Cushman & Wakefield (real estate services company) recently released their industrial report for the third quarter. The report states that the Metro Phoenix industrial market showed impressive strength during the third quarter of 2016. It was able to record a 9.3% vacancy rate!
Through Metro Phoenix remained strong, the report showed that a decrease in vacancy was seen in Southwest Phoenix. It finished the third quarter of 2016 at 12.6%. This decrease is said to be due to Ozburn-Hessey Logistics (OHL) playing a huge role. Approximately 295,695 square feet of Phase 1 at 10 West Logistics Center was leased by OHL. Furthermore, Western Window Systems leased 169,685 SF at Airport I-10 Business Park which played a role in the decrease in vacancy rate.
The greatest net gain was seen by distribution space, out of all the products types. It was able to post about 1.3 million square feet with regards to a positive net absorption for the third quarter. This was also the seventh time that distribution space was able to come at the top of the charts. In second place was general industrial. It showed occupancy growth of 380,000 SF for the 3rd quarter of 2016.
Metro Phoenix was led in absorption of about 1.2 million square feet of occupancy growth by Southwest Phoenix. This reduced vacancy to 12.6% in the 3rd quarter from the 13.4% that was recorded during the 2nd quarter. The Rapid Deployment Center in Tolleson was also purchased by Cohen Asset Management in the 3rd quarter. This totaled 466,418 square feet for a value of $48 million.
The industrial inventory of Metro Phoenix also experienced an addition of 1.5 million square feet of new product. More than 1.0 MSF of which were in the form of BTS projects or came preleased online. A total of 20 new projects, industrial products that are currently under construction, are being tracked by Cushman & Wakefield. About 1.1 MSF of them are expected to reach completion by the end of 2016’s fourth quarter. The rest are said to reach completion during the first quarter of 2017.
Additionally, the direct average asking rage of Metro Phoenix is experiencing a climb. The current climb rate is said to be $0.56/sq-ft. This rate is on a monthly triple net basis. The greatest increase with regards to direct average asking per year was seen by the East Mesa submarket. It jumped from 2015’s $0.15/sq-ft to $0.73/sq-f in 2016.
