Phoenix’s Industrial Market Still a Standout

Phoenix’s industrial market closed 2025 with one of the country’s most active development pipelines, supported by continued deliveries and strong investment volume.

Construction activity remained well above national averages, with the metro ranking near the top of its peer set for both pipeline and completions. Investment activity also stood out, with Phoenix posting the highest pricing among major industrial markets. Early 2026 figures pointed to continued sales momentum, while vacancy trended above the U.S. average, according to Yardi Matrix.

Development pipeline remains elevated

By year-end 2025, Phoenix recorded almost 17.7 million square feet of industrial space under construction. A total of 100 facilities were under development, accounting for 4 percent of total stock, much higher than the 1.7 national average. Dallas (28.7 million square feet) was the only gateway market with a larger pipeline than Phoenix, while Indianapolis (6.4 million square feet), Philadelphia (4.7 million square feet) and Kansas City (3.5 million square feet) lagged behind.

Developers broke ground on 13.7 million square feet of industrial space through year-end, spread across 99 facilities, according to Yardi Matrix data.

One of the largest projects underway is Seoul-based LG Energy Solution’s $5.5 billion battery manufacturing complex in Queen Creek, Ariz., the largest-ever single investment for a stand-alone battery manufacturing facility in North America. The development includes two manufacturing facilities valued at $3.2 billion and $2.3 billion, respectively—one for cylindrical batteries for electric vehicles and the other for lithium iron phosphate pouch-type batteries for energy storage systems.

In November, ViaWest Group and Barings obtained $107 million in construction financing for ReDiscover Logistics Park, an 808,448-square-foot industrial project in Phoenix. Located at 2402 W. Beardsley Road in the Deer Valley submarket, the development will include four buildings ranging from 189,280 to 212,000 square feet, featuring 32- to 36-foot clear heights.

Deliveries keep Phoenix near the top of its peer group

In 2025, 97 projects totaling almost 18 million square feet delivered in Phoenix, accounting for 4 percent of the metro’s total inventory. Within the peer group, Phoenix ranked second for industrial deliveries, followed by Chicago (12 million square feet), Atlanta (9.5 million square feet) and Indianapolis (6.9 million square feet). Chicago ranked first with 28.7 million square feet.

The metro’s largest delivery of the year was the first phase of Park Algodon. A joint venture of Creation and Clarion Partners developed the $250 million industrial and mixed-use campus in Phoenix. The first phase of the infill project includes four buildings totaling 766,000 square feet, while the campus is set to total about 1.3 million square feet upon completion.

CapRock Partners also completed the second and final phase of CapRock West 202 Logistics in Phoenix. The 3.4 million-square-foot project is the largest speculative industrial campus in the Valley.

Investment volume tops $4 billion as pricing leads gateway markets

Phoenix’s industrial investment volume exceeded $4 billion in 2025, outperforming gateway markets such as Chicago ($4 billion) and Atlanta ($2.5 billion). Assets traded at an average of $174.75 per square foot, the highest among gateway markets. Atlanta ($131.06 per square foot) and Philadelphia ($128.31 per square foot) posted similar pricing, while Chicago ($90.19 per square foot) and Kansas City ($84.88 per square foot) recorded the lowest.

Phoenix’s industrial investment volume in the first month of this year reached $234 million, with 18 facilities totaling 1.5 million square feet exchanging hands. The metro recorded the highest sales among peer markets as of the end of January, with pricing averaging $150.85 per square foot.

More recently, Electric Research and Manufacturing Cooperative Inc. acquired an industrial property in Waddell, Ariz., for $91 million from Invesco Real Estate. The company will occupy the more than 550,000-square-foot facility, marking its first expansion west of the Mississippi River.

Vacancy rises above U.S. average

Phoenix’s industrial vacancy rate stood at 11 percent at the end of January, above the 9.8 percent U.S. average, according to Yardi Matrix. Chicago posted a 12.5 percent vacancy rate, while Dallas stood at 11.4 percent. Philadelphia registered 8.9 percent, Indianapolis 8.6 percent and Atlanta 8.4 percent. Kansas City recorded the lowest vacancy rate at 5 percent.