Total Phoenix industrial sales volume hit $1.8 billion in 2018, nearly double the sales volume achieved in 2017 for local owner-user and investment flex and industrial product above 10,000 square feet, according to JLL’s Q4 Phoenix Industrial Market Report. The West Valley accounts for the majority of these sales, with the Southwest Valley alone amassing almost $698 million in sales volume across 89 transactions.
“E-commerce has disrupted sectors across commercial real estate, and the West Valley is the de-facto home for local e-commerce distribution center construction and investment,” said JLL Senior Vice President Peter Bauman. “This has placed the limelight on industrial real estate in Phoenix, solidifying it as a product type that is not only here to stay but that has tremendous value for investors.”
Bauman is seeing many institutions actively repositioning their portfolio from office and retail properties into industrial assets, and continues to see new foreign capital investors purchasing industrial properties.
According to JLL, more than a quarter of all transactions in the last five years took place in 2018, representing 482 transactions. Within this activity, the average building size remained roughly the same but prices have increased significantly, with price-per-square-foot up 14.52 percent year-over-year (up 17.05 percent over five years). The average sale price is also up 36.7 percent year-over-year (up 22.7 percent over five years).
“There is a very strong demand to place capital in Phoenix industrial product, and particularly the Southwest Valley where costs are lower, opportunity is high and there exists the highway infrastructure and workforce needed to keep large industrial operations functional,” said Bauman.
The largest Phoenix industrial deal of 2018 was Buckeye Logistics Center, a 1,009,351-square-foot distribution center that sold for $98.32 million ($97.41 per-square-foot). The most expensive deal of the year was a 910,250-square-foot Albertson’s Distribution Center in a sale-leaseback, trading for $116.12 million ($127.58 per-square-foot).
To access JLL research for Phoenix and across the U.S., visit the company’s research page at https://www.us.jll.com/en/trends-and-insights#research.