About this episode
Phoenix maintains its position as one of the most dynamic job markets in the Southwest, even as national and regional headwinds create some uncertainty. According to recent analysis by Kidder Mathews, the Phoenix metro’s unemployment rate in May stood at 3.6%, below both the Arizona state average of 4.1% and the national rate of 4.2%. Despite a modest year-over-year increase in unemployment, the labor market remains stable, with Arizona nonfarm employment growing by 18,300 jobs. The latest U.S. Bureau of Labor Statistics data shows that the Phoenix-Mesa-Chandler area added 35,900 jobs over the past year, making it one of the fastest-growing metro areas for employment in the country. Employment in Phoenix is driven by a diverse mix of industries. Manufacturing and logistics remain core sectors, with over 460 million square feet of industrial space and strong activity in warehouse leasing and sales. Glendale and Deer Valley are leading submarkets for new industrial deliveries. However, industrial construction is slowing, with 11.9 million square feet currently underway, down from 28 million in mid-2024, reflecting a broader cooling in speculative development. The region’s largest employers include major healthcare systems, financial services firms, and technology companies, with a growing footprint of advanced manufacturing and research-driven enterprises. The ongoing development of the South Valley Employment Zone, supported by a new 2-million-gallon reservoir, signals future growth in technology, research, higher education, and medical training, with mixed-use and residential components also in play.Several sectors are poised for expansion. Advanced manufacturing, artificial intelligence, IT security, healthcare, and skilled trades such as electrical and welding are experiencing heightened demand, driven by both business relocations and local workforce development programs. West-MEC, a regional career and technical education provider, is expanding its campuses and program offerings to address workforce shortages in these fields, with over 9,000 industry credentials awarded last year. Franchise growth is also robust, with Arizona projected to add approximately 1,374 new franchise businesses in 2025, contributing $22.6 billion to the economy and supporting 216,000 jobs statewide, according to the 2025 Franchise Trends Report by LT.Recent developments highlight both opportunities and challenges. Leasing activity in the industrial sector may pause as tenants await clarity on the impact of new tariffs, but long-term demand for logistics and manufacturing space is expected to rise. Availability and vacancy rates for industrial properties have increased, with 39.7 million square feet of vacant space across the valley and an additional 10 million under construction. The labor market shows seasonal stability, with no pronounced fluctuations reported in the past year.Commuting trends continue to evolve as emp
