Amidst evolving market conditions, The Home Depot Inc., the well-known home improvement retail giant, is looking to sublease a 1.3-million-square-foot warehouse situated in the Valley. This substantial space became available earlier this month and is being marketed through CBRE Group Inc., as reported by ABC15. The facility, positioned just west of the Phoenix Goodyear Airport at 16155 W. Elwood St., comes with 3,866 square feet of office space, 233 dock doors, and ample parking to accommodate 691 trailers.
Having signed a decade-long lease at the tail end of 2021, Home Depot's swift pivot to subleasing highlights a broader recalibration in the wake of a pandemic-induced expansion. According to additional details provided by Phoenix Business Journal, the retail behemoth doubled its distribution capacity from 56 million square feet in 2018 to 111 million square feet by 2023. Nevertheless, in step with a beleaguered housing market pressured by rising interest rates, Home Depot vacated close to 879,000 square feet of space near Chicago and forwent another 480,000 square feet in California's Inland Empire.
Despite the currently challenging environment for home furnishing chains linked with housing market dynamics, "Businesses tied to home sales have been some of the biggest contributors to move-outs nationally," as Connor Devereux, director of market analytics for CoStar Group, stated, quoted the Phoenix Business Journal. However, Home Depot's sales, after a 3% drop in fiscal year 2023, showed hints of recovery in subsequent months, achieving $43.2 billion in the second quarter of fiscal year 2024, marking a modest increase from the same period in the previous year.
The company's search for a subletter comes at a time when the Valley's industrial sublease market has seen 6.4 million square feet of space available, tripling the pre-pandemic average, and indicating record high levels of sublease availabilities. This warehouse stands as the largest single sublease opportunity existing in the Valley's industrial sector at present. The local office market, for contrast, currently wrestles with 7 million square feet of sublease space, accounting for 3.5% of all such properties, according to research highlighted by the Phoenix Business Journal.
This situation has placed the Valley's sublease availability ranking No. 8 among 46 major industrial markets, with the Inland Empire topping the list having 19.2 million square feet of sublease space. The Home Depot's Goodyear warehouse sublease aligns with a national trend of reassessment and reconfiguration among retailers as they adapt to post-pandemic realities and fluctuating economic indicators.
