Greater Phoenix is reinforcing its position as one of the countrys stronger industrial markets, supported by steady tenant demand and a slowdown in new product reaching the market. A recent report from Colliers notes that heading into 2026, tenant activity remains healthy enough to keep the metro among the leading industrial locations for both occupiers and investors.
Colliers reports that industrial vacancy in Greater Phoenix edged down by 10 basis points during the fourth quarter, finishing 2025 at 9.7 percent. The modest decline in vacancy reflects the interaction of sustained tenant activity and a reduction in new development, suggesting that available space is being steadily backfilled even as construction activity tapers.
Net absorption in the fourth quarter reached 3.2 million square feet, contributing to an annual 2025 total of 18.2 million square feet. According to the report, this made 2025 the strongest year for net absorption in Greater Phoenix since 2022, underscoring the markets ability to accommodate new and existing users despite broader economic uncertainty.
On the supply side, new industrial deliveries in the fourth quarter continued a downward trend, adding just 2.4 million square feet of inventory. Colliers characterizes this pullback in new supply as part of a healthier balance, with the market having absorbed 34.8 million square feet of new space overall. The combination of elevated historical deliveries and current demand has helped the market work through substantial new inventory while moderating future additions.
Pricing trends remained constructive, with the report indicating that average industrial rental rates in Greater Phoenix increased slightly in the fourth quarter of 2025. At year end, average rents stood at $1.14 per square foot. The modest rent growth, alongside easing vacancy and solid absorption, points to generally favorable fundamentals for landlords while still allowing room for tenant activity to continue.
Viewed together, the metrics highlighted in the Colliers report depict an industrial market that has moved away from peak development levels toward more measured supply growth, while still posting strong leasing performance. With vacancy below double digits, positive net absorption, and incremental rent gains at the close of 2025, Greater Phoenix enters 2026 with a foundation that appears supportive for ongoing occupier and investor interest in the industrial sector.
