The Phoenix industrial market continued to improve during the third quarter of 2026, supported by strong tenant demand, moderating construction activity, and a continued decline in vacancy. Over the past 12 months, the market recorded approximately 22.3 million square feet of net absorption compared with 15.6 million square feet of new deliveries, helping vacancy fall from 12.3% a year ago to 10.5%. Leasing activity remained active throughout the Valley, driven by logistics, advanced manufacturing, semiconductor-related, and data center users. Demand continues to favor newer facilities with modern clear heights, strong power capacity, and efficient loading, while smaller industrial and infill properties remain comparatively resilient due to limited new construction. Market conditions continue to vary by size segment. Larger mega-warehouse properties have seen strong demand, with vacancy among logistics buildings over 500,000 square feet falling below 5%, while the greatest competitive pressure remains concentrated in the 100,000- to 500,000-square-foot range where recent speculative development has added significant supply. Rent growth has moderated from the elevated pace of recent years but remains positive, with asking rents increasing 3.6% over the past 12 months. Phoenix continues to outperform the broader U.S. industrial market, while smaller and well-located properties maintain stronger pricing fundamentals than more competitive bulk distribution space. Looking ahead, the outlook remains encouraging as the market continues to work toward greater balance. New deliveries have slowed significantly from the record levels seen in 2023 and 2024, and annual completions are expected to remain below 15 million square feet in the coming years. With demand continuing to absorb existing inventory, market fundamentals are positioned for continued stabilization and gradual improvement heading into 2027.