In early 2024, Phoenix has surpassed Dallas-Fort Worth as the top industrial construction hub, boasting about 45 million square feet under development, the highest in the nation. This historic construction boom follows the completion of 30 million square feet in the previous year and 25.9 million square feet in 2022, contributing to a 15% increase in industrial inventory since Q4 2021. Vacancy rates are expected to rise, reaching 7.8% in the fourth quarter, primarily in larger buildings, while smaller properties are anticipated to remain more resilient. Elevated costs for construction financing, materials, and labor are slowing groundbreaking, with new construction starts declining by 37% year over year in 2023. This slowdown may alleviate supply pressure by early 2025. Meanwhile, industrial construction in Dallas-Fort Worth is moderating, with 35 million square feet under development, down from the peak of 83 million square feet in 2022, and rising vacancies expected to reach 9.5% by the end of 2024 before stabilizing.
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Frequently asked questions
A full-service lease is a lease that has one, all-inclusive rental rate which includes both the base lease rate and the operating expenses combined into one figure.
A modified gross lease is a lease where the tenant pays base rent at the lease’s inception, but it takes on a proportional share of some of the other costs associated with the property as well, such as property taxes, utilities, insurance, and maintenance.
A triple net lease is a lease agreement on a property whereby the tenant or lessee promises to pay all the expenses of the property, including real estate taxes, building insurance, and maintenance. These expenses are in addition to the cost of rent and utilities.
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