Metro Phoenix recorded a whopping 9.8 million total square feet of industrial absorption in 2017. This is the largest annual net absorption gain in Phoenix history. The total also marked the fourth consecutive year of annual net absorption in Phoenix, totaling 6.0 million square feet or more, which has not been seen since 2004-2007. The previous peak of nearly 7.9 million square feet in 2005 fell in the middle of one of the largest expansionary periods recorded in Phoenix.
Sustained economic and population growth, as well as the overall affordability and accessibility to the metro area, continues to attract users. Unlike previous cycles, which relied heavily on the homebuilding industry, demand—and risk—is now spread across a diverse range of growing sectors.
With vacancy continuing to decline, absorption outpacing construction and rate growth holding steady, there haven’t been any signs of a slowdown. So just how good will 2018 be? All members of our industrial team have made their predictions.
Managing Director Bill Honsaker thinks we’ll slightly outperform 2017. “All economic indicators are positive for 2018, “said Honsaker. “Based on current and planned inventory, I expect absorption to somewhat exceed the 2017 total.”
Managing Director Anthony J. Lydon thinsk we’ll significantly outperform 2017. “Users of industrial space continue to grow their building footprints and capital improvements for their selected solutions,” said Lydon.
Senior Vice President Rick Collins is playing it safe, predicting the market will perform well, but just shy of 2017. “While recent tax cuts and decreased regulation on corporate America will continue to stimulate the economy, I think the current geopolitical landscape will temper our overall absorption numbers,” said Collins. “I am not expecting 2018 to be extraordinary, but I think it will still be great!”
To learn more about the office market in Metro Phoenix, download our Q4 2017 Industrial Insight report.
About the author
Kiana Cox is a senior research analyst in the JLL Phoenix office who works closely with brokerage and support professionals throughout the western region, as well as colleagues throughout the global JLL organization, to provide best-in-class research that differentiates JLL.