|
Metro Phoenix Industrial Market
1Q09 |
|
By Submarket |
 |
Total SF |
Vacant % |
Net Absorbtion SF 1Q09 |
|
(All Types) |
Under Construction |
|
Net Absorbtion SF YTD |
|
|
|
Black Canyon |
|
4,766,773 |
10.2 |
27,788 |
|
0 |
|
27,788 |
|
|
|
Central Phoenix |
|
2,792,831 |
9.1 |
(5,179) |
|
0 |
|
(5,179) |
|
|
|
Chandler |
|
19,399,865 |
13.7 |
290,046 |
|
70,000 |
|
290,046 |
|
|
|
Deer Valley |
|
13,225,446 |
10.6 |
(153,295) |
|
68,569 |
|
(153,295) |
|
|
|
East Mesa |
|
3,951,277 |
26.1 |
(16,307) |
|
67,827 |
|
(16,307) |
|
|
|
Mesa/Gilbert |
|
5,162,593 |
13.3 |
(122,065) |
|
0 |
|
(122,065) |
|
|
|
Glendale |
|
2,633,157 |
51.6 |
(25,958) |
|
0 |
|
(25,958) |
|
|
|
Grand Avenue |
|
20,111,497 |
8.3 |
(351,788) |
|
0 |
|
(351,788) |
|
|
|
North Glendale |
|
2,860,094 |
37.8 |
(23,304) |
|
86,696 |
|
(23,304) |
|
|
|
Pinal |
|
3,596,114 |
11.9 |
0 |
|
0 |
|
0 |
|
|
|
Scottsdale |
|
4,543,248 |
12.0 |
(197,276) |
|
0 |
|
(197,276) |
|
|
|
Scottsdale Airpark |
|
7,455,957 |
14.9 |
(149,915) |
|
0 |
|
(149,915) |
|
|
|
Sky Harbor |
|
44,560,087 |
10.6 |
(698,708) |
|
0 |
|
(698,708) |
|
|
|
Southwest |
|
58,217,415 |
20.8 |
288,986 |
|
1,267,110 |
|
288,986 |
|
|
|
Tempe |
|
41,267,460 |
10.3 |
(76,489) |
|
0 |
|
(76,489) |
|
|
|
West Central |
|
27,598,881 |
7.7 |
(321,379 |
|
0 |
|
(321,379 |
|
|
|
West Mesa |
|
7,410,441 |
21.3 |
(220,893) |
|
0 |
|
(220,893) |
|
|
|
Total |
|
269,553,136 |
13.9 |
(1,755,736) |
|
1,560,202 |
|
(1,755,736) |
|
|
|
Vacancy - The vacancy rate continues to exceed normal levels at the end of the first quarter of 2009, primarily due to overbuilding. The current overall rate of 13.9 percent is approaching the highest recorded rate of 14.6 percent, set in 1993. 14 out of 17 submarkets showed double digit vacancy rates. The lowest occurred in the West Central and Grand Avenue Submarkets, with 7.7 and 8.3 percent respectively. Scottsdale had the biggest change jumping from 7.9 to 12.0 percent. The greatest change in type of vacancy occurred in the incubator property type, which increased 180 basis points.
Absorption - The current quarter negative net absorption is nearly equal to the entire year of 2008. The submarkets that showed the highest absorption totals were Chandler with 290,046 square feet and Southwest with 288,986 square feet. Grand Avenue and Sky Harbor lost the most space in the first quarter of 2009. Of the seventeen Industrial Submarkets, thirteen have experienced a net loss of space in the first quarter of 2009.
Construction - The recent construction boom and new existing buildings seem to be fairing well when compared to older buildings as the vast majority of the new leasing activity occurred in buildings aged 2000 and newer.
Rental Rates - Monthly asking rental rates have dropped considerably from $0.66 to $0.59 over the past 4 quarters. These rates will continue to fall due to the abundance of inventory and near record vacancies. Concessions and other recent leasing incentives given out by Landlords has not helped to increase demand.
Opportunities and Challenges - The biggest challenge facing the industrial market is declining occupancy. In addition to the millions of square feet delivered over the last few years, tenants are consolidating or closing and the vacancy is far above normal.
Forecast - Even with excellent leasing opportunities, the meager job forecast for the upcoming year does not bode well for demand. Although the slowdown in construction will help level off the vacancy rate it will most likely reach 14 percent by the end of 2009.
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