Pat Feeney remembers the first speculative warehouse being built in the Valley that was north of 550,000 square feet.

CBRE's executive vice president considers when that happened in the mid-to-late 1990s an "oh-my-gosh" moment for the Phoenix metro industrial market. Years later in Buckeye, the first 1 million-square-foot spec building broke ground in 2005.

Fast forward 17 years, however, Feeney said eight buildings larger than 1 million square feet — some reserved for one tenant — are under construction with another set to break ground soon. Meanwhile, Phoenix industrial brokers have put together four deals in the first half of 2022 that tenants have signed for more than 1 million square feet, according to research from CBRE.

Amazon, Lowe's and Puma are three of the known tenants that signed those huge leases this year. Amazon signed a 1.1 million-square-foot lease in the first quarter to the recently sold Elliot 202, which was slightly topped by Lowe's and its 1.2 million-square-foot lease at The Cubes in Mesa Gateway. Puma inked a 15-year lease in the second quarter for the first building at 303 Crossroads, a 1.7 million-square-foot facility with two industrial buildings fronting the northeast corner of the Loop 303 and Northern Parkway in Glendale.

Across the country, CBRE found there were 37 lease deals of 1 million square feet or more completed in the first half of 2022, up from 24 from the same point last year. The bulk of the leases went to general retail and wholesale users and third-party logistics companies.

"The number of transactions has increased, but the square footage of the transaction has really jumped from 2018 until today," Feeney said. "[Phoenix is] now a big-time player. ... I think, on the horizon, there's room for this to continue."

Investors, developers bullish on Valley's industrial prospects

Feeney said that as of Aug. 22, as many as three more food manufacturing companies are considering Phoenix, as well as distributors of pharmaceuticals, electronic components, aviation parts — all of whom could command space of more than 1 million square feet.

"There is a good amount of megawarehouse-use users looking at Phoenix from a good variety of classifications," Feeney said.

Chris McClurg of Lee & Associates said that the East Valley doesn't command as much of the attention for 1 million-square-foot-plus leases compared to the West Valley, though Amazon and Lowe's each inked 1 million-square-foot deals this year near Phoenix-Mesa Gateway Airport.

For projects of 100,000 to 500,000 square feet, however, there's plenty of activity to go around. After averaging between four and six deals for tenants taking 100,000-square feet and above in 2018 and 2019 in the East Valley, McClurg anticipates that number to jump between 16 and 20 projects to be completed the year.