Phoenix Industrial Real Estate: Regional Distribution Hub, Semiconductor Manufacturing and Diverse Workforce
Matt Duplantis serves as senior vice president and Phoenix market officer for Link Logistics, where he oversees industrial real estate operations across one of the fastest-growing metropolitan areas in the United States. With Phoenix positioned as a strategic distribution hub between Southern California and the broader Western United States, Matt helps businesses navigate a market characterized by large-scale bulk distribution, semiconductor manufacturing expansion and increasingly diverse industrial real estate use. Link Logistics' Phoenix warehouse portfolio serves companies ranging from local service providers to regional distribution operations and high-tech manufacturers. In this Q&A, Matt discusses warehouse space in Phoenix—what drives demand, how TSMC's presence is reshaping the market and why power capacity and trailer parking have become critical factors for industrial users.
What drives demand for industrial real estate in Phoenix?
Matt: Phoenix has a very diverse industrial real estate landscape that has expanded significantly over the last 10 years. The market serves everything from smaller users—local service providers and vendors—to million-square-foot industrial properties. Demand for those million-square-foot bulk facilities has grown immensely over just the last five years, particularly in the West Valley area.
In 2020, TSMC chose Phoenix for its first advanced semiconductor manufacturing site in the United States. Since then, rapid growth in data centers and chip manufacturing has emerged as a major demand driver. Intel and other tech companies already had a presence in Phoenix, but TSMC's project accelerated expansion dramatically. TSMC's total investment in Phoenix is projected to exceed $165 billion. All this activity from TSMC, its supplier network and other companies involved in semiconductors absorbs industrial space while also creating ancillary demand.
From an industrial real estate demand perspective, Phoenix serves the full spectrum: basic distribution and last-mile logistics users, high-power advanced manufacturers, EV and battery users, defense contractors, aerospace parts producers and everything in between. The diverse qualities of labor available in Phoenix support this range of users.
Why has bulk distribution grown so rapidly in Phoenix?
Matt: The growth in large bulk distribution is primarily a location and labor story. Phoenix functions similar to Dallas, Atlanta or Chicago as a regional distribution hub. From Goodyear in the West Valley, companies can travel to or from the Port of Los Angeles within a day's drive. That proximity allows businesses to bring product in from Southern California ports and distribute it throughout the Western United States or the entire country from Phoenix. They can still maintain cost-effective operations, because warehouse rental costs are lower here than in California. That's why the large bulk sector in Phoenix has prospered.
How do industrial submarkets differ across Phoenix?
Matt: The West Valley of Phoenix is where large bulk users have concentrated—typically facilities over 500,000 square feet. This is driven by land costs and developers' ability to put large parcels to work at the most competitive pricing. The Southwest market serves demand for infill warehouse space, generally facilities 500,000 square feet and under.
The airport area has a heavy concentration of high-tech users. Defense contractors, aerospace parts manufacturers and companies tied to airport operations operate here and pay a premium for the location. This area has the lowest vacancy rate in the Phoenix market because development is constrained and demand from these specialized users remains strong.
The center of Phoenix serves businesses that need to reach the entire valley efficiently or have airport-related operations. There has been significant redevelopment to build newer industrial facilities to serve these users, and this area commands premium pricing.
The Southeast Valley has become heavily concentrated with data centers and chip manufacturing. The workforce profile differs here as well—the Southeast Valley attracts more highly educated, high-tech workers, while the Southwest draws more blue-collar labor focused on distribution and light manufacturing.
The Deer Valley area within North Phoenix is where TSMC's campus is located. TSMC's expansion here has driven substantial growth, with developers building warehouses and industrial facilities specifically to serve TSMC's suppliers and service providers.
What is TSMC's impact on Phoenix's industrial real estate market?
Matt: TSMC's announcement has been transformative for Phoenix's industrial real estate landscape, and Phoenix now boasts the fourth-largest semiconductor workforce in the United States. The project is part of a broader onshoring trend—moving chip manufacturing to American soil for security reasons and supply chain stability rather than relying on production in Taiwan. The ancillary demand from suppliers and service providers is substantial as well.
Developers have followed TSMC north, constructing warehousing to accommodate the suppliers and vendors that support semiconductor manufacturing operations. The market is currently working through some of this new product, but the long-term demand story remains strong as TSMC's operations expand.
What emerging trends are shaping the Phoenix warehouse market?
Matt: Trailer parking has become extremely important in the Phoenix market. The volume of trucks moving back and forth between Los Angeles and Phoenix creates significant demand for trailer parking capacity at industrial facilities.
Power capacity has become a commodity and is increasingly difficult to secure. Companies that require higher power loads are finding that power availability is a crucial decision-making factor.
HVAC demand has also increased significantly. Because of Phoenix’s increasingly hot summers, companies are paying a premium for fully HVAC-conditioned warehouse space rather than evaporative cooling systems. Full HVAC requires substantially more power, which ties back to the power capacity challenge. Buildings without HVAC face longer downtime and may require concessions because finding tenants for them is more difficult.
How does Link Logistics support companies looking for warehouse space in Phoenix?
Matt: Link Logistics benefits from strong internal collaboration across markets. Our teams share intelligence about companies looking for space in Phoenix, Las Vegas or other Western markets, which allows us to identify opportunities early and determine how we can help.
We have several development projects underway in Phoenix that position us to accommodate specific user needs. For example, we have a development project with higher power capacity that we're currently discussing with a company looking to expand in Phoenix. That kind of targeted capability matters in a market where power capacity has become constrained.
Our approach combines our existing industrial real estate portfolio with strategic development that addresses market gaps—whether that's power capacity, location or building specifications. The ability to collaborate across Link Logistics' markets and match users with the right Phoenix facilities gives us flexibility to serve diverse needs.
Looking ahead, what makes Phoenix attractive for businesses evaluating warehouse space?
Matt: Phoenix is rapidly growing. It’s currently the fifth-largest city and tenth-largest metropolitan statistical area in the United States, with approximately 1.5% annual population growth. The Phoenix industrial real estate market has experienced staggering corresponding expansion, roughly doubling in size over the last decade.
There was a period where observers wondered whether Phoenix's industrial real estate growth had longevity or if it would revert to a tertiary market as the development cycle slowed. But Phoenix has shown real staying power. It has been one of the better-performing markets in the West even as other markets slowed, demonstrating the strength of its underlying fundamentals.
The labor force is robust and diverse. Phoenix offers everything from blue-collar workers handling distribution and inventory operations to highly skilled workers supporting some of the most secure high-tech operations in the country. That workforce diversity allows Phoenix to accommodate the full spectrum of industrial users.
For businesses seeking warehouse space for lease in a strategic Western U.S. distribution hub with lower costs than Southern California, access to the Port of Los Angeles within a day's drive, a business-friendly environment and a diverse skilled workforce, Phoenix presents compelling opportunities—particularly as semiconductor manufacturing and data center growth continue to reshape the market.
Explore available warehouse and distribution space in Phoenix to learn more about industrial real estate opportunities in Arizona and the Western United States.
