UNPRECEDENTED DEMAND PUTS INDUSTRIAL MARKET ON RECORD BREAKING PACE

The Phoenix Industrial Market continued to see record demand, net absorption and construction through the first half of the year. Net absorption totaled 11,190,264 square feet at the midway point and is on pace to break
last years record of 14,168,380 square feet. Phoenix saw its 45th consecutive quarter of positive net absorption, lowering the vacancy to a near record 6.2%.

Lease rate increased to $0.69/SF NNN in Q2 2021 from $0.67/SF NNN in Q1 2021, pushing the Metro Phoenix Market to its highest overall asking lease rate.

Phoenix continued to rank in the top five in the US for new construction.
At the end of Q2 Metro Phoenix had 21,997,529 SF under construction, comprised of 100 new buildings. Of those, 28% are built-to-suit, pre- leased or owner occupied. In Q2 2021, only 12 buildings totaling 2,298,032 SF delivered to the market, of those deliveries 92% were pre-leased or built to suit.

The second quarter saw a record number of 1M SF projects break ground, the largest being The Cubes 5M SF project that will be built in phases in Glendale. It will be the first development for CRG in Arizona.

During the second quarter 2021, 204 sales transactions were completed compared to 133 from Q2 2020. Sales volume was up significantly to $641M from $371M in Q2 2020. The average price per foot was $124.22/SF, a slight drop from Q1 2021. The largest sale of the quarter was JLL Income Property Trusts acquisition of the Lotus Project in Chandler. The four building development with excess land sold for $91M. The second largest sale of the quarter was the five building,Tempe Commerce Park.

The Phoenix Industrial Market continues to stamp itself as a diverse market with a wide variety of new users coming to the Valley as big name tenants like Microsoft, Amazon, MLILY, and Wal-Mart continue to increase their valley footprint. Arizona finished first place for net migration for the third consecutive year as market fundamentals continue to draw users from outside the market. Housing, job growth, innovation and low cost of doing business have Phoenix’s future shining bright.