Phoenix’s Industrial Market Sees Slower Deliveries, Strong Starts

August 14, 2025

Market Updates Development In Focus Industrial More Investment Phoenix West

The metro's industrial development continues to outpace national trends, according to Yardi Research Data.

Phase 1 of Mesa Gateway 202 calls for nine buildings to be constructed on 123 acres of the site with about 1.8 million square feet of industrial space and approximately 100,000 square feet of office space. The industrial buildings range in size from 72,796 to 557,650 square feet. *Image courtesy of Ware Malcomb*

Phoenix’s industrial market continued to post solid performance, supported by sustained construction activity, high-value transactions and resilient tenant demand.

The metro recorded nearly $932 million in industrial sales year-to-date through May, with an average price of $198.30 per square foot—ranking among the highest in the nation.

Development remained active, with 6.6 million square feet breaking ground, accounting for 1.5 percent of total inventory and significantly outpacing the national average of 0.4 percent.

Although completions declined sharply compared to the same period last year, overall market fundamentals remained solid, driven by investor interest and steady leasing.

Development accelerates, outpaces national average

Industrial development in the West remained largely concentrated in Phoenix, which led the region with 17.7 million square feet of industrial space underway in May. Phoenix’s 90 under-construction projects accounted for 4.1 percent of the metro’s total inventory, much higher than the 1.7 percent U.S. index.

The pipeline more than doubled compared to the same period last year, when almost 7.3 million square feet of industrial space was under construction across 25 properties.

LG Energy Solution’s $5.5 billion development in Queen Creek, Ariz., represents the largest-ever single investment for a stand-alone battery manufacturing facility in North America. *Image courtesy of the Town of Queen Creek*

By the end of May, nearly 6.6 million square feet of industrial space had broken ground across 37 properties in the metro area—representing 1.5 percent of the total inventory, significantly outpacing the national average of 0.4 percent.

LG Energy Solution and U.S. Realty Advisors are currently developing LG Plant, a 1.4 million-square-foot plant to produce cylindrical EV batteries. This represents one of the largest-ever single investments for a stand-alone battery manufacturing facility in North America.

Upon completion, the LG Plant is set to include two separate facilities, with the company expecting to invest $3.2 billion in the EV battery plant and $2.3 billion to construct the ESS battery facility.

Completions slow down year-over-year, but major deliveries continue

Phoenix’s industrial completions at the end of May totaled 10.5 million square feet from the 46 developments that came online, according to Yardi Research Data. This marks a considerable decline year-over-year, when 95 projects spanning 18 million square feet were delivered.

Phoenix remained in the spotlight, followed by Kansas City (8.7 million square feet) and Chicago (4.3 million square feet). Indianapolis (752,500 square feet) was at the opposite pole.

The new manufacturing facility represents Nestlé USA’s 20th food and beverage factory. The factory recycles and repurposes as much as 75 percent of its treated water using advanced management tools. It also uses renewable electricity to reduce carbon emissions and is zero waste for disposal. Image courtesy of Nestlé

Scannell Properties has delivered Building 3 of Mesa Gateway 202, a nearly 2 million-square-foot industrial and office park near the Phoenix-Mesa Gateway Airport. Spread on 166 acres, the development also features build-to-suit properties and retail space.

Nestle USA has also recently opened its new beverage factory and distribution center in Glendale, Ariz., a 630,000-square-foot facility. The company broke ground on the $675 million project back in 2022. Located at 8351 N. 150th Ave., the 139-acre property represents Nestle USA’s 20th food and beverage factory.

Industrial sales strong, with pricing outpacing most markets

Phoenix’s industrial sales volume reached $932.2 million year-to-date through May, with almost 5.7 million square feet of industrial space sold across 71 facilities. The metro’s sale price reached $198.30 per square foot.

Only New Jersey ($251.37 per square foot) and Inland Empire ($247.89 per square foot) recorded higher numbers, while metros like Chicago ($93.36 per square foot) and Kansas City ($69.13 per square foot) were at the lower end of the spectrum.

Riverside @ 51 is a 336,038-square-foot facility in Phoenix. — Riverside @ 51 is some 14 miles from Canal Crossing. The facility last changed hands in 2018, when Bixby paid $27.2 million to Pacifica Real Estate Group. Image courtesy of Cushman & Wakefield

This April, BKM Capital Partners acquired a three-property portfolio totaling 778,000 square feet in metro Phoenix for $156.8 million. The properties included in the portfolio are Kyrene CommercePlex, Estrella Business Park II and Hohokam Industrial Park.

Link Logistics purchased Riverside @ 51, a 336,038-square-foot warehouse featuring 99 dock-high doors, six drive-in doors, 30-foot clear heights and a 135-foot truck court. Completed in 2007, the distribution center is at 2300 S. 51st Ave. in the Southwest Valley submarket.

Vacancy holds steady

Phoenix’s industrial vacancy rate at the end of April was 7.4 percent. The metro’s average in-place rent during the same month was $9.42, Yardi Research Data shows.

Exterior rendering of Caliber by Greystar in Peoria, Ariz. — Caliber by Greystar is the industrial component of an 88-acre mixed-use development. *Image courtesy of Greystar*

Gateway Classic Cars has signed to become Greystar’s first tenant at the Class A three-building Caliber by Greystar industrial development in Peoria, Ariz. Reportedly the world’s largest classic car sales company, the tenant will occupy 43,809 square feet in Caliber’s 122,863-square-foot Building B.

Caliber represents the industrial component of Greystar’s $500 million, 88-acre Peoria Place master-planned development. At full build-out, the mixed-use property will include luxury apartments, build-for-rent homes and ground-floor retail in Peoria’s historic downtown.