LXP Industrial Trust announced that it has secured a 1.2‑million‑square‑foot speculative development in the West Valley sub‑market of Phoenix to a U.S. subsidiary of a global logistics company. The lease will begin on December 1 2026, spans five years, and carries an initial annual cash base rent of $9.8 million with 3.5 % annual escalations, yielding an estimated development cash return of roughly 8.0%.
The deal represents the largest single‑tenant lease LXP has ever closed and lifts the company’s record leasing volume to 4.4 million square feet year‑to‑date. By locking in a tenant before construction is complete, LXP reduces exposure to market risk and positions the property to generate stable cash flow from the outset. The pre‑lease also supports the company’s goal of achieving a 7‑7.5 % stabilized yield on new developments.
Phoenix remains LXP’s most important market, accounting for more than 14 % of its gross book value. Demand in the city has been driven by large‑scale onshoring projects, including a major expansion by Taiwan Semiconductor Manufacturing Company, and by the broader Sunbelt trend of e‑commerce and logistics growth. The West Valley sub‑market has seen a steady absorption of million‑square‑foot supply over the past 18 months, underscoring the strength of the local industrial pipeline.
Financially, the $122 million project valuation and the 8.0 % development cash yield reinforce LXP’s high‑yield, single‑tenant strategy. The lease’s terms—five‑year duration, 3.5 % escalations, and a sizable base rent—provide predictable income that aligns with the company’s target yield profile and contributes positively to its portfolio’s overall return profile.
Management highlighted the strategic fit of the lease, noting that the pre‑lease “positions LXP to secure this lease during the early part of the construction phase” and that the transaction “has achieved record leasing volume at this stage of the year.” The move signals confidence in the Phoenix market and demonstrates LXP’s execution capability in securing high‑quality tenants for speculative developments.
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.