Phoenix Industrial Market 2026: Forklift Demand
Phoenix absorbed 5.2M sq ft of industrial space in Q2 2026 as vacancy fell to 11.4%. Why tighter space favors reach trucks and electric fleet right-sizing.
Phoenix absorbed 5,181,826 square feet of industrial space in Q2 2026, more than three times the 1,444,014 square feet delivered, and overall vacancy fell to 11.4%, according to Lee & Associates. With demand outpacing new buildings, more tenants are getting more out of the space they already have. For forklift fleets, that shifts spending toward narrow-aisle trucks and right-sized electric fleets.
Phoenix Industrial Market, Q2 2026
| Metric | Q2 2026 | Q1 2026 | Q2 2025 |
|---|---|---|---|
| Direct net absorption | 5,181,826 sq ft | 4,306,769 sq ft | 2,311,273 sq ft |
| Overall vacancy | 11.4% | 12.4% | 13.8% |
| Deliveries | 1,444,014 sq ft | n/a | n/a |
| Under construction | 16,528,185 sq ft | 15,869,468 sq ft | 19,282,617 sq ft |
Source: Lee & Associates, Phoenix Industrial Market Report Q2 2026.
Vacancy has fallen steadily over the past year while the construction pipeline has shrunk from 19.3 million to 16.5 million square feet. Other brokers measure the market differently and report Q2 vacancy anywhere from about 9.6% to 14.2%, but the direction is the same: space is getting tighter.
Lee & Associates puts the overall asking rate at $1.08 per square foot NNN, per month, and the market’s inventory at 465,520,409 square feet. It credits strong population growth, corporate relocations, and expanding manufacturing operations for tenant demand. Quarterly absorption has also climbed in each of the last two quarters, from 3,444,417 square feet in Q4 2025 to 4,306,769 in Q1 and 5,181,826 in Q2.
The Largest Leases
| Tenant | Size | Location |
|---|---|---|
| DHL (logistics) | 1,184,591 sq ft | NEC Reems Rd. & Northern Pkwy., Waddell |
| Fluidstack (technology) | 1,149,958 sq ft | 13543 W. Northern Ave., Bldgs. A & B, Glendale |
| DHL (logistics) | 406,027 sq ft | 16451 W. Glendale Ave., Litchfield Park |
The West Valley continues to take the biggest deals, which is where most new logistics space and the largest forklift fleets are concentrated.
Will East Valley Battery Manufacturing Add Demand?
Not all of the demand is logistics. In the East Valley, LG Energy Solution announced a $5.5 billion battery manufacturing complex in Queen Creek in March 2023. It combines a $3.2 billion cylindrical EV battery plant (27 GWh a year) with a $2.3 billion LFP energy-storage battery plant (16 GWh a year).
Queen Creek’s economic development director said in 2025 that the manufacturing facility was about 60% complete, with production expected from summer 2026. Treat that as the schedule reported to date, not confirmation that production has begun. Either way, a complex of this size has the same forklift needs we describe for Ohio’s battery plants: heavy-capacity trucks during construction and installation, then electric trucks for materials and finished goods once lines run. Hiring was already underway at the site when that report was published.
Tighter Space Favors Narrow-Aisle Fleets
When big blocks of space are scarce, tenants that cannot move tend to densify: narrower aisles, taller racking, and more pallet positions per square foot. That changes which trucks pay for themselves:
- Reach trucks. They work in aisles far narrower than a counterbalance truck needs and lift higher. Our reach truck guide covers aisle widths and lift heights.
- Right-sized electric fleets. Densified buildings often run more shifts in the same space. Lithium-ion trucks that opportunity-charge on breaks avoid battery swaps. Compare in lithium vs lead-acid.
- Heat planning. Phoenix summers stress batteries and chargers. Ask dealers about battery thermal management and charger placement before you commit to a multi-shift electric fleet.
Which Forklift for Which Phoenix Job?
| Job | Typical machine | Phoenix consideration |
|---|---|---|
| Dense racked storage | Reach truck | Aisle width and lift height set the payoff |
| Order picking | Order picker | Rent first if the pick volume is still uncertain |
| Dock and trailer loading | Electric or LPG counterbalance | Trailer floors and dock heat |
| Outdoor yard | Pneumatic-tire truck | Sun and surface heat |
| Battery or equipment plant | High-capacity counterbalance, then electric | Capacity margin with attachments |
How Should You Plan Batteries and Chargers for Phoenix Heat?
Heat is a purchasing question, not only a maintenance one. Before you sign for an electric fleet that will run several shifts, ask each dealer these things in writing:
- How the battery manages temperature during a hot shift, and what the warranty says about operating conditions.
- Where chargers will sit. A charger in a hot corner of the building works harder than one near a dock door with airflow.
- Whether opportunity charging on breaks fits your shift pattern, so trucks do not need a battery swap.
- What the service response time is when a truck goes down in summer.
Our lithium forklift battery guide and the electric vs LPG comparison cover the cost side. If your building has an outdoor yard, LPG or pneumatic units may still fit that part of the job.
Renting Narrow-Aisle Equipment in Phoenix
Reach trucks and order pickers are specialized units, so availability is tighter than for standard counterbalance trucks. Book early for seasonal peaks, and compare an all-in quote that includes delivery and damage waiver. Our forklift rental near me guide lists the questions to ask, and the forklift rental cost guide shows typical rates. If you are deciding between equipment types, start with how to choose a forklift.
What to Do Next
- Measure your current aisle widths and rack heights, then ask for reach truck specs that fit them.
- Count shifts per day to decide between lithium opportunity charging and swapped batteries.
- Rent specialized units for a season before you buy them.
- Compare quotes on total cost, using the forklift total cost guide, not only the monthly rate.
- Reread one broker’s report each quarter and track the trend, rather than mixing vacancy numbers across sources.
Sources
- Lee & Associates, “2026 Q2 Phoenix, AZ Industrial” market report (https://www.lee-associates.com/wp-content/uploads/2026/07/2026-Q2-Phoenix-AZ-Industrial.pdf)
- CBRE, “Phoenix Industrial Figures Q2 2026” (https://mktgdocs.cbre.com/2299/05578a01-f671-4c81-b5a5-38669356d1cc-208200488/Phoenix_Industrial_Figures_Q2_.pdf)
- Savills, Phoenix industrial market research (https://www.savills.us/research_articles/256536/393043-0)
- Manufacturing Dive, “LG Energy Solution’s $5.5B Arizona investment” (https://www.manufacturingdive.com/news/lg-energy-solutions-5-5b-arizona/646040/)
- ABC15, “LG Energy Solution’s Queen Creek battery plant nears completion, hiring ramps up” (https://www.abc15.com/news/business/lg-energy-solutions-queen-creek-battery-plant-nears-completion-hiring-ramps-up)
Frequently Asked Questions
How is the Phoenix industrial market doing in 2026?
Tightening. Lee & Associates reported 5,181,826 square feet of direct net absorption in Q2 2026, outpacing new supply, with overall vacancy falling to 11.4% from 12.4% in Q1 and 13.8% a year earlier. Deliveries were 1,444,014 square feet in the quarter, with 16.5 million square feet under construction.
Why do Phoenix vacancy figures differ between reports?
Brokers track different building inventories and use different definitions, such as direct versus overall vacancy and the size threshold for buildings counted. Q2 2026 vacancy estimates for Phoenix range from roughly 9.6% to 14.2% depending on the source. Compare the trend within one broker's series rather than mixing numbers across reports.
What forklifts suit a Phoenix warehouse with limited space?
When tenants densify existing buildings instead of moving, narrow-aisle equipment earns its cost: reach trucks and order pickers fit more pallet positions into the same footprint. Phoenix heat also matters, so check battery cooling and charging plans for electric fleets running multiple shifts.
What was the biggest Phoenix industrial lease in Q2 2026?
DHL leased 1,184,591 square feet at the northeast corner of Reems Road and Northern Parkway in the West Valley, according to Lee & Associates. Fluidstack, a technology tenant, leased 1,149,958 square feet at 13543 W. Northern Avenue.