According to a new report from CBRE, third-party logistics (3PL) providers leased the most big-box warehouse space in Phoenix, accounting for 32.6% of all transactions. 

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Phoenix is still considered a top big-box growth market. Down from 14.3% in 2022, Phoenix fell second to Savannah (12.9%) with a 6% growth rate in 2023.

Around 23 million sq. ft. of space is currently under construction, with only 26.4% preleased. Phoenix has the second-highest construction activity in North America, which is expected to further increase vacancies in 2024. 

National Trends

Nationally, retailers and wholesalers dethroned third-party logistics providers with 36% of all transactions. In addition to retailers and wholesalers, fashion and apparel fulfillment, automobiles, tires & parts and building materials and construction also saw an increase in share of leasing activity, which overall fell 15.8% in 2023.

Industrial construction activity peaked in 2023, with a record 413 million sq. ft. delivered to the market, causing a doubling of the vacancy rate to 6.6%. However, construction in progress dropped to 208.4 million sq. ft. by year end, half of the previous year’s total. 

CBRE forecasts a 5% increase in big-box leasing volume in 2024 as current market conditions are favorable to tenants. This indicates a potential rebound in demand, as the market strives to catch up with the robust deliveries of newly constructed industrial spaces.

“There was naturally going to be a period of cooling in big-box leasing, which had reached unsustainable levels in recent years, due to e-commerce demand and companies electing to warehouse to more inventory,” said John Morris, CBRE’s President of Americas Industrial & Logistics. “This cooling represents a move toward stabilization, and we expect a modest increase in lease transaction volume this year as the market settles.”

CBRE analyzed “big-box” warehouses of 200,000 sq. ft. and larger because warehouses of that size are crucial for extensive national and international product distribution. Encompassing the United States, Mexico and Canada, the big-box report found that industrial facilities had higher taking rents than in years past. Rent growth remained robust at 15.9%, but down from 25.1% in 2022.

Of the leasing activity that took place, demand was driven primarily by a desire to boost supply chain resilience, increase access to growing population centers, modernize space to accommodate increased automation and support continued e-commerce growth.

North America’s Top 25 Core Markets

CBRE’s report examined 25 big-box markets in North America. The top 10 markets in North America, ranked by square feet leased, were: