Phoenix Industrial Real Estate Posts Record $990.8M in Investment Sales During Q1 2026, Colliers Reports

The Greater Phoenix industrial real estate market posted its strongest quarter on record for investment sales in the first quarter of 2026, with $990.8 million in total transaction volume, according to a market report released April 21 by Colliers. Net absorption reached 4.81 million square feet — more than three and a half times the 1.38 million square feet of new supply delivered during the period — pushing the overall vacancy rate down to 9.2 percent.

Record Industrial Real Estate Investment Activity in Phoenix

Investment activity in the Phoenix industrial market surged 24.0 percent year-over-year in Q1 2026, with the average price per square foot rising to $245.48, up 17.4 percent from Q1 2025, according to Colliers. The quarter included 61 total transactions, with the Northwest cluster accounting for the highest concentration of deal activity.

Among the quarter's notable real estate acquisitions, Prologis acquired Cotton 303 Logistics Center for $104 million, while Transwestern purchased a two-building portfolio in Tolleson for $94.1 million. All five of the quarter's top transactions involved Class A industrial buildings constructed within the past four years.

West Valley Leasing Surge Anchors Industrial Absorption

Several large-scale leasing transactions drove absorption figures in the West Valley during the quarter. AWS signed a lease for 1.21 million square feet at Southern Industrial Center in Goodyear. DHL leased more than 1.6 million square feet across two separate locations in Glendale — Olive Logistics and Park 303. LG Energy Solution became the first tenant at Caprock West 202 Phase II, leasing 597,297 square feet and bringing the 3.3 million-square-foot project to more than 80 percent occupancy.

The Colliers report noted that big-box demand — defined as buildings of 500,000 square feet and above — strengthened throughout 2025 and into 2026, with tenants actively seeking and occupying large-block space, particularly in Glendale and Goodyear. With available big-box supply now nearly exhausted, the report indicated that leasing demand is expected to shift toward new buildings under construction, with pre-leasing on speculative development poised to lead the big-box leasing landscape through the remainder of 2026.

Vacancy Falls for Fourth Consecutive Quarter

Phoenix industrial vacancy declined for the fourth straight quarter in Q1 2026, falling from a peak of 11.2 percent in Q1 2025 to 9.2 percent. By building type, warehouse and distribution vacancy stood at 10.2 percent, manufacturing at 6.3 percent, and office/service at 4.6 percent. Net absorption exceeded new supply deliveries for the second consecutive quarter, a trend Colliers described as signaling a sustained market recovery.

New deliveries reached a cycle low during the quarter at 1.38 million square feet. The construction pipeline gained momentum, with 14.3 million square feet underway in Q1 2026 — a 35 percent increase from the 10.6 million square feet under construction in Q4 2025. Current construction activity remains well below the market high of 33 million square feet recorded in 2024.

Rental Rates Hold Steady Across Phoenix Industrial Market

Average asking rents held steady at $1.14 per square foot during Q1 2026. Warehouse and distribution rents edged down slightly to $1.04 per square foot, while manufacturing rates rose to $1.17 per square foot. Office/service space posted the highest asking rents at $1.41 per square foot. The Northeast submarket recorded the strongest rent growth, climbing to $1.60 per square foot — up 2.6 percent quarter-over-quarter. The Southwest submarket saw rents fall 3.2 percent to $0.93 per square foot, which Colliers attributed to softness in the large-bay, lower-amenity segment.

The Colliers report was authored by Phillip Hernandez, Director of Research for Arizona, along with researchers Carter Cho and Nicole Shih, all based in the firm's Phoenix office.