Phoenix Industrial Market Report

The following reflects Phoenix industrial market conditions as of 2Q 2026.

MARKET DRIVERS

Arizona advanced its global technology leadership with the opening of the Taiwan Trade and Investment Service Center in Phoenix, strengthening collaboration, trade and foreign direct investment opportunities. These efforts continue to elevate Arizona’s national leadership in semiconductors and advanced technology while promoting the state as a premier destination for innovation and global investment. Construction is underway on the $7 billion Halo Vista development, a 2,300-acre innovation district adjacent to TSMC’s expanding Arizona campus. The project is poised to support Arizona’s rapidly growing semiconductor ecosystem, attract global companies and investment, and create thousands of jobs across advanced industries.

The total vacancy rate declined to 11.4%, marking a 210 bps YOY decrease, while total availability fell 190 bps to 13.6%. Leasing activity reached 7.9M SF, supported by 5.4M SF of direct net absorption, with Glendale, Chandler North/Gilbert, and Goodyear posting the strongest gains amid continued industrial demand. Direct average asking rents for spaces 10K SF and larger increased 3% year over year to $1.18 PSF NNN in Q2. At the same time, new construction slowed significantly as the market continued to absorb existing inventory, with only 3.2M SF delivered YTD, a 66% YOY decline.

ECONOMIC REVIEW

According to the Arizona Office of Economic Opportunity, Phoenix metro’s unemployment rate increased 40 bps YOY to 4.1% in May. Arizona’s labor market continues to navigate slower job growth and a tightening labor force, while semiconductor expansion, advanced manufacturing investment, and infrastructure growth continue to drive demand for specialized talent.

NEAR-TERM OUTLOOK

Vacancy rates are expected to continue declining through the remainder of 2026 as strong absorption supports market fundamentals; however, ongoing West Phoenix development will add new supply and maintain competitive conditions.

Frequently Asked Questions

What is the industrial vacancy rate in Phoenix as of Q2 2026?

Phoenix’s total industrial vacancy rate was 11.4% as of Q2 2026, down 210 basis points from 13.5% a year earlier, according to Kidder Mathews research. The improvement reflects continued absorption of existing inventory even as new supply enters the market.

What is the total availability rate for Phoenix industrial space in Q2 2026?

Phoenix’s total industrial availability rate was 13.6% in Q2 2026, down 190 basis points from 15.5% a year earlier (Data source: CoStar). Availability includes space currently vacant as well as space being marketed ahead of a tenant’s move-out.

What are average industrial asking rents in Phoenix in Q2 2026?

The average direct asking rent for Phoenix industrial spaces 10,000 SF and larger was $1.18 PSF NNN in Q2 2026, a 3% increase year over year, according to Kidder Mathews research. Submarket rents ranged widely, from roughly $0.76 PSF NNN in the SC South of Salt River submarket to $1.79 PSF NNN in Scottsdale/Salt River.

How much industrial leasing activity occurred in Phoenix in Q2 2026?

Phoenix industrial leasing activity totaled 7.9M SF in Q2 2026, bringing year-to-date leasing activity to 16.6M SF, a 22% increase over the same period in 2025 (Data source: CoStar). Glendale and Southeast submarkets such as Chandler North/Gilbert drove much of the quarter’s leasing volume.

What was net absorption for Phoenix industrial in Q2 2026?

Phoenix industrial direct net absorption reached 5.4M SF in Q2 2026, according to Kidder Mathews research. Net absorption measures the change in occupied space over the quarter, and the positive figure means tenants moved into significantly more space than they vacated, led by Glendale, Chandler North/Gilbert, and Goodyear.

How much industrial space is under construction in Phoenix?

As of Q2 2026, roughly 13.2M SF of industrial space was under construction across Phoenix, according to Kidder Mathews research. New deliveries totaled 3.2M SF year-to-date, a 66% decrease from the same period in 2025, as developers pulled back amid the market’s continued absorption of existing inventory.

What was the largest industrial sale in Phoenix in Q2 2026?

The largest industrial sale in Phoenix in Q2 2026 was The Hub @ 202, a 10-property, 1,271,390-SF portfolio in the Chandler North/Gilbert submarket that traded for $135,000,000, or $106.18 per SF (Data source: CoStar). The buyer group included Machine Investment Group, Miramar Capital, and Axonic Capital.

What was the largest industrial lease signed in Phoenix in Q2 2026?

The largest industrial lease signed in Phoenix in Q2 2026 was Fluidstack’s 1,215,396-SF direct lease at Luke Field, 13543 W Northern Ave Buildings A & B in the Glendale submarket, signed in May 2026 with landlord Lincoln Property Co., according to Kidder Mathews research. DHL also signed a large 1,184,591-SF direct lease at Northern Parkway Logistics Building D in Glendale in June 2026.

Which Phoenix industrial submarkets are seeing the strongest demand?

Glendale, Chandler North/Gilbert, and Goodyear posted the strongest net absorption gains in Q2 2026, according to Kidder Mathews research. Glendale alone recorded 4.76M SF of direct net absorption in the quarter, driven by continued semiconductor and advanced manufacturing demand tied to Arizona’s growing tech sector.

What is the outlook for the Phoenix industrial market?

Vacancy rates are expected to continue declining through the remainder of 2026 as strong absorption supports market fundamentals, according to Kidder Mathews research. However, ongoing development in West Phoenix will add new supply and is expected to keep the market competitive.

How does Phoenix industrial sales volume compare to a year ago?

Phoenix industrial sales volume totaled 6.4M SF in Q2 2026, bringing year-to-date sales volume to 12.8M SF, a 23% increase over the same period in 2025 (Data source: CoStar). This growth in investment activity coincided with declining vacancy and rising rents across the market.

Last updated: 2Q 2026. Data source: CoStar, AZ Office of Economic Opportunity, PBJ. Compiled by the Kidder Mathews Research Group.

2Q 2026 Phoenix Industrial Market: Key Data Points

Explore our full Phoenix industrial market review for deeper insights into leasing trends, sale activity, and submarket performance.

Vacancy Rate Continues to Improve: Phoenix’s total industrial vacancy rate declined to 11.4%, down 210 basis points year-over-year, reflecting ongoing market absorption and improving occupancy trends.
Strong Net Absorption: Direct net absorption totaled 5.4M SF during Q2 2026, with year-to-date absorption reaching 10.2M SF, a 36% increase from the prior year.
Leasing Activity Accelerates: Industrial leasing volume reached 7.9M SF in Q2, while year-to-date leasing activity climbed to 16.6M SF, up 22% year-over-year.
Industrial Rents Increase: Average direct asking rents rose to $1.18 PSF NNN, representing a 3% year-over-year increase despite elevated supply across portions of the market.
Construction Deliveries Decline: New deliveries totaled 3.2M SF YTD, a 66% decrease year-over-year, helping reduce development-driven supply pressure.
Technology and Manufacturing Drive Demand: Arizona’s expanding semiconductor and advanced manufacturing sectors continue to support industrial leasing demand, with Glendale, Chandler North/Gilbert, and Goodyear posting some of the strongest absorption gains in the market.

Submarket Statistics

Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	2Q26 Direct Net Absorption (SF)	YTD Direct Net Absorption (SF)	SF Under Construction	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate (NNN)

Phoenix Industrial Submarket Statistics 2Q26 — Airport Area: includes North Airport, South Airport North of Roeser, South Airport South of Roeser, SC North of Salt River, SC South of Salt River
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	2Q26 Direct Net Absorption (SF)	YTD Direct Net Absorption (SF)	SF Under Construction	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate NNN
North Airport	13,355,167	6.1%	6.4%	34,435	34,438	648,028	90,846	$1.29
South Airport North of Roeser	15,029,452	10.5%	11.4%	-288,358	-349,629	224,274	187,499	$1.25
South Airport South of Roeser	4,520,634	3.7%	3.7%	-84,934	-81,155	0	153,469	$1.35
SC North of Salt River	14,861,086	6.9%	9.3%	-57,178	-148,317	0	103,471	$1.12
SC South of Salt River	2,423,176	2.2%	2.2%	67,579	5,372	357,721	0	$0.76
Airport Area	50,189,515	7.2%	8.3%	-328,456	-539,291	1,230,023	535,285	$1.22

Phoenix Industrial Submarket Statistics 2Q26 — Northeast: includes Central Phoenix, Scottsdale Airpark, Scottsdale/Salt River
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	2Q26 Direct Net Absorption (SF)	YTD Direct Net Absorption (SF)	SF Under Construction	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate NNN
Central Phoenix	3,327,757	2.7%	2.7%	-9,116	34,978	70,000	9,102	$1.32
Scottsdale Airpark	6,558,323	4.8%	5.6%	43,661	34,687	0	112,156	$1.73
Scottsdale/Salt River	6,255,265	11.5%	11.5%	66,334	150,445	267,051	48,461	$1.79
Northeast	16,141,345	7.0%	7.3%	100,879	220,110	337,051	169,719	$1.66

Phoenix Industrial Submarket Statistics 2Q26 — Northwest: includes Deer Valley/Pinnacle Park, Glendale, Grand Avenue, North Black Canyon, Surprise, West Phoenix North of Thomas Road, West Phoenix South of Thomas Road
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	2Q26 Direct Net Absorption (SF)	YTD Direct Net Absorption (SF)	SF Under Construction	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate NNN
Deer Valley/Pinnacle Park	20,833,769	7.6%	8.3%	200,713	446,557	1,083,734	308,213	$1.33
Glendale	59,813,362	10.4%	12.7%	4,764,304	6,355,541	4,305,470	3,565,121	$1.05
Grand Avenue	14,726,296	8.5%	9.5%	94,259	-228,309	418,642	129,598	$0.85
North Black Canyon	4,879,987	22.9%	22.9%	-152,908	-146,906	428,011	50,177	$1.13
Surprise	7,427,985	17.3%	17.3%	706,285	1,246,710	57,520	84,628	$1.38
West Phoenix North of Thomas Road	7,209,446	4.0%	4.0%	13,536	36,601	0	145,103	$1.09
West Phoenix South of Thomas Road	6,585,747	1.6%	1.6%	138,652	18,735	0	21,950	$1.20
Northwest	121,476,592	9.7%	11.1%	5,764,841	7,728,929	6,293,377	4,304,790	$1.17

Phoenix Industrial Submarket Statistics 2Q26 — Southeast: includes Chandler Airport, Chandler, Chandler North/Gilbert, Falcon Field/Apache Junction, Mesa, Tempe East, Tempe Northwest, Tempe Southwest
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	2Q26 Direct Net Absorption (SF)	YTD Direct Net Absorption (SF)	SF Under Construction	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate NNN
Chandler Airport	9,715,688	11.1%	19.1%	-60,756	-11,340	486,154	71,731	$1.48
Chandler	23,832,569	7.0%	7.4%	237,571	153,598	315,961	232,401	$1.43
Chandler North/Gilbert	45,047,076	22.2%	22.7%	123,834	1,926,591	992,468	971,194	$1.37
Falcon Fld/Apache Junction	6,201,686	8.5%	8.9%	131,819	141,774	352,706	44,839	$1.35
Mesa	6,612,538	5.4%	5.7%	76,136	92,590	0	30,874	$0.95
Tempe East	6,040,236	7.5%	7.7%	-2,242	-3,034	689,109	72,462	$1.26
Tempe Northwest	9,679,782	8.8%	9.7%	-5,509	-153,879	124,444	157,630	$1.24
Tempe Southwest	22,227,267	11.1%	12.2%	-55,034	-93,176	507,799	209,475	$1.18
Southeast	129,356,842	13.4%	14.6%	445,819	2,053,124	3,468,641	1,792,960	$1.28

Phoenix Industrial Submarket Statistics 2Q26 — Southwest: includes Goodyear, Southwest North of Buckeye Road, Southwest South of Buckeye Road, Tolleson
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	2Q26 Direct Net Absorption (SF)	YTD Direct Net Absorption (SF)	SF Under Construction	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate NNN
Goodyear	40,499,730	12.3%	12.6%	257,347	1,578,615	78,548	434,265	$1.07
Southwest North of Buckeye Road	37,786,672	10.9%	11.9%	-414,362	-145,207	673,419	316,249	$0.97
Southwest South of Buckeye Road	20,692,997	9.5%	9.5%	-329,481	-267,950	0	199,746	$1.31
Tolleson	49,767,418	5.6%	7.5%	-74,487	-475,380	1,100,500	187,025	$0.85
Southwest	148,746,817	9.4%	10.3%	-560,983	690,078	1,852,467	1,137,285	$0.96

Phoenix Industrial Market Total 2Q 2026 — combined totals for all submarkets
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	2Q26 Direct Net Absorption (SF)	YTD Direct Net Absorption (SF)	SF Under Construction	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate NNN
Phoenix Total	465,911,111	10.3%	11.4%	5,422,100	10,152,950	13,181,559	7,940,039	$1.18

Phoenix Industrial 2Q 2026 — Breakdown by type
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	2Q26 Direct Net Absorption (SF)	YTD Direct Net Absorption (SF)	SF Under Construction	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate NNN
Manufacturing & Warehouse	268,429,672	10.1%	11.0%	1,844,438	2,319,393	9,823,651	4,941,209	$1.09
General Industrial	165,556,768	11.7%	13.5%	3,520,326	7,198,849	2,684,388	2,506,062	$0.82
Flex	27,542,725	9.0%	9.7%	-146,156	-146,156	673,520	256,273	$1.37

Data as of 2Q 2026. Source: CoStar, AZ Office of Economic Opportunity, PBJ. Prepared by the Kidder Mathews Research Group.

Significant Sale Transactions 2Q 2026

Phoenix Industrial Significant Sale Transactions 2Q 2026: property, submarket, SF, sale price, $/SF, buyer, seller
Property	Submarket	SF	Sale Price	$/SF	Buyer	Seller
The Hub @ 202 (10 Properties)	Chandler N/Gilbert	1,271,390	$135,000,000	$106.18	Machine Inv. Grp/Miramar Cap./Axonic Cap.	Affinius Cap., LLC/Wharton Equity Ptnrs/BDT & MSD Ptnrs
The Cubes at Mesa Gateway	Chandler N/Gilbert	1,200,000	$116,000,000	$96.67	La Costa Capital Partners, LLC	CRG
Elliot Gateway	Chandler N/Gilbert	516,944	$98,000,000	$189.58	Cohen Asset Management, Inc.	Trammell Crow Company
9175 E Pima Center Pky	Scottsdale/Salt River	316,585	$79,500,000	$251.12	Miramar Capital	MainSpring Capital Group
West Summit at Surprise	Surprise	453,960	$63,887,560	$140.73	U.S. Merchants	Mohr Capital

Significant Lease Transactions 2Q 2026

Phoenix Industrial Significant Lease Transactions 2Q 2026: property, submarket, SF, date, landlord, tenant, lease type
Property	Submarket	SF	Transaction Date	Landlord	Tenant	Lease Type
Luke Field – 13543 W Northern Ave Bldgs A & B	Glendale	1,215,396	May 2026	Lincoln Property Co.	Fluidstack	Direct
Northern Parkway Logistics – Bldg D	Glendale	1,184,591	June 2026	Merit Partners, Inc.	DHL	Direct
16811 W Commerce Dr – Blue Buffalo Goodyear	Goodyear	540,349	May 2026	LXP Industrial Trust	Blue Buffalo	Renewal
16451 W Glendale Ave	Glendale	40,027	April 2026	EQT Real Estate	Undisclosed	Direct

Significant Under Construction

Phoenix Industrial Significant Under Construction 2Q 2026
Property	Address	Submarket	SF	Owner	Delivery
Northern Parkway Logistics – Bldg D	Reems Rd & Northern Pky	Glendale	1,184,591	Merit Partners	4Q 2026
VT303 North – Bldg A	7842 N Reems Rd	Glendale	1,146,518	VanTrust Real Estate	4Q 2026
NorthPark Logistics Center – Bldg 1	W Northern Pky & 147th Dr	Glendale	1,142,071	Lovett Industrial, LLC	3Q 2027
West 101 Logistics – Bldg 1,2,3,4,5	SEC Loop 101 & Indian School Rd	Glendale	1,088,806	Trammell Crow Company	3Q 2026