The Phoenix industrial market started the year off strong, as robust leasing activity caused the Metro-wide vacancy rate to compress from 4.9 percent at the end of 2022 to 4.4 percent in Q1 2023. New deliveries will moderately outpace space demand, causing vacancies to drift higher. This could bring Phoenix back into alignment with where it was entering the pandemic as the market enters a normalization period. The area’s broad range of demand drivers provides a powerful long-term tailwind for the industrial market. Not only has Phoenix established itself as a prominent link in national supply chains, but it also has tremendous momentum in terms of manufacturing. These industries underpin the record 26.1 million square feet of net industrial space that was absorbed over the past 12 months.