Under construction activity rose to 11.6 MSF in an effort to meet persistent demand
- Asking rates continued to increase nearly 4.2% over-the-year and up 1.16% over-the-quarter, reaching $0.58 PSF
- Investment sales during second quarter could not keep up with the amount of large multi-property transactions that took place in first quarter
- Sales volume and the number of transactions were down significantly
- Second quarter closed out with $320 million in volume, but the median price PSF increased 4.2% over-the-quarter and 15.1% year-over-year to $116 PSF
Outlook: The outlook for the Greater Phoenix industrial market remains extremely healthy and is the product category within the CRE industry that will thrive the most through the pandemic. Absorption continues to peak over 1 million square feet and vacancy remains low. Warehouse and distribution tenants will rapidly see the benefits of increases in online purchasing.
Projects under construction are moving along as quickly as supply allows, and a slowdown in construction materials seems to be one of the main factors hindering construction.
In the midst of the COVID-19 outbreak, information and data is emerging at a quick and uneven rate. The information contained herein has been obtained from sources deemed reliable at the time the report was written. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.