Why is Phoenix the No. 1 Industrial Market?

Phoenix continues to rank at the top of lists as one of the hottest markets in the country. Earlier this year, it was named the #1 industrial market. So, why does Phoenix keep ranking this high? We decided to dig into it.

According to CommercialCafe, during the first quarter of 2025, construction activity remained subdued due to persistent oversupply. However, rents rose in 29 out of the 30 major markets analyzed. The industrial real estate sector continues to demonstrate stability, though forthcoming changes in global logistics and manufacturing policies may present new challenges. Notably, Phoenix emerged as the top-performing industrial market in Q1 2025. There are a number of reasons why Phoenix is so popular, which Colliers outlined in its 2025 Q1 Greater Phoenix Industrial Market Report:

• Phoenix’s proximity to major markets like California, Texas and Mexico, as well as access to key transportation corridors without high costs or regulatory hurdles
• The city’s heavy investment in infrastructure like highways, rail, and air freight capabilities
• A pro-business climate with relatively low taxes, fewer regulations and incentives for industrial development
• Strong demand and investment, especially for newer and smaller spaces
• Major corporate investments from companies like TSMC and Mayo Clinic in advanced manufacturing and biotech
• A growing, educated workforce that is looking for more affordable living and operating costs

In an effort to capture the current trajectory of this sector, the country’s top industrial markets were analyzed and ranked based on key indicators — vacancy rates, development pipelines, rental trends, and loan maturities — using commercial real estate data and research from CommercialEdge and Yardi Matrix, as well as analysis of Google search trends. Here are some of the key highlights:

• Phoenix scored the highest with a total of 67.5 points, still being boosted by its solid ongoing construction compared to other markets.
• In Q1, the Phoenix market delivered 8.6 million square feet of space – more than double the amount delivered in second-place Dallas-Fort Worth. This resulted in a 2.2% expansion of industrial inventory in Phoenix.
• Phoenix has 15,748,674 square feet of industrial space — or 3.9% of inventory —  currently under construction
• The average sale price per square foot saw the 5th-highest increase of industrial real estate compared to last year’s first quarter with a $12 increase.
• The Phoenix area saw the average monthly search volume for industrial real estate keywords at a state level increasing by roughly 7% over 12 months.

Phoenix’s strong performance in Q1 2025 highlights its growing role as a national leader in industrial real estate. With record-setting space deliveries, a robust construction pipeline, rising property values, and increasing online interest, the city is well-positioned for continued growth and long-term success in the evolving industrial landscape.