On May 14, Marcus & Millichap published its 2026 U.S. Industrial Investment Midyear Outlook. The report details how the Phoenix market remains one of the highest-ranked industrial markets nationally in 2026 as the region’s business-friendly environment and strategic Southwest location continue attracting users across manufacturing, e-commerce and distribution operations.
AZ Big Media sat down with Ryan Sarbinoff, senior managing director and market leader for Marcus & Millichap, to learn why the Phoenix industrial market earned the No. 7 spot on the firm’s National Industrial Property Index.
The following responses have been edited for clarity and length.
AZ Big Media: The outlook notes that the Phoenix market is no longer defined by velocity along, but by balance. What’s the evidence for this?
Ryan Sarbinoff: If we look at the volume of industrial properties completed recently, there was 30 million square feet delivered in 2023 and 36.5 million in 2024. That caused an over building situation where demand wasn’t keeping up, so the vacancy rate crept up to around 13.5% in 2024. Now that deliveries have slowed significantly, we’re going to see vacancies continue to drop as all that space gets absorbed.
ABM: Is it safe to say the Phoenix industrial market is still recovering from the construction boom earlier in the decade?
RS: I’ll argue that we’ve actually turned the corner and are in the early stages of the next cycle. Keep in mind that real estate is reactive in nature, making it impossible to pinpoint exactly when everything started looking up in real time. That said, I’ll try for our edification.
So far in 2026, we’ve had 6 million square feet of space come onto the market while absorbing 11.3 million square feet. That means the vacancy rate has decreased nearly 200 basis points. But perhaps even more importantly, rents are going up and exceeding the peak levels from 2023. That’s a major indicator that demand and supply are closer to balance.
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ABM: The report mentions that both construction starts and deliveries have slowed, giving the demand side a chance to catch up. Are these the main reasons you feel optimistic about the market’s outlook?
RS: That’s part of it, but Phoenix’s industrial market has found balance because the user base is broadening, much like what’s happening in the region’s overall economy. Over the last four years, demand has increased 20% — far higher than the 5% average for the U.S. overall.
Because of that diversification, we’ll have fewer bust cycles than we have historically. Just look at the growing advanced manufacturing sector anchored by TSMC. The reshoring and near-shoring of supply chains continues to direct industrial activity to the Sun Belt. I still think there potential to siphon more and more business from the Inland Empire
When you look at the investment, new development and companies coming to Phoenix, we’re in a great position.
Read the full report here.
