The Phoenix industrial market is beginning to stabilize, though near-term conditions remain somewhat uncertain. The supply-driven rise in vacancy that weighed on performance through 2023 has leveled o as a slowing pace of new deliveries aligns more closely with steady tenant demand. Even so, elevated construction volumes from prior years continue to keep vacancy high and rent growth muted. While demand has cooled from the rapid pace seen in 2021 and 2022, leasing activity picked up modestly over the past year. Logistics, retail, and advanced manufacturing users drove 14.3 million SF of net absorption over the last 12 months, much of it concentrated in newly delivered facilities. However, absorption has not yet kept pace with deliveries, pushing vacancy from 4.2% in mid-2022 to 12.8% today. New supply has been heavily concentrated in large-format buildings, leading to elevated vacancy among properties over 100,000 SF, where rates have climbed to roughly 16%. Small bay product has remained more resilient, with vacancy in the low-5% range, though availability is gradually increasing. Increased competition from new construction has slowed rent growth, with average asking rents rising 3.2% over the past year. Near-term growth is expected to remain modest, particularly for large, suburban assets, while infill and small bay properties should retain stronger pricing power. With more than 18 million SF under construction, vacancy is likely to stay elevated in the near term. Looking ahead, a continued slowdown in deliveries should allow vacancy to trend lower through 2026, supporting improved fundamentals and a gradual reacceleration in rent growth. Source: CoStar Group, www.costar.com, Phoenix - AZ USA-Industrial-Market-2026-01-10