1st Qtr. 2026 Phoenix Industrial Report

The first quarter of 2026 was strong for leasing and industrial sales. Almost half (1.66 million sf) of the square footage was leased to DHL in two buildings, possibly as a third-party logistics provider. The top 10 leases total about 3.6 million sq. ft, 9 leases are in the 100,000 sq. ft.+ size range. Most leases were in buildings in the far west, 303, or east near Mesa Gateway airport.

DHL 1,032,079 sf Dvele 220,375

DHL 629,833 Fullscript 171,862

LG Energy 597,297 Camfill 126,000

Flooring 345,000 Cerris 124,594

Kenco 289,000 DPR Construction 87,560

Industrial sales show three large industrial buildings and 2 large land transactions. TSMC purchased 900 acres to expand its campus. Mack Development sold 51 acres to a developer. The 3 industrial building sales were to developers or investors.

Industrial Sales:

TSMC land sale : 902 acres $197,250,000 or $5.02 psf

Investment Building: 663,3670 sf $104,550,000 or $157.60 psf

Investment building: 915,160 sf $104,000,000 or $113.64 psf

Tenant in place

Investment: 662,804 sf $94,125,000 or $142.01 psf

Multi-tenant, midsized bays.

Industrial land sale 51 acres $59,924,000 or $26.97 psf

Other trends:

-Asking lease rates have stayed steady; possibly, these higher lease rates are now baked into the market. Higher lease rates provide several months of free rent.

Brokers want to get their vacant space on the show list. If the property is not on the list, it's difficult to lease the space.

-Looks like the new million sq. ft. buildings have all been leased. A year ago, there were 8 buildings, all of which have now been leased. A few 800-900,000 sf buildings have come online, so still a few large buildings on the market.

-Tenants are looking to reduce their lease rate. Buildings with higher rates or NNN charges are searching the market for lower-priced space. A recent 15,000 sf tenant leased the same-sized space at a lower-cost building. In years past, that tenant would stay because warehouse space was so difficult to find. For some building owners, available tenants are thin, meaning that if you don't lease to that one tenant, your building may be vacant for a while.

- IOS, Industrial Outside Storage properties are still in strong demand for purchase. Some properties are selling before the existing tenant moves out.

Many IOS leased properties with longer-term leases are not worth as much as empty ones. The new buyer/owner can get a premium lease rate for the empty property.

Below are the quarterly totals for industrial space coming on the market.

Costar reports on properties new to the market. I track buildings over 18,000 sq. ft. in three categories: Sublease Space, New Construction, and Existing Space.

8.5 million sq. ft. of available industrial space was added to the market in Q1. New construction numbers continue to drop, less than a million sq. ft. Another wave of buildings is under construction and due for completion in the 3rd and 4th quarters of 2026. Over 6.3 million sq. ft. of existing space has come to market, more than all three categories in the 4th quarter of 2025. Businesses are giving up more warehouse space. Lower sublease space was put on the market in Q1, 1.4 million sf , compared to the fourth quarter '25.

Costar

Industrial Space New to Market:

1st Quarter 2026 Totals:

Exiting Space: 6,303,000 sq. ft.

Sublease space: 1,415,000 sq. ft.

Newly Constructed Space: 879,000 sq. ft.

Total Space on the market: 8,597,000 sq. ft.