Industrial Goes Full Bore While Office Remains Questionable

While companies from all industries are relocating to Arizona, some commercial real estate sectors are experiencing more growth than others. With increased data demand from home offices, online education and more, industrial property construction has intensified in the last year with a buildout of more than 270 million across nearly 1,000 properties.

Warehouse construction has also increased to support the demand for manufacturing and production. Companies such as Intel, Samsung and Amazon are just a few of the companies that have opened or plan to open warehouses in Arizona. Metro Phoenix ranks third in the Sun Belt for new construction, behind only the Texas markets of first place Dallas-Fort Worth and second place Houston. 

“Although office rental rates are holding strong and (with) positive net absorption, the office sector remains a question mark as many large corporations have just started transitioning back to the office,” says Andrea Davis, principal of Andrea Davis CRE. However, the interest in medical office buildings has increased as metro Phoenix continues to expand its economic and healthcare footprint. Net absorption for medical office space in fourth quarter 2020 reached 111,974 square feet and 2020 ended with a positive net absorption in all four quarters. Demand is this sector is expected to remain high for the remainder of 2021.