Development of industrial space in metro Phoenix is slowing down as the vacancy rate increased to over 10% in the second quarter, with 9 million square feet delivered. As a result, construction has decreased, although about 25 million square feet were underway in Q2. Despite the rise in vacancies, leasing activity remains healthy with 3.3 million square feet of new leases. Speculative space development is cooling, but build-to-suit projects are increasing, driven by manufacturing and food-related companies. Experts predict another wave of demand within the next 12-18 months. Rental rates have not significantly decreased due to high construction costs, though incentives are offered to attract tenants.