Phoenix Solidifies Its National Leadership in the U.S. Industrial Real Estate Market in 2025

By Carlos Calderón | Special contribution for the Signature International Real Estate & Investment Analysis Bulletin

Phoenix, Arizona – Amid a global economic landscape marked by uncertainty, capital market volatility, and post-pandemic logistical disruptions, one city stands out as the undisputed leader in the industrial real estate segment: Phoenix. According to the latest reports from Cushman & Wakefield and CBRE, Arizona’s capital not only exceeded expectations in Q1 2025, but also doubled the industrial inventory delivered by its closest competitor, firmly establishing itself as the epicenter of logistics investment in the country.

📊 Hard data supporting the trend

In the first quarter of 2025, Phoenix delivered 8.6 million square feet of new industrial space to the market, compared to 4.3 million in Dallas-Fort Worth—historically the leading region in this segment in previous years. This figure accounts for 20.3% of all new inventory delivered nationally during the same period.

In addition, Phoenix currently has 15.7 million square feet under construction, representing 3.9% of its total industrial inventory, which is estimated at roughly 402 million sq. ft., according to data from Colliers International.

🏭 Growth fueled by logistics and manufacturing demand

Phoenix’s industrial surge is driven by multiple structural advantages:

• Strategic geographic location: Direct connectivity to Mexican border ports of entry and access to major interstate corridors (I-10, I-17, and Loop 303).

• Competitive operating costs: Average industrial rent remains at $0.91 USD/sq. ft./month, compared to $1.33 in Los Angeles or $1.21 in Denver.

• Nearshoring boom: Over 47 companies in the manufacturing and tech sectors have relocated or expanded operations in Arizona since 2022, capitalizing on supply chain reshoring from Asia to North America.

  
  

🔄 Vacancy rate and net absorption: signs of a healthy market

Despite massive increases in supply, the industrial vacancy rate remains steady at 5.7%, just 0.8 percentage points above the national average—demonstrating robust net absorption. In Q1 2025, Phoenix reported 6.1 million square feet in net absorption, a 12.6% year-over-year increase.

The most active submarkets include:

• Southwest Valley (Goodyear, Avondale, Tolleson): 3.2 million sq. ft. absorbed.

• Northwest Valley: 37% growth in industrial occupancy compared to Q1 2024.

• Mesa-Gateway: Hub for advanced manufacturing and e-commerce distribution operations.

  
  

🏗️ Major industrial developments underway

Highlighted projects include:

• Ten West Industrial Park – Buckeye: 4 million sq. ft. of Class A space, LEED Silver certified.

• Loop 303 Logistics Center – Glendale: 2.1 million sq. ft. for cross-docking; already 70% pre-leased.

• SkyBridge Arizona – Mesa: Phase 3 expansion underway, supporting U.S.-Mexico binational logistics operations through a partnership with U.S. CBP and Mexican Customs.

🔍 Institutional capital and global funds bet big on Phoenix

Institutional investor appetite has been decisive. Funds such as Prologis, Blackstone RE, Clarion Partners, and Nuveen Real Estate have invested over $2.3 billion USD in industrial acquisitions over the past 12 months. This has pushed the average CAP rate to 5.6%, still attractive compared to saturated metros.

Furthermore, REITs (Real Estate Investment Trusts) have listed Phoenix among their top five priority emerging markets for 2025–2026, overtaking traditional hubs like Chicago or New Jersey.

🌱 Innovation, sustainability, and automation: the new standard

Over 60% of all new inventory delivered since 2023 complies with ESG standards (Environmental, Social & Governance), featuring solar roofing, high-efficiency HVAC systems, rainwater harvesting, and EV charging stations for logistics fleets.

Developers have integrated smart automation solutions, including robotic picking systems, RFID-based inventory tracking, and AI-driven fleet management—making Phoenix a hub for logistics innovation.

📈 Market outlook for the remainder of 2025

Forecasts project that Phoenix will deliver over 30 million square feet of new industrial space by year-end, with an expected 87% occupancy rate at the time of delivery—a rare phenomenon that signals strong pre-existing, unmet demand.

The Governor of Arizona, in partnership with the Arizona Commerce Authority (ACA), recently announced enhanced incentives for industrial developers, including tax breaks, expedited permitting, and subsidized rail connectivity.

🎯

Phoenix is no longer just a market with potential—it is the new benchmark for industrial real estate in North America. Its unique combination of strategic location, low costs, modern infrastructure, and state support has transformed this desert city into the nerve center of a continental logistics revolution.

In an age where supply chain efficiency and sustainability define global competitiveness, Phoenix not only meets the demand—it anticipates it and leads it.