E-commerce, which slowed in 2023 after its pandemic-driven peak, is showing signs of recovery in 2024. According to the latest CommercialEdge national industrial market report, online sales reached $291.6 billion in the second quarter, marking a 1.3% increase from the previous quarter and a 6.7% rise year-over-year. With that, e-commerce now accounts for 18.8% of core retail sales — its highest share since the pandemic and reflecting six consecutive quarters of growth.
Notably, this resurgence is gradually affecting the warehouse and storage sector. Specifically, the Bureau of Labor Statistics reports 24,900 new jobs in the sector so far this year, which is a modest improvement after it contracted by 8.5% between mid-2022 and late 2023. The increase also comes as the sector adjusts to a vast supply of new space: More than 1.1 billion square feet was added in 2022-23. Even so, with e-commerce requiring roughly three times more space than traditional retail, absorption is underway, despite vacancy rates ticking up.
Of course, Amazon has been central to this rebound after reversing its earlier retrenchment and ramping up its leasing in 2024. In fact, the company has already secured more than 16 million square feet of industrial space this year. For example, in the Phoenix area alone, Amazon has leased nearly 3.5 million square feet across three major facilities, including two 1.2-million-square-foot warehouses in Goodyear and Glendale. This leasing activity aligns with Amazon’s strategy to regionalize its distribution network, further boosting its capacity in key Western markets.
Phoenix’s Construction Pipeline Doubles Size of Next-Closest Dallas
Phoenix remains the most active market for industrial space under construction nationwide with 36.77 million square feet of space under construction, which is equal to 9.1% of existing stock. Meanwhile, vacancy rates are at 5.6% and recent lease deals are averaging $13.14 per square foot — significantly higher than the market’s overall rate of $8.99.
Here, a diverse construction pipeline for warehouse and distribution facilities accounts for more than half of the projects, while manufacturing represents 25%. Data centers also make up 18% of ongoing construction and comprise one-quarter of all square footage started in 2024.
