Tempe, Arizona, February 12, 2026

The completion of the Source Business Center in Tempe represents a key development in the Phoenix metropolitan area, reflecting ongoing growth and demand in the industrial sector. This Class A industrial facility, spanning 144,885 square feet, is designed to accommodate advanced industrial users and enhances local connectivity with direct access to major transportation routes. Despite rising vacancy rates due to increased inventory, strong tenant activity illustrates the sector’s resilience and attractiveness to businesses seeking modern operational spaces.

Phoenix: Tempe’s New Industrial Center Bolsters Metro Economy Amidst Evolving Market Dynamics

The completion of a significant Class A industrial facility in Tempe marks another milestone for the Phoenix metropolitan area, showcasing the region’s continuous growth and entrepreneurial drive. This new development contributes to the expanding industrial landscape, arriving at a time when the market is characterized by robust demand and significant absorption, even as new construction introduces additional inventory.

Phoenix’s economic narrative is consistently shaped by proactive development and the resilient spirit of its business community. This latest industrial site in Tempe is a testament to the region’s capacity for growth and its appeal to businesses seeking modern, well-connected operational spaces. While the market adjusts to an increased supply of industrial properties, the underlying health of the sector is evident in strong tenant activity and long-term economic forecasts.

Source Business Center: A Modern Industrial Hub in Tempe

The recently completed Source Business Center in Tempe is a 144,885-square-foot, Class A industrial facility, strategically located on a 15-acre site at the southeast corner of Warner Road and Hardy Drive. This project was developed by Creation in partnership with investor CrossHarbor Capital Partners, with LGE Design Build serving as both the architect and general contractor.

Designed to meet the rigorous demands of advanced industrial users, the facility features 32-foot clear heights, robust electrical capacity, and six acres of contiguous yard space for flexible outdoor storage and vehicle parking. Its adaptable design allows for occupancy by either a single large enterprise or up to two distinct tenants, each benefiting from separate entrances and dedicated parking areas. The site includes 204 parking spaces, notably incorporating eight electric vehicle charging stalls, bicycle parking, and clearly defined pedestrian pathways to enhance user experience and safety.

The Source Business Center’s location offers prominent frontage on Warner Road and provides direct access to vital transportation corridors such as Interstate 10 and Loop 101. A unique advantage is its rail spur capability, stemming from its adjacency to a Union Pacific line, which offers valuable multimodal shipping options for occupants. This comprehensive infrastructure and thoughtful design ensure the facility serves businesses seeking high-performance building systems and efficient connectivity. The redevelopment transformed a site previously occupied by an RV/boat storage and office complex.

Phoenix AZ Business: Navigating Industrial Vacancy and Absorption

The Phoenix AZ business environment, particularly its industrial sector, continues to experience significant activity. While the metro area has seen a surge in new construction to meet expanding demand from logistics, distribution, and manufacturing sectors, this influx of new supply has influenced vacancy rates. In Q2 2025, the overall industrial vacancy rate in the Phoenix metropolitan area stabilized at 12.1%, marking it as the highest rate since the Great Recession, largely due to speculative construction. By Q4 2025, this rate saw a slight increase to 13.5%, reflecting a 20 basis points rise year-over-year. This elevated vacancy disproportionately affects larger industrial buildings (100,000 square feet or more), where vacancy has exceeded 16%, while smaller bay products (under 50,000 square feet) have maintained a lower vacancy rate of 5%.

Despite these figures reflecting increased availability, the underlying market fundamentals remain strong. Net absorption, which measures the total space occupied versus vacated, reached 13.4 million square feet over the past year as of Q2 2025, placing Phoenix fourth nationally in this metric. Total leasing activity throughout 2025 amounted to 27 million square feet, a 3% increase year-over-year. Class A properties accounted for nearly half of the overall leasing activity in the first half of 2024, demonstrating continued strong demand for modern, high-quality spaces. This robust absorption indicates that the market is actively filling newly available spaces. Industrial experts anticipate that these strong demand indicators should ultimately lead to a decline in vacancy rates. The average asking rent for industrial spaces 10,000 square feet and above reached $1.19 per square foot triple net in Q4 2025, reflecting a 6% increase from the prior year.

Entrepreneurial Drive and Private Sector Investment

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Author: STAFF HERE PHOENIX WRITER

The PHOENIX STAFF WRITER represents the experienced team at HEREPhoenix.com, your go-to source for actionable local news and information in Phoenix, Maricopa County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Waste Management Phoenix Open, Cactus League Spring Training, and Arizona State Fair. Our coverage extends to key organizations like the Greater Phoenix Chamber of Commerce and Visit Phoenix, plus leading businesses in technology and healthcare that power the local economy such as Intel and Banner Health. As part of the broader HERE network, including HERETucson.com, we provide comprehensive, credible insights into Arizona's dynamic landscape.