Arizona attracted the most industrial investment dollars in 2025 among U.S. states, according to Avison Young’s industrial investment tracker.

There were 10 industrial real estate projects across the state that attracted nearly $520B in investments last year, the report says. Texas followed Arizona, securing the No. 2 spot with $373.5B of investments.

“Arizona’s become a top spot for manufacturing because it’s business-friendly, has a strong logistics infrastructure, and the federal incentives make investing here attractive,” West Industrial Manager for Market Intelligence Erick Parulan told Bisnow in an email.

Geographically, the state has a lot going for it that is attractive to investors, Parulan said.

“The state has lower operating costs, an abundance of land, and solid transportation connections, so it’s ideal for attracting big manufacturing projects,” he said.

Arizona’s top positioning comes as U.S. manufacturing on the whole undergoes a “historic capital investment cycle.” It has been fueled by such factors as a push at the federal level to reshore manufacturing and corporate decisions to realign supply chains, Avison Young analysts said.

The investment money flowing into the state’s industrial sector is concentrated in high-growth submarkets, including manufacturing of semiconductors, pharmaceuticals, rare earth materials, magnets, batteries and aerospace products.

Many large-scale projects in these industrial sectors broke ground across Arizona last year, most within the Phoenix metro area, JLL Capital Markets Senior Director Greer Oliver said.

“Phoenix is the West Coast hub for manufacturing right now, seeing a lot of growth from what I’ll call megaprojects,” Oliver said.

Oliver listed the LG battery manufacturing complex in Queen Creek, the Amcorp semiconductor packaging facility in Peoria, and the Mayo Clinic campus expansion in Phoenix as some of the big-name projects that led to industrial activity in the Phoenix metro area last year.

She also mentioned JLL’s sales of the Fairway Commerce Center, a 450K SF building in Avondale, and of Sight Logistics Park, featuring 357K SF across two buildings in Tempe, as contributors to major industrial activity in the area.

Parulan pointed to Nvidia as a standout in the area’s industrial market. The company announced last year that it would expand testing sites for its Blackwell graphics processing units in Arizona.

Institutional investment activity totaled $1.3B in Phoenix in the fourth quarter, crossing the $1B threshold for the second consecutive quarter, according to Colliers’ Q4 greater Phoenix industrial report.

Industrial leasing activity in the Phoenix area was strong last year, with unwavering tenant demand across warehouse, manufacturing and flex spaces, the report says. According to data from Cushman & Wakefield’s Q4 Phoenix industrial report, leasing activity in the city last year reached its highest level since 2022, exceeding 29M SF.

Phoenix boasts “one of the most aggressive development pipelines in the country,” according to a Q4 Matthews report, delivering more than 85M SF over the last three years. Some 90% of recent construction in the Phoenix metro targeted buildings larger than 100K SF in 2025, according to the report.

Topping the list of the most anticipated industrial projects in the region this year is the continued expansion of the Taiwan Semiconductor Manufacturing Co. campus in North Phoenix. The company recently accelerated its development timeline for its campus. In January, it acquired 900 acres for more than $195M to add to its 1,129 acres, bringing its total land in the area to more than 2,000 acres.

Manufacturing announcements are gaining momentum in the U.S., “especially in semiconductors, AI, EVs, advanced materials, and aerospace and defense,” Parulan said. He expects Arizona and Texas will secure “a significant share of that investment” due to factors like their strategic locations, expanding workforces and available industrial real estate.