After an impressive end to 2013, the industrial sector slowed slightly this quarter; both leasing activity and sales volume decreased. Rental rates inched upwards in Q1, continuing the long term trend of increasing rates. Despite positive first quarter absorption, vacancy rates saw a small increase in Q1. However, long-term vacancy trends continue to decline in all industrial property types, except for big box inventory.
In Q4 of 2013, net absorption totalled 2,669,041 SF, making up for a slow Q2 and Q3 that posted negative numbers. 2014 was vibrant with activity in the first couple months, but fizzled into a net absorption of only 479,422 SF. This decrease was reflected in leasing activity as well; last quarter 4.3 million SF was leased in the Phoenix Metro industrial market, while just 2.2 million SF was leased in the first quarter of 2014. Sales Volume also fell this quarter, coming in at $176 million, down from the $331 million seen at the end of 2013.