Your HVAC equipment is taking over the garage. Your e-commerce inventory has spread to the spare bedroom. You’re running a legitimate business out of spaces that were never designed for it—and you’re ready for an actual warehouse.
The challenge? Traditional Phoenix industrial leases expect you to commit to 5,000+ square feet for 3-5 years. You need 800 square feet. Maybe 1,500. Enough to organize operations without drowning in rent for space you’ll never use.
Phoenix offers small warehouse options that actually match how growing businesses operate—if you know where to look and what to expect. Here’s what matters when you’re searching for small industrial space in the Valley.
What Qualifies as “Small” Warehouse Space in Phoenix
In Phoenix’s industrial market, “small” typically means:
- 200-2,000 SF: Micro-bay units suited for single-person operations up to small teams
- 2,000-10,000 SF: Small-bay space for established businesses with inventory and equipment
- 10,000-50,000 SF: Mid-sized facilities—still considered “small” in industrial terms
This guide focuses on spaces under 10,000 SF, where most growing businesses land when graduating from home-based operations.
The Phoenix Small Warehouse Market: Supply and Demand Reality
Phoenix’s industrial market tells two very different stories depending on the size of space you need.
Large warehouses (100,000+ SF) are struggling with 16% vacancy rates as oversupply catches up with demand. Meanwhile, small-bay industrial space maintains just 4.1-5.6% vacancy—dramatically tighter market conditions.
The math is straightforward: developers heavily favor big-box construction because economies of scale make it more profitable. Only 4-5% of new Phoenix industrial construction targets the small-bay segment, even though these smaller spaces represent nearly 30% of existing inventory.
For business owners, this supply shortage translates to:
- Limited availability in desirable locations
- Faster lease-up times (spaces under 50,000 SF average just 3.6 months to lease versus 7+ months for larger facilities)
- Premium pricing compared to big-box warehouse rates
- Less negotiating leverage on lease terms
Phoenix Warehouse Pricing: What to Expect
Phoenix industrial rents stabilized in 2025 after three years of significant growth. Overall market asking rents now range from $12.84 to $13.68 per square foot annually (NNN), translating to roughly $1.07-$1.14 per square foot monthly before additional expenses.
Small-bay and flex spaces command premiums:
- Flex industrial: Averages $19.16/SF annually, about 47% above standard warehouse rates
- Small-bay units: Typically $14-$18/SF annually depending on location and building quality
- Premium submarkets: Scottsdale Airpark and Deer Valley can exceed $19-21/SF annually
Critical pricing note: Most Phoenix industrial leases are triple-net (NNN), meaning you pay base rent plus your proportional share of property taxes, insurance, and common area maintenance. Budget an additional $3-5/SF annually for these expenses.
All-inclusive options (where one rate covers rent, utilities, maintenance, and amenities) are less common but growing through co-warehousing operators that specialize in small businesses.
Understanding Phoenix’s Extreme Heat Impact on Warehouse Operations
Phoenix’s climate is a major operational factor that affects both your costs and your product.
The numbers are extreme: Phoenix recorded 113 consecutive days above 100°F in 2024, smashing the previous record of 76 days. Summer temperatures regularly hit 110-115°F, with the all-time record at 122°F.
What this means for warehouse storage:
Non-climate-controlled warehouse space in Phoenix works for short-term storage (days to a few weeks) of durable goods only. Anything sensitive to heat will degrade:
- Electronics components and finished products
- Pharmaceuticals and medical supplies
- Food products and beverages
- Cosmetics and personal care items
- Wood furniture (warping/cracking)
- Anything with adhesives
Energy cost considerations:
Arizona’s commercial electricity rates average around 10.62¢/kWh, close to the national average. However, Phoenix commercial users consume electricity at rates nearly 30% higher than the national average due to cooling demands.
Industrial facilities average 134,024 kWh monthly—about 19.5% above the national average—driven largely by HVAC requirements. For businesses evaluating warehouse costs, summer cooling expenses should factor significantly into budgets.
Seasonal operational advantages:
Phoenix’s heat comes with benefits: 300+ days of sunshine mean minimal weather-related shipping delays. Winters are short and mild (frost is uncommon), eliminating the winter weather disruptions common in cold-climate markets. Year-round operations proceed without snow days, ice storms, or heating system failures.
Where to Look: Phoenix Submarkets for Small Warehouse Users
Phoenix’s industrial market divides into distinct submarkets, each with different characteristics and pricing:
Best for Small-Bay Space:
Scottsdale Airpark
Specializes in small-bay and flex industrial, with typical building sizes of 1,600-50,000 SF. Expect the highest rents in the market ($19-21/SF annually) but also the tightest vacancy and highest concentration of small-format options. Best for professional service businesses, light assembly, and owner-users who value location over price.
Deer Valley/North Phoenix
Sweet spot for 25,000-60,000 SF users, but smaller divisible spaces exist. The area commands premium pricing around $17.60/SF annually—about 30% above Phoenix’s average—due to proximity to TSMC’s $165 billion semiconductor campus and related supply chain activity. Modern buildings with good power infrastructure.
Sky Harbor/Airport Area
Maintains extremely tight vacancy around 5.2% with pricing around $1.17/SF monthly ($14.04/SF annually). Central Phoenix location offers excellent highway access (I-10, I-17, SR-51, Loop 202) and proximity to Sky Harbor International Airport. Mix of older functional buildings and newer Class A space.
Tempe (Infill Locations)
Limited availability but highly desirable for businesses that value proximity to Arizona State University, downtown Phoenix, and affluent East Valley markets. New shallow-bay development underway. Expect premium pricing and fierce competition for available space.
Value-Oriented Options:
West Valley (Goodyear, Buckeye, Avondale)
Primarily large-format distribution, but some smaller spaces exist at more affordable rates ($0.88-$0.98/SF monthly, or $10.56-$11.76/SF annually). Trade-off: longer distances from central Phoenix and East Valley population centers. Best for businesses that prioritize cost over location and don’t require daily client visits.
South Phoenix
Wider range of building ages and quality levels creates pricing diversity. Properties range from older, affordable functional space to newer construction. Good highway access via I-10 and Loop 202.
Lease Terms and Flexibility
Traditional Phoenix industrial leases typically require:
- 3-5 year terms (sometimes longer for newer buildings)
- Personal guarantees from business owners
- First and last month’s rent plus security deposit
- Tenant responsibility for all interior maintenance and repairs
- Build-out costs if space needs improvements
Alternative models gaining traction:
- Co-warehousing operators offering month-to-month or 6-12 month leases
- All-inclusive pricing covering utilities, maintenance, and amenities
- Turnkey move-in with racking, dock access, and equipment already installed
- Flexible sizing allowing businesses to expand or contract without lease renegotiation
What’s Included (and What’s Not)
Standard Phoenix warehouse leases typically provide:
- Four walls and a roof (and that’s about it)
- Basic electrical service to the building
- Structural maintenance of roof and exterior walls
- Parking (ratios vary by building and zoning)
You’re generally responsible for:
- Interior improvements and build-out
- HVAC installation and operation
- Dock equipment (if needed)
- Interior lighting upgrades
- Security systems
- Internet/phone service
- Janitorial and interior maintenance
- Utilities (billed directly or via NNN charges)
Full-service and co-warehousing options flip this model, providing move-in-ready space with infrastructure already installed.
Due Diligence: Questions to Ask Before Signing
About the space:
- What’s the actual usable square footage versus quoted square footage?
- What’s the ceiling height? (Matters for racking and storage efficiency)
- How many dock doors, and what’s the door access schedule/policy?
- Is the space climate-controlled, or is HVAC your responsibility to install?
- What’s the power capacity? (Critical for equipment-heavy operations)
About the costs:
- Is this quoted as base rent only, or all-in?
- What are the actual NNN charges (property tax, insurance, CAM)?
- Who pays for what repairs and maintenance?
- Are there any upcoming special assessments or major building repairs planned?
- What utilities am I responsible for?
About the operations:
- What are the access hours? (24/7, business hours only, restricted access?)
- Can I receive deliveries when I’m not on-site?
- Are there any restrictions on business types or activities?
- What’s the policy on vehicle parking, including trucks and trailers?
- Can I install signage?
Phoenix’s Logistics Advantages for Warehouse Operations
Phoenix’s positioning makes it attractive for businesses with distribution needs:
Highway infrastructure: I-10 provides direct transcontinental routes to Los Angeles and Texas. I-17 connects to Northern Arizona. Loop 101, Loop 202, and Loop 303 create efficient beltway access. Most Phoenix industrial areas offer direct freeway visibility and access.
Port proximity: California’s major ports (LA/Long Beach) sit just 369-380 miles away—roughly 5.75-6 hours by truck. Same-day port access enables businesses to manage import operations without coastal California’s higher warehouse costs.
Air cargo: Sky Harbor International Airport ranked as the nation’s 11th-busiest airport in 2024, handling approximately 400,000 tons of annual cargo. Two dedicated cargo complexes serve the region.
Regional distribution reach: Phoenix-based warehouses can reach 35 million consumers across seven states within one-day truck haul. The location provides next-day service coverage across all of Southern California, Nevada, and much of the Southwest.
Major carrier presence: Amazon operates 10+ fulfillment centers totaling more than 10 million square feet in Phoenix metro. FedEx, UPS, and other major carriers maintain substantial regional operations and sorting facilities.
When Phoenix Makes Sense (and When It Doesn’t)
Phoenix warehouse space works well for:
- Growing businesses transitioning from home-based operations
- E-commerce operations needing fulfillment and inventory space
- Contractors and trades requiring equipment and material storage
- Southwest regional distribution taking advantage of Phoenix’s highway access
- Businesses with climate-controlled product needs (if you secure appropriate space)
- Companies wanting lower occupancy costs than coastal California markets
Consider other options if:
- Your products are heat-sensitive and you can’t secure climate-controlled space
- You need immediate access to California ports (Long Beach/LA warehouse might be better)
- Your customer base is entirely East Coast (Phoenix adds shipping time/cost)
- You’re extremely seasonal and need ultra-flexible month-to-month space
- You require heavy rail service for inbound materials (rail exists but isn’t Phoenix’s strength)
Next Steps: Finding Your Phoenix Warehouse Space
Start your search by:
- Defining your actual space needs: Square footage, ceiling height requirements, dock needs, climate control necessity
- Setting your budget: Remember to account for NNN costs, not just base rent
- Identifying priority submarkets: Balance location convenience against cost
- Connecting with specialists: Industrial real estate brokers focusing on small-bay space, or co-warehousing operators if you want flexible terms
- Touring multiple options: Understand what different price points deliver in terms of quality and location
- Reading the full lease: Get legal review before signing, particularly on maintenance obligations and exit clauses
Phoenix’s small warehouse market rewards businesses that understand the supply constraints, plan for heat-related costs, and recognize when to compromise on location to secure better pricing. The space exists—you just need to know what questions to ask and what trade-offs make sense for your specific operation.
FAQ
How much does small warehouse space cost in Phoenix?
Small warehouse space in Phoenix typically ranges from $14-21 per square foot annually depending on location and building quality, with most spaces falling in the $15-18/SF range. Remember that most leases are triple-net (NNN), meaning you’ll pay an additional $3-5/SF annually for property taxes, insurance, and common area maintenance. All-inclusive options from co-warehousing operators offer simpler pricing but may come at a premium.
Do I need climate control for warehouse space in Phoenix?
For most products, yes. Phoenix experiences extreme heat with temperatures regularly exceeding 110-115°F in summer and 113 consecutive days above 100°F in 2024. Electronics, food products, pharmaceuticals, cosmetics, and wood furniture all require climate-controlled storage. Non-climate-controlled space works only for short-term storage of truly heat-resistant goods. Factor cooling costs into your budget—Arizona commercial users consume nearly 30% more electricity than the national average due to HVAC demands.
What’s the difference between warehouse space and flex industrial space?
Warehouse space is designed primarily for storage and distribution, with minimal office area and features like loading docks, high ceilings (20-40 feet), and concrete floors. Flex industrial combines warehouse area with significant office/showroom space (typically 15-40% office), lower ceilings, and finishes suitable for client visits. In Phoenix, flex space commands significant premiums—averaging $19.16/SF annually versus $13.01/SF for standard warehouse space.
How tight is the Phoenix small warehouse market?
Extremely tight. While large warehouses (100,000+ SF) face 16% vacancy rates, small-bay space under 100,000 SF maintains just 4.1-5.6% vacancy—less than one-third the vacancy of big-box facilities. Only 4-5% of new construction targets small-bay users despite this segment representing nearly 30% of existing inventory. Expect limited availability, faster lease-up times, and less negotiating leverage.
Which Phoenix neighborhoods are best for small warehouse space?
Scottsdale Airpark offers the highest concentration of small-bay options ($19-21/SF annually). Deer Valley/North Phoenix provides modern facilities with good infrastructure ($17.60/SF annually). Sky Harbor/Airport Area delivers central location with tight 5.2% vacancy ($14/SF annually). Tempe offers infill locations near downtown and ASU. West Valley (Goodyear, Buckeye) provides more affordable options ($10.56-11.76/SF annually) if location flexibility exists.
Can I find month-to-month warehouse leases in Phoenix?
Traditional industrial landlords rarely offer month-to-month terms—most require 3-5 year commitments. However, co-warehousing operators and some flex space providers offer shorter lease terms (6-12 months) or even month-to-month arrangements, typically at premium rates compared to long-term leases. These flexible options work well for growing businesses that need the ability to scale space up or down without being locked into multi-year commitments.
Ready to find small warehouse space sized for your Phoenix business?
WareSpace Phoenix South Tempe offers flexible small warehouse units from 200-2,000 SF with all-inclusive pricing, climate-controlled space, and no long-term commitments. Loading docks, industrial racking, WiFi, and shared equipment included.
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