Market Update: Industrial Development is Accelerating in the Valley

Phoenix has become the number two growing market for industrial development. People want to live in Phoenix.

In 2022, Phoenix has become the number two growing market for industrial development, behind only Dallas-Fort Worth. Industrial demand is higher than ever. And people are moving here in big numbers.

People want to live in Phoenix. The recent numbers show a sweeping migration into the Valley. In 2022 alone, Arizona added 269 new people every single day with no signs of slowing down. Why? Phoenix is beautiful, for one. But it’s also a city with a lifestyle perspective, and with the state’s pro-business policies at the forefront, it can support a thriving and collaborative ecosystem that embraces growth.

In a rapidly evolving economic environment, Arizona has sought to make sure it’s at the forefront of design and infrastructure. Major tech companies are eyeing their chance to create avenues toward alternative fuels, like solar, and Arizona is throwing its weight into the fight. It’s good timing, as the state is already ramping up efforts to attract the engineering talent that will fuel growth in the alternative energy sector.

It’s worth a little effort to make your city memorable, and Phoenix has managed to integrate innovation into its community model.

Historically speaking, Industrial manufacturing has been a huge contributor to jobs in the greater Phoenix area. 138,000 manufacturing jobs are in the region now, and more growth is expected to come. “We are seeing an industrial technologies renaissance, led by semiconductor companies like Taiwan Semiconductor Manufacturing Company building a massive campus in north Phoenix and Intel expanding with Fab 52 and Fab 62 in the southeast Valley that are driving a whole ecosystem of investment,” says Chris Camacho, president and CEO of Greater Phoenix Economic Council.

Employment in this sector is expected to increase faster in Greater Phoenix than in any other competitor markets, adding 5,400 jobs over the next five years.

Out of a potential regional investment of $90 billion and 49,000 new jobs, 177 of those companies are industrial. 30,000 students have enrolled in engineering programs across Arizona, and with more investments expected to pour into STEM education across the Greater Phoenix, the ecosystem should continue to expand.

In 2021 alone, the Arizona Commerce Authority successfully won more than 90 competitive projects from companies that committed to creating more than 23,500 projected new jobs while investing more than $27 billion in the state. This includes battery manufacturing, electric vehicle assembly, and semiconductor laser manufacturing.

Demand for industrial space in Phoenix has spiked considerably in recent years. Despite the pandemic and government shutdown, there are low vacancies and major investments contributing to the metro’s role as a regional distribution and manufacturing hub.

CBRE’s Phoenix Industrial Market report for Q1 2022 shows construction activity is remaining strong, with 26.6 million square feet under construction to start 2022. A high volume of construction should continue throughout 2022. Out of all under-construction product, 17.7 million square feet, or 66.5%, is in the Southwest Valley. In addition, construction activity in the Southeast Valley is rising, specifically in the Phoenix Mesa Gateway area where 5.3 million square feet is expected to come online in the future. Currently, 35.2 % of the product under construction is committed, displaying a demand in the market for new construction.

Colliers in Arizona’s Q1 2022 industrial market report for Phoenix also examines the sector’s impact on jobs. According to Collier’s report, Phoenix’s industrial labor market is running parallel to its commercial growth, which “remains red hot and consistently performs better each quarter.”

As of February of this year, Metro Phoenix had grown its labor force by 89,600 employees over February of last year, a 4.1% increase. Over the same period, transportation, warehousing and utilities supersector jobs increased by 40.3%, manufacturing jobs by 3.9% and construction jobs by 3.0%.

Arizona is such a key center for innovation, and it’s one of the most popular destinations for residential home buyers. As such, it remains a fantastic opportunity to buy a new home.