Phoenix’s industrial market had an exceptional final quarter in 2015, according to a Lee & Associates report.
The improving economy, including consumer confidence, a rising home market and lower unemployment, have fueled the industrial sector’s healthy year, the report stated.
Construction activity remains at a healthy clip and a strong pipeline remains in place. This was the fourth highest quarterly absorption since 1999 with the vacancy rate at its lowest point it’s been since 2007.
Asking lease rates are up 3.8 percent since the first quarter and it’s the strongest year for inventory deliveries since 2008.
The overall vacancy settled at 11 percent, dropping 80-basis points from the third quarter. The Southwest and Northwest Valley’s had the highest vacancy decrease of the five submarket clusters.
Net absorption for the quarter posted at 3,100,698 square-feet. The Northwest Valley led all others in net absorption for the fourth quarter. But the Southwest Valley posted the highest absorption for 2015 with 2,685,976 square-feet.
Asking rental rates increased to $0.54 per square-foot, per month, a 1.9 percent overall increase compared with no increase in the third quarter.
The Sky Harbor submarket cluster brought in the highest overall rental rates of 4.6 percent. Construction activity remained strong this quarter with 3,454,071 square-feet, nearly besting last quarter.
Deliveries were modest this quarter at 657,834 square-feet. Next quarter, many projects are scheduled for completion and deliveries will be significantly higher.
In the largest new lease signed for the quarter, Daikin Applied took 57,000 square-feet of manufacturing space at Phoenix 51st Avenue Industrial Park, 4940 W. Lower Buckeye Rd., Phoenix.
In the largest sales transaction in the fourth quarter, Hawaii-based Watumull Enterprises, Ltd. purchased the Shutterfly building at Discovery Business Campus, 7195 S. Shutterfly Dr., Tempe for $43,100,000 or $181.86, per square-foot. The building was completed in 2015 and was part of a 1031 exchange. The cap rate was posted at 6.6 percent.