Published August 13, 2024
Phoenix still tops the nation in industrial construction
Phoenix still tops the nation in industrial construction
Phoenix continues to outrank the rest of the nation in industrial construction with nearly 40 million square feet of space underway by the end of June, according to a new CommercialSearch report.
Several massive projects were contributing to that amount and are soon set to deliver, such as Lucid Group Inc.'s electric vehicle factory expansion totaling nearly 3 million square feet and the new Ross Stores Inc. distribution center totaling 1.7 million square feet in Buckeye.
The Valley's supply of construction has remained high in part because of manufacturing projects but also because developments that were previously delayed are now getting closer to being completed.
Phoenix has five of the top 20 largest industrial projects that are expected to be delivered in the second half of 2024, including speculative developments such as the Prologis 303 business park, Goodyear Airpark and Luke Field.
The largest project under construction in the U.S. that's set to deliver in Q4 is the Hyundai electric vehicle manufacturing plant in Savannah, Georgia, expected to total 16 million square feet at buildout.
The nearly 40 million square feet of space is poised to expand Phoenix's supply by nearly 10%, the second-highest expansion compared to current supply in the U.S.
Industrial slowdown expected into 2025
A slowdown is expected to continue in industrial growth throughout the next year — compared to the start of the year, industrial construction in metro Phoenix was down 8%, CommercialSearch found.
Phoenix's total was nearly 15 million square feet more than Savannah, which had more than 26 million square feet of industrial in the pipeline and was the second highest amount. Savannah had the highest expansion of 18.8% compared to its existing stock.
Only Dallas, Austin, Kansas City, Atlanta and Chicago had more than 10 million square feet of space being built while the remaining top markets for construction had less than 10 million square feet.
By the end of June, about 375.7 million square feet of industrial space was under construction across the country, which will increase the nation's supply by nearly 2% once completed.
This is a big dip from the start of the year, which saw 463 million square feet of space underway, or a 45% drop from January to June.
The Phoenix industrial market has also normalized with a slowdown in construction starts this year but is expected to pick up again once the new supply of buildings starts to get leased up.
Build-to-suit developments for companies are also going to drive growth in the Valley as speculative space continues to slowdown.
Final Thoughts:
Phoenix remains a powerhouse in industrial construction, leading the nation with nearly 40 million square feet of space under development. While the pace of new projects has slowed, the Valley's strong pipeline of manufacturing and distribution centers, like Lucid's factory expansion and the new Ross Stores facility, continues to drive growth. As the market adjusts and current projects near completion, Phoenix is poised to see a resurgence in demand, solidifying its position as a key hub for industrial development. For businesses looking to expand, Phoenix offers a robust infrastructure ready to meet future needs.
