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Phoenix Industrial Market Goes South

PHOENIX-The region's industrial market is playing follow the leader with the nation's economy in a downturn that only caution can correct. The latest Cushman & Wakefield of Arizona report records 1.9 million sf and cautions about too much too supply.

By D.J. Burrough | Updated on August 16, 2001

PHOENIX-Local real estate experts say the industrial market is faring OK despite record negative absorption of 1.9 million sf in the first half of the year. And, the times could get tougher if construction isn’t held in check.

At the second quarter end, the overall vacancy of industrial buildings increased to 8.1%, up 0.5% from Q1′s 7.6%. Although the vacancy rate went up, it’s a positive indication of the resiliency of the Valley’s industrial market, Rob Stephens, director in the Industrial Properties Division of Cushman & Wakefield of Arizona Inc., tells GlobeSt.com. “This is a healthy vacancy figure when you consider we’ve lost 1.9 million sf of absorption year-to-date,” he says. “Our market remains strong when compared to other US cities, but continued negative absorption combined with on-going construction could lead us to significantly higher vacancies in the near future.”

The 1.9 million sf of negative net absorption figure is somewhat misleading. “Revlon’s move from the Southwest Phoenix submarket comprised 880,000 sf of our overall negative net absorption,” he says. “When you combine that figure with Motorola’s downsizing in North Tempe, the negative impact is significant. That type of large tenant movement is not anticipated to continue during the remainder of 2001.”

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