LBA Logistics has purchased a 220,240-square-foot, fully occupied Class A industrial facility in Glendale, Ariz. The property changed hands for $39 million, according to CommercialEdge.

Echo Real Estate Capital Inc., in joint venture with Grandview Partners, was the seller. Cushman & Wakefield brokered the deal for the partnership.

The facility, known as Building A, is at 9701 N. 151st Ave. within Echo Park 303, an industrial campus that includes a 455,936-square-foot second building, and is fully occupied by HubStarr Logistics.

READ ALSO: Top 5 Markets for Industrial Transactions

The industrial park is close to Interstate 10 and the Loop 303 industrial corridor, allowing easy access within the Southwest Valley submarket and through the Greater Phoenix area. Phoenix Sky Harbor International Airport is 31 miles from the facility, while Mesa Gateway Airport is within 63 miles.

Echo Park 303’s Building A features 32-foot clear heights, two grade-level doors, 56 dock-high doors and 440 vehicle parking spots. The property, together with the second building at 9501 N. 151st Ave., was designed by LGE Design Build and came online in 2023. Developed by Echo Real Estate Capital Inc., the two-building business park was financed by a $53.6 million loan originated by Pacific Coast Capital Partners, CommercialEdge shows.

Executive Vice Chairman Will Strong, Directors Michael Matchett and Jack Stamets, together with Senior Associate Molly Hunt and Senior Financial Analyst Madeline Warren with Cushman & Wakefield represented the seller.

Phoenix industrial sales

The company recently brokered another deal in Phoenix. In early January, CIP Real Estate picked up a 809,230-square-foot Class A industrial park in Mesa, Ariz., from Canyon Partners Real Estate LLC. The multi-tenant campus known as Broadway 101 Commerce Park traded for $168.3 million, in a transaction that represented the largest single deal for an industrial park in the Southeast Valley of Phoenix.

During the same week, LaSalle Investment Management also made a notable purchase in the metro: the company picked up a 536,122-square-foot, five-building industrial campus in Tempe, Ariz.

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A joint venture of Ryan Cos. and Alidade Capital has broken ground on Chandler Freeways Business Park, a 190,475-square-foot industrial development in Chandler, Ariz. The duo will convert a 175,654-square-foot existing office building as part of the project. Completion is scheduled for the fourth quarter this year.

Plans call for the conversion of the two-story office building into an 87,600-square-foot, single-story industrial facility. Additionally, the developers will build a second, 102,875-square-foot industrial asset. Butler Design Group provided design services.

Chandler Freeways Business Park will feature clear heights between 28 and 32 feet, speed bays ranging from 40 to 60 feet, as well as a total of 26 dock-high doors and 11 grade-level doors.

READ ALSO: Phoenix Industrial Development Remains Fast-Paced

The development is taking shape at 6955 W. Morelos Place, less than 1 mile from Highway 202 and about 19 miles southeast of downtown Phoenix. The Phoenix Sky Harbor International Airport operates 12 miles away.

Ryan Cos.’ office-to-industrial ventures

In November 2024, Ryan purchased the office property for $16.8 million from Landwin Management Co. Verizon had leased the asset since 2004. The office building didn’t start out as such. It was originally built as an industrial facility and later converted into an office building. Now, due to its conversion-minded design, it’s slated to go back to its initial usage.

This isn’t the first time Ryan and Alidade partnered to turn office into industrial in metro Phoenix. The duo joined forces last June to redevelop the 128,048-square-foot Red Mountain Corporate Center in Phoenix into Innovate48, a 163,000-square-foot industrial facility. Completion is expected next quarter.

Metro Phoenix industrial completions hit a new record

Industrial completions skyrocketed last year, with 42.9 million square feet brought online across metro Phoenix, setting a new record, according to a Cushman & Wakefield report. The supply glut led to seven consecutive quarters of vacancy increases, bringing it up to 12.7 percent in December.

Several projects wrapped up during the last quarter. Rockefeller Group completed a 418,400-square-foot distribution center in Surprise, Ariz., while Thompson Thrift brought online the 400,000-square-foot first phase of the Germann Commerce Center in Phoenix.

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The non-profit organization Visit Phoenix has signed a 24,722-square-foot lease at RED Development’s mixed-use CityScape in Phoenix.

Visit Phoenix will relocate its offices from 400 E. Van Buren St., less than one mile from CityScape. The tenant will establish its headquarters at the new space and will move to the location in the fourth quarter of 2025.

JLL represented both parties in the lease negotiations.

The 1.2 million-square-foot property features a 27-story office tower, retail, dining and entertainment spaces, as well as the Kimpton Palomar hotel.

READ ALSO: Phoenix Office Market’s Small Wins Add Up

The office component’s tenant roster includes Alliance Bank, United Healthcare and Gust Rosenfeld and is currently at 6.0 percent vacancy, Phoenix Business Journal reported.

The office tower at CityScape

Located at 1 E. Washington St., the property is in downtown Phoenix, in the city’s central business district. Phoenix Sky Harbor International Airport is some 4 miles southeast.

The 641,718 rentable-square-foot office building came online in 2010 and features 23,600-square-foot floorplates and 33,000 square feet of retail space. Amenities include shared conference rooms, a fitness center and some 2,670 car parking spaces. In 2024, the high-rise became subject to a $170 million loan originated by Western Alliance Bank, according to CommercialEdge information.

JLL Executive Vice President Mike Gordon worked on behalf of Visit Phoenix in the lease negotiations, while Senior Managing Director Ryan Timpani and Senior Vice President Brett Thompson represented the ownership.

The office market in Phoenix had a vacancy rate of 19.4 percent as of December 2024, a 40-basis-point uptick over a 12-month period, but slightly lower than the national average of 19.8 percent, a recent CommercialEdge report shows. The metro’s asking rents reached $28.4 per square foot, up 2.7 percent year-over-year.

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Nestle USA has opened its new beverage factory and distribution center in Glendale, Ariz., a 630,000-square-foot facility. The company broke ground on the $675 million project in 2022.

Initially, Nestle wanted to construct the facility within the 1,340-acre Woolf Logistics Center masterplan, on a site the company acquired in December 2021. That development was supposed to span 625,000 square feet and cost about $400 million.

The newly completed project is located at 8351 N. 150th Ave. The 139-acre property is less than 26 miles from downtown Phoenix and 29 miles from Phoenix Sky Harbor International Airport.

READ ALSO: Phoenix Industrial Development Remains Fast-Paced

Nestle will use the manufacturing building to produce creamers for several of its go-to brands, including Coffee mate, natural bliss and Starbucks. It plans to employ 300 people.

The facility has 10 drive-in doors and 38 dock-high loading doors, as well as levelers and bumpers, and is equipped with advanced technology and digital tools, allowing it to adapt production to meet evolving consumer needs and trends.

The factory recycles and repurposes as much as 75 percent of its treated water using advanced management tools. It also uses renewable electricity to reduce carbon emissions and is zero waste for disposal.

The new manufacturing facility represents Nestle USA’s 20th food and beverage factory, adding to its over $3 billion investment in upgrading its manufacturing capabilities across the U.S. in recent years.

Phoenix’s industrial pipeline tops the nation

Phoenix’s industrial sector continued to lead nationally for under-construction inventory, with 24 million square feet underway as of November, according to a CommercialEdge industrial report. The metro’s vacancy rate during the month clocked in at 7.2 percent, slightly below the 7.6 percent national average.

In November, Thompson Thrift completed the first phase of Germann Commerce Center, spanning 400,000 square feet. Upon full build-out, the project rising in the southeast Phoenix suburb of Queen Creek will total 1 million square feet.

Other recent notable developments in the area include Rockefeller Group’s completion of a 418,400 square-foot distribution center on 24 acres in Surprise, Ariz.  Surprise Pointe Commerce Center can fit as many as four tenants and has 80 dock doors.

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Cushman & Wakefield brokered the sale and arranged the $93.8 million acquisition loan from institutional investors advised by J.P. Morgan Asset Management.

Broadway 101 Commerce Park’s sale has achieved multiple local milestones, such as being the biggest industrial transaction in Phoenix last year or the largest single deal for an industrial park in the Southeast Valley of Phoenix.

At the time of the sale, the industrial park was 98 percent leased to a total of 34 tenants. The roster includes Mitel, Stars Healthcare, Branded Bills, Accu-Tech, Factory Motor Parts and Evoqua Water Technologies, among others.

Built between 2005 and 2007, Broadway 101 Commerce Park encompasses 11 warehouse and industrial buildings spread on some 53 acres. The facilities feature 125 grade-level doors, 109 dock-high doors, ESFR fire sprinklers, insulated ceilings, climate control and parking spaces.

READ ALSO: Phoenix Industrial Development Remains Fast-Paced

Executive Vice Chair Will Strong, Director Michael Matchett and Senior Associate Molly Hunt from Cushman & Wakefield’s National Industrial Advisory Group – Mountain West worked on behalf of the seller. Executive Vice Chair Rob Rubano, Executive Managing Director Brian Share and Managing Director Joseph Lieske from the Equity, Debt & Structured Finance team arranged the financing.

Back in August, CIP acquired Tully Business Center, a small-bay, 143,221-square-foot industrial park in San Jose, Calif. Dollinger Properties sold the asset for $40 million.

Phoenix’s strong industrial scene

Located 2140-2360 West Broadway Road, the industrial park is in Phoenix’s Mesa submarket, within a 67.5-acre master-planned park. Broadway 101 Commerce Park is centrally located near the Sky Harbor Airport/Tempe area, providing access to Loop 101, Loop 202 and US-60 freeways, as well as proximity to the light rail.

Phoenix’s industrial market continues to thrive, with the industrial sales volume reaching nearly $2.2 billion in 2024 through October, according to a recent CommercialEdge report. The average price per square foot stood at $162, with more than 15 million square feet of industrial space changing hands.

The metro also led the nation in terms of industrial development, despite a slowdown in construction starts. At the end of October, metro Phoenix had approximately 24.7 million square feet of industrial space under construction.

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Montecito Medical Real Estate has acquired Chandler Medical Pavilion, a 65,931-square-foot outpatient facility in Chandler, Ariz., for $30 million.

JLL’s Medical Properties Capital Markets team brokered the transaction and worked on behalf of the seller, a partnership between Unbound Development and Webb Investments.

In early 2022, the property became subject to a 10-year, $22 million permanent loan from First-Citizens Bank & Trust Co., CommercialEdge data shows.

Tailor-made for Banner Health

The Class A medical office building is fully leased, as the property was completed in 2021 to meet the needs of a single tenant, Banner Health. Chandler Medical Pavilion is a three-story ambulatory surgery facility featuring three operating rooms, an imaging center and cardiology department, as well as a Banner Health Clinic with gastroenterology, endocrinology and orthopedics divisions. The property includes grade-level parking with upwards of 300 spots.

Chandler Medical Pavilion is at 1125 S. Alma School Road, just off Arizona State Route 202 and across the road from the Banner Ocotillo Medical Center. Chandler Regional Medical Center and the East Valley Dermatology Center are both less than 2 miles from the property. Downtown Phoenix is some 22 miles northwest.

In a recent interview with Commercial Property Executive, Alliance CGC Founder & CEO Ben Reinberg talked about the factors currently fueling demand for medical outpatient centers across the country.

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LaSalle Investment Management has acquired Tempe Commerce Park, a five-building industrial complex totaling 536,122 square feet in Tempe, Ariz. The acquisition was made on behalf of LaSalle Property Fund, the company’s U.S. core open-ended fund. An acquisition price was not disclosed.

Located at 7340-7360 S. Kyrene Road and 7333-7343 S. Hardy Drive, Tempe Commerce Park provides accessibility to several major transportation routes, including Interstate 10 and U.S. Route 60.

The property, which totals more than 36.7 acres, features 24-foot clear heights and dock-high as well as grade-level doors. The complex is 92 percent leased to eight tenants, including McKesson, Genuine Cable Group and Rivian.

LaSalle manages $88.2 billion of assets in private and public real estate equity and debt investments as of Q3 2024. The firm’s clients include public and private pension funds, insurance companies, governments, endowments, corporations and high-net-worth individuals worldwide.

READ ALSO: 2024 Industrial Net Lease Sales and Cap Rates

JLL represented the seller, a global investment manager and BKM Capital Partners, in the sale to LaSalle. The JLL effort was led by Senior Managing Director Mark Detmer, Senior Director Greer Oliver and Associate Connor Nebeker-Hay. The local market leasing efforts were handled by CBRE Senior Vice President Jackie Orcutt and First Vice President Jonathan Teeter.

BKM Capital Partners focuses on investing in small and mid-bay light industrial properties in the western U.S. In December, the company undertook a $550 million recapitalization of a nine-property light industrial portfolio totaling more than 2.1 million square feet in the West.

Phoenix industrial supply overshoots demand

Greater Phoenix has been one of the U.S. industrial markets to see a post-pandemic boom in demand that outpaced supply, followed by a more recent ramping up of supply that has outpaced demand. 

In 2019, new supply was ahead of net absorption, but by a relatively small amount, with both figures hovering around 5 million to 6 million square feet that year, according to JLL data.

By 2021, pandemic-era demand for online sales, deliveries and last-mile logistics spurred a spike to nearly 20 million square feet of net industrial absorption, with new supply that year only a bit more than half of that, JLL notes. By 2023, however, new supply shot ahead that year to more than 30 million square feet, or roughly three times the total net absorption. Thus, vacancies are up. Total vacancy was at 12.5 percent as of Q3 2024, reports JLL. However, the report further forecasts that development will soon taper off. The absorption of recently delivered space will thus lead to an anticipated peak in vacancy rates in 2025.

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A joint venture of George Oliver Cos. and Ascentris has acquired 7272 E Indian School, a 165,220-square-foot office building in Scottsdale, Ariz., for $42.3 million. Seller Goldman Sachs Asset Management LP bought the asset in 2016 from Lowe for $40 million, according to CommercialEdge information. JLL arranged the current deal for the seller.

7272 E Indian School, along with two other similar assets the partnership purchased this year—4167 and 4141 N. Scottsdale Road—will be renovated and transformed into an office campus carrying the George Oliver trademark.

Located 12 miles east of downtown Phoenix, the three adjacent properties are at the corner of Scottsdale Road and Indian School Road, totaling over 350,000 square feet on a 6-acre site. With George Oliver Design in charge of design and architecture, the campus, soon to be dubbed Old Town Scottsdale, is scheduled to begin renovations in 2025.

The last piece of the puzzle

Completed in 1988, the five-story office building at 7272 E Indian School Road previously underwent renovations in 1998 and 2012. On-site amenities include conference rooms, individual pods for teleconferencing and podcasting, as well as a fitness center, dining and bar areas and EV charging stations. The tenant roster comprises Cornerstone Advisors of Arizona LLC, Crest Insurance Group LLC, Puritan Life Insurance Company of America, along with Grossman Company Properties.

JLL’s Senior Managing Director Ben Geelan and Senior Director Will Mast, together with Jack Miller and Real Estate Analyst Virginia Martin, worked on behalf of the seller in the present transaction.

The post George Oliver, Ascentris Buy Last Piece of Phoenix Office Campus appeared first on Commercial Property Executive.

The seller, Regent Properties, had acquired the property from FCA Partners for $58.6 million back in 2014. The campus is subject to a 78-year unsubordinated net ground lease held by the State of Arizona, according to CommercialEdge data.

Discount Tire has been a tenant at Desert Ridge Corporate Center since 2019, where it occupies an entire floor. The location is 4.7 miles from the retailer’s main headquarters. Additionally, it’s just a mile away from the 35-acre site it purchased in December 2022 for the construction of a new corporate campus.

READ ALSO: Office Sector Decline Continues Amid Flexibility Shift

The 12-acre Desert Ridge comprises two four-story office buildings, measuring 137,983 square feet and 137,225 square feet, that were completed in 2005 and 2007, respectively. The property features electric vehicle charging stations, elevators, controlled access and a three-level parking structure.

Located at 20830 and 20860 N. Tatum Blvd., the office campus is near major routes including the Loop 101 and Squaw Peak Parkway. The buildings are directly opposite The Marketplace at Desert Ridge, a 1 million-square-foot retail hub.

A top 10 best-performing market for office investment

Phoenix remained one of the top 10 best-performing markets for office investment, according to recent CommercialEdge data. However, the Valley’s development activity slowed this year, the under-construction pipeline being one of the smallest among the major U.S. metros at the end of October.

The market’s office sales volume totaled $1 billion year-to-date through October, comprising 7.2 million square feet across 82 assets. The dollar value was up by 18.5 percent on a year-over-year basis.

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One to four tenants can fit within the Surprise Pointe Commerce Center, which features 80 dock doors, a 190-foot truck yard, a 36-foot clear height, 103 truck trailer parking stalls, 466 auto-parking stalls and custom-designed office space.

Rockefeller Group was excited about the opportunity to develop in Surprise, Noah Goldstein, development associate for Rockefeller Group’s West Region, told Commercial Property Executive.

“We were attracted by its perfect blend of strategic location, business-friendly environment and proximity to TSMC,” he said. “Given the rise in emerging industries calling Surprise home, we saw a chance to contribute to the city’s growth during such a formative time.”

Rockefeller Group has been active in developing industrial buildings in the Phoenix and Arizona market for decades, including projects in Chandler, Gilbert and Tucson. Further, Rockefeller Group has developed multifamily projects in Goodyear, Gilbert and North Phoenix, with several projects under construction in the Laveen area of Phoenix.

The Phoenix-area market continues to thrive

As for distribution center demand, Goldstein said the past two years have been slower compared to the exciting run-up seen during the COVID-19 era, but the future of Phoenix is as exciting as ever.

“We expect demand to continue pushing up as the state sees more job, labor and housing growth. Every week, we read about new companies moving their regional or corporate headquarters to the city, and we expect this trend to continue.”

READ ALSO: How Automation and AI Shape Industrial Demand

Interstate 10 and Loop 303 are easily accessible to the site, which is also near U.S. 60, Interstate 17 and Loop 101. Therefore, the facility can also serve Tucson, Las Vegas, all of Texas and Albuquerque, N.M.

Cooper Fratt and John Werstler of CBRE are marketing the project for lease or sale.

Layton Construction was its general contractor, Ware Malcomb the designer and Rockefeller Group’s civil engineer was Hunter Engineering.

In September, a joint venture of Matan Cos, Mitsubishi Estate New York, Chuo Nittochi and Taisei USA LLC, along with Rockefeller Group, began construction on the first phase of Port 460 Logistics Center in Suffolk, Va. The plan is for it to comprise about 5 million square feet.

The first phase of the 540-acre campus will consist of 2.4 million square feet across five buildings. The second phase will comprise four facilities totaling 2.6 million square feet.

In May, construction began on the Rockefeller Group Logistics Center at Carneys Point, a two-building, more than 1.1 million-square-foot campus in Carneys Point, N.J. This is Rockefeller’s second such project in Southern Jersey. Rockefeller built a 345,600-square-foot warehouse in Mount Holly, N.J.

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A group of private investors have acquired 501 Gateway, a 102,305-square-foot, recently renovated office building in Phoenix, for $18 million. Irgens previously owned the asset, according to CommercialEdge information. Cushman & Wakefield represented the seller.

The property was 82 percent leased to a diverse tenant mix at the time of sale, including Knight Management and the County of Maricopa.

Irgens had purchased the asset for $17 million in 2016, the same source shows. A $16.1 million loan from Western Alliance Bank financed the acquisition.

READ ALSO: Phoenix Office Market’s Small Wins Add Up

That same year, the 1997-completed property at 501 N. 44th St. underwent cosmetic renovations. The four-story building features floorplates averaging 25,500 square feet and structured parking with a parking ratio of 5 spaces per 1,000 square feet. Amenities include a contemporary lobby and a café with indoor and outdoor patio seating.

The transit-oriented property is some 2 miles from Phoenix Sky Harbor International Airport. Downtown Phoenix is roughly 6 miles southwest.

Cushman & Wakefield Executive Managing Directors Eric Wichterman and Chris Toci, along with Managing Director Mike Coover, brokered the deal on behalf of Irgens.

Phoenix office sales remain steady

Phoenix’s office investment volume year-to-date as of November reached $1.1 billion, according to a recent CommercialEdge report. Assets traded for $164 per square foot on average, slightly below the $179 national figure.

In the metro’s largest transaction of the year so far, Wide Open Excursions acquired 24th at Camelback II for $97.9 million. Hines sold the 306,877-square-foot Class A asset.

More recently, U-Haul paid $23.7 million for 20 E. Thomas Road, Arizona’s third tallest office tower. The deal marked the largest owner/occupier office sale in the Southwest since early in the pandemic.

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Phoenix continues to lead the nation in terms of industrial development, despite a slowdown in construction starts. At the end of October, the metro had 24.7 million square feet of industrial space under construction across 95 projects. Nevertheless, construction starts for industrial projects have decreased sharply since the same period last year.

When it comes to sales, the Phoenix industrial market is thriving, with nearly $2.2 billion in transactions recorded year-to-date through October. The average price per square foot stood at $162, with over 15 million square feet of industrial space changing hands.

A slowdown in construction starts

At the end of October, Phoenix had 24.7 million square feet of industrial space under construction across 95 projects. The pipeline accounted for 5.9 percent of existing stock, significantly surpassing the national average of 1.8 percent.

Among peer markets, Kansas City (4.1 percent) also recorded higher numbers than the national average, while New Jersey (1 percent), Indianapolis (1.1 percent) and the Inland Empire (1.5 percent) had the lower numbers.

In the first 10 months of the year 10.7 million square feet of space broke ground in the metro across 55 properties, showing a significant decrease compared to an average of 32.5 million square feet annually over the previous three years. This represents 2.4 percent of total stock, higher than the 0.9 percent national average, according to CommercialEdge data.

Taiwan Semiconductor Manufacturing Co.’s 3.8-million-square-foot project remains the largest industrial property under construction within the metro. Spanning 805 acres at 5088 W. Innovation Circle—within the metro’s North Gateway submarket—the facility will be the most advanced semiconductor fabrication plant in the country. TSMC’s project, expected to be completed in the beginning of next year, is supported by $6.6 billion in direct U.S. funding provided under the CHIPS and Science Act. 

Lincoln Property Co.’s 1.3 million-square-foot Building C at the Luke Field campus in Glendale ranks fifth among the metro’s largest industrial projects under construction. Totaling 2.4 million square feet, the $515 million Class A industrial project will also include the 695,750-square-foot Building A and the 454,761-square-foot Building B.

Still leading industrial development

Year-to-date through October, 142 projects totaling almost 29 million square feet of industrial space came online in Phoenix. Deliveries accounted for 6.9 percent of the market’s total stock, much higher than the national average of 1.6 percent.

Pheonix ranked first, with Dallas (27 million square feet) following closely. Metros such as New Jersey (7.8 million square feet), Atlanta (7 million square feet) and Indianapolis (6.1 million square feet) lagged behind.

Prologis has completed the 1.2 million-square-foot Building 1 at Prologis 303 Business Park in Goodyear, Ariz. At full build-out, the 113-acre campus will comprise two buildings totaling some 1.6 million square feet. Continuing to expand its presence in Phoenix, Amazon signed a 1.2-million-square-foot lease at the facility, committing to a 10-year tenancy.

Ross Stores has delivered Ross Distribution Center, a 1.7 million-square-foot distribution hub in Buckeye. Covering 125 acres at 23255 W. Southern Ave., the site is near Interstate 10, at the intersection of Southern Avenue and Watson Road. The developer purchased the site back in 2022 for $28.3 million.

READ ALSO: Industrial Demand Slips, But Avoids a Slump

Industrial deal volume increased in Phoenix

Phoenix’s industrial sector registered almost $2.2 billion in sales year-to-date through October, surpassing the $1.6 billion recorded at this point in 2023. Involving 171 properties, more than 15 million square feet of industrial space changed hands across the metro, according to CommercialEdge data. Assets traded at an average price of $162 per square foot.

Among peer markets, The Inland Empire ($263 per square foot) and New Jersey ($218 per square foot) were the priciest metros and surpassed the national average of $113 per square foot, while Indianapolis ($70 per square foot) and Kansas City ($40 per square foot) recorded the lowest average sale prices nationwide. 

Cohen Asset Management has recently sold a 400,000-square-foot Class A cross-dock industrial building in Phoenix for $69.6 million. Karney Properties purchased the facility located at 7200 W. Buckeye Road. The Home Depot fully leases the property and uses it as a return center.

Phoenix industrial vacancy grows year-over-year

Phoenix’ industrial vacancy rate at the end of October reached 6.4 percent, lower than the national average of 7.2 percent, but much higher than the 2.4 percent recorded in the metro in October 2023. Other markets with vacancy rates above the national average were Indianapolis (9.1 percent), Dallas (8.3 percent), New Jersey (7.8 percent) and the Inland Empire (7.3 percent).

Gateway Classic Cars has recently signed to become Greystar’s first tenant at the Class A three-building Caliber by Greystar industrial development in Peoria, Ariz. The company will occupy 43,809 square feet in Caliber’s 122,863-square-foot Building B.

Additionally, GTI signed a full-building lease for a 530,307-square-foot facility at Lakin Park in Goodyear, as part of its expansion in the Phoenix industrial market. The newly completed building at 17505 W. MC 85, within the 400-acre master-planned logistics campus, will be used for light manufacturing and battery casings assembly.

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SENTRE has purchased a 322,070-square-foot industrial asset in Tolleson, Ariz., for $48.8 million. Brennan Investment Group sold the metro Phoenix property with representation from Cushman & Wakefield.

The asset came online in 1988 and was expanded in 2010. Brennan acquired it two years later in a $178 million portfolio deal encompassing 3.8 million square feet, CommercialEdge data shows. AIC Ventures sold that collection.

Specifications include clear heights of nearly 35 feet, 29 dock and six grade-level doors, roughly 26,000 square feet of office space and truck courts with depths between 110 and 140 feet. Additionally, the property features 110 parking stalls.

READ ALSO: These CRE Transactions Typify an Interesting 2024

WinCup—a manufacturer of foodservice products which had owned the building between 1999 and 2008, according to CommercialEdge data—fully leases the facility. The triple-net deal is set to expire in 2039.

Located on more than 15 acres at 7980-7990 W. Buckeye Road in Phoenix’s Southwest Valley submarket, the facility is less than 3 miles south of Interstate 10. The area has witnessed a boost in warehouse and logistics space demand as it provides access to a nearby railroad and thoroughfares such as interstates 10 and 17, Loop 101 and 202, according to Cushman & Wakefield.

The Cushman & Wakefield team that represented Brennan included Executive Vice Chair Will Strong, Vice Chair Phil Haenel, Director Foster Bundy and Associate Katie Repine.

Industrial investment shines in The Valley

Greater Phoenix’s industrial sale volume totaled more than $2.2 billion in the first 10 months of the year, according to a CommercialEdge report. Only two western markets fared better—the Bay Area ($3 billion) and Los Angeles ($2.4 billion).

Assets traded on average for $159 per square foot year-to-date through October, above the national average of $129 per square foot, the same source reveals.

The Southwest Valley in particular witnessed heightened sales activity. Just last month, BGO paid $118.3 million for an Ares Management property in Buckeye, Ariz. Amazon is the sole tenant of the 1 million-square-foot facility.

In July, BlackRock-managed funds acquired CRG’s 1.2 million-square-foot asset in Glendale, Ariz., for $128.1 million. Amazon leased that facility as well. The building is part of a 335-acre industrial park set to comprise 5.5 million square feet upon full build-out.

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The largest owner/occupier office sale in the Southwest since early in the pandemic has closed.

U-Haul has paid $23.7 million for 20 E. Thomas Road in Phoenix, Arizona’s third tallest office tower. An entity controlled by Bank of America sold the 548,938-square-foot asset in a deal brokered by Cushman & Wakefield and Kidder Mathews. The sale also included a 1.1-acre land parcel for additional parking.

The previous owner, LBA Realty, had purchased the high-rise in 2006 for $76.3 million, according to CommercialEdge information. This June, several months after leases comprising more than two thirds of the building expired, the Bank of America entity foreclosed on the property that was encumbered by a $62 million loan originated in 2016.

READ ALSO: Phoenix Office Market’s Small Wins Add Up

U-Haul will use the building to expand its corporate campus in Midtown. About 16 percent of the tower will remain leased to existing tenants, while the moving and self-storage company will occupy the rest.

The 25-story high-rise came online in 1988 and includes about 1,500 square feet of first-floor retail space. The building has floorplates averaging 23,000 square feet, a conference and training center, along with about 1,230 parking spaces.

The transit-oriented tower is some 2 miles from downtown Phoenix and less than 1 mile from U-Haul’s headquarters at 2727 N. Central Ave. The property is part of the 11-acre mixed-use development dubbed Phoenix Plaza, comprising 1.5 million square feet of office space, 30,500 square feet of retail, a 242-key hotel and an 11-story parking garage.

Cushman & Wakefield Executive Managing Directors Eric Wichterman and Chris Toci, as well as Managing Director Mike Coover, represented the seller, while Executive Managing Director Jerry Roberts and Managing Director Pat Boyle provided leasing advisory. Kidder Mathews Senior Vice President Ryan Eustice worked on behalf of U-Haul.

Phoenix office sales remain steady

Phoenix’s office investment volume year-to-date as of October reached $1 billion, according to a recent CommercialEdge office report. Assets in the metro traded for $164 per square foot on average, below the $177 national figure. Meanwhile, the Valley’s vacancy rate registered a 60-basis-point decrease year-over-year, clocking in at 18.4 percent in October.

In the metro’s largest office deal of the year, Wide Open Excursions acquired a 306,877-square-foot tower for $97.9 million. Hines sold the Class A asset that came online in 2009.

Other notable transactions included Net Lease Office Properties’ sale of a 354,000-square-foot office building for $71.5 million. The property had previously changed for nearly $40 million in 2000.

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On par with ongoing national trends, the Phoenix office sector’s construction activity slowed this year, with developers breaking ground on only nine projects, according to CommercialEdge data. The metro’s under-construction pipeline was one of the smallest among major U.S. metros as of the end of October.

However, the Valley of the Sun remained one of the top 10 best-performing markets for investment in the office sector. Meanwhile, coworking space in Phoenix was on par with the national figure, while conversion of office space into residential is a growing option to deal with the sector’s woes.

Development activity trails peer markets

As of October, Phoenix had 555,850 square feet of office space under construction, accounting for 0.4 percent of existing stock—below the national figure of 0.9 percent. When factoring in projects in the prospective and planning stages, the rate reached 1.9 percent of existing stock—still below the national rate of 3.2 percent.

The metro is still struggling with office supply and had one of the smallest pipelines among high-volume secondary markets. Austin led, with 3.5 million square feet underway, followed by San Diego (3.1 million square feet), Dallas (3 million square feet), Nashville (2.1 million square feet) and the Bay Area (1.8 million square feet). Markets with smaller pipelines were Detroit (524,000 square feet) and the Twin Cities (435,666 square feet).

The largest project currently under construction remains SunCap Property Group’s Gilbert Spectrum’s Building 3, a 119,222-square-foot office building that broke ground in July 2023. Its completion date was pushed to the end of the year.

Another notable office development is HonorHealth Medical Campus at Peoria, a 100,000-square-foot health-care facility. Developed by Anchor Health Properties, HonorHealth and SMIL, the project topped out in April this year is expected to come online in early 2025.

Construction starts totaled 561,845 square feet across nine properties year-to-date through October, while developers delivered 646,629 square feet in 10 properties.

One project that came online in 2024 is Levine Investments’ office campus at 8240 S. River Parkway in Tempe, Ariz., totaling 135,000 square feet. The property is part of Arizona State University’s Research Park.

Office-to-residential conversion an option for Phoenix

While the office landscape struggles with rising vacancy rates and owners are offloading properties, office-to-residential conversions pose an increasingly attractive option. A new tool developed by CommercialEdge, the Conversion Feasibility Index, evaluates and lists the potential of office properties for residential makeovers, based on building features and property-level scores.

There are currently 41 office properties in metro Phoenix with a score between 75 and 100, placing them as Tier I and II candidates for future residential redevelopment. Of the total, 35 are in Phoenix, while the Mesa and Scottsdale submarkets each have three candidates.

Transaction activity increased year-over-year

Year-to-date through October, Phoenix office properties traded for a total of $1 billion, comprising 7.2 million square feet across 82 assets. The deal volume increased by 18.5 percent on a year-over-year basis. The metro ranked eighth among the best-performing markets, with Manhattan leading with $3.3 billion. Across Sun Belt markets, the Bay Area came first with $2.1 billion and was followed by Dallas ($1.1 billion), while Phoenix outperformed Austin ($881 million).

One of the biggest transactions closed in the metro was the $97.9 million sale of 24th at Camelback II, a 302,209-square-foot Class A building. Hines sold the 11-story property at the end of October to Wide Open Excursions, in one of the largest office deals since 2022.

The second largest office transaction was the sale of 24th at Camelback I, an asset with the same square footage. The 2000-completed building changed hands from New York Real Estate Investors to Columbus Properties in a $86.1 million deal.

The average sale price for office properties in Phoenix was $164 per square foot—below the national figure of $177 per square foot. Among similar markets, deals were pricier in the Valley when compared to Dallas ($130 per square foot) and Houston ($104 per square foot).

Phoenix office vacancy rate below the national figure

As of October, Phoenix’s office vacancy rate reached 18.4 percent, down 60 basis points over a 12-month period and below the national rate of 19.4 percent. The index was one of the lowest among similar markets, such as Austin (27.7 percent), the Bay Area (26.4 percent), Houston (24.3 percent) and Dallas (23 percent).

Earlier this year, a fund managed by Cousins Properties inked a 26,042-square-foot lease at Hayden Ferry Lakeside II, a 318,240-square-foot office building in Tempe, Ariz. The in-home care provider previously occupied 25,000 square feet at the LEED Gold-certified property, under a sublease agreement.

An expansion in the coworking sector

As of October, coworking spaces in Phoenix totaled 2.8 million square feet, more than in the Bay Area (2.6 million square feet) and Austin (1.7 million square feet). Manhattan led all rankings with 11.2 million square feet. The share of flex office space as percentage of total leasable office space reached 1.9 percent, on par with the national figure, but higher than Austin’s (1.7 percent) and the Bay Area’s (1.2 percent).

Providers with the largest footprints in the metro remained unchanged—Regus led with 567,688 square feet, followed by Expansive (207,095 square feet), Industrious (201,712 square feet), Spaces (171,460 square feet) and Bellagio Executive Plaza (140,393 square feet).

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Lena Centers, a Longpoint Realty Partners division, has acquired El Monte Shopping Plaza, a 101,269-square-foot retail center in Phoenix. Primestor Development sold the asset for $17 million, according to CommercialEdge information. The property was 99 percent leased at the time of closing. 

El Monte Shopping Plaza came online in 1962 and has since been continuously serving more than 160,000 people living within a 3-mile radius. Covering an 8.8-acre site, the property is anchored by El Rancho Market IGA, a Mexican and Hispanic specialty grocery store. Its tenant roster comprises 15 tenants, including Baskin-Robbins, Shoe Palace, ArchWell Health and USA Cash Services. 

El Monte Shopping Plaza is at 8917 N. 19th Ave., just south of the Valley light rail and 12 miles from downtown Phoenix. Interstate 17 is also nearby.

Colliers Executive Vice President Mindy Korth and Vice President JK Jackson together with Vice Chair El Warner and Vice President Caitlin Zirpolo arranged the transaction. 

Earlier this month, Longpoint purchased a slightly smaller retail center in Katy, Texas. JLL Capital Markets brokered the sale of the 96,486-square-foot asset that was completed in 1978.

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Amazon fully occupies the property, CommercialEdge data shows. Located at 18900 W. McDowell Road in Phoenix’s flourishing Southwest Valley submarket, the project was completed in March and covers more than 60 acres.

The property is near Interstate 10 and the AZ 303 Freeway, within six hours of the Los Angeles and Long Beach Ports. It includes a 40-foot clear height, multiple points of ingress/egress and 190-foot maneuverability, among other features.

READ ALSO: Industrial Demand Slips, But Avoids a Slump

Will Strong, Michael Matchett and Molly Hunt of Cushman & Wakefield’s National Industrial Advisory Group represented all parties in the transaction. Andy Markham, SIOR, Mike Haenel and Phil Haenel provided leasing advisory and will continue to handle the project’s leasing services.

Phoenix has benefited from its strategic location, pro-business attitude and continued population growth, Josh Tracy, senior vice president of real estate development at Ryan Cos., told Commercial Property Executive.

“These factors, combined with the tailwinds from onshoring and nearshoring, have allowed Phoenix to rise to the top of the list for large domestic and industrial companies,” Tracy said.

Cushman & Wakefield’s third-quarter 2024 report reveals a rise in occupancy of more than 7 million square feet year-to-date in the Southwest Valley. That growth outpaces every submarket in the metro area by a significant margin.

The Paloma Vista Center is part of a master-planned industrial park. A recently completed 423,000-square-foot building is adjacent to the property, and a 1.2 million-square-foot project is planned for the second phase. Upon completion, the industrial park is set to include a combined 2.7 million square feet.

An active industrial market

In September, LaSalle Investment Management acquired Buckeye85, an industrial building in Phoenix, on behalf of LaSalle Property Fund. The sellers were Lincoln Property Co. and Goldman Sachs, according to CommercialEdge data. The 321,892-square-foot warehouse was completed in 2023 and is fully leased to Tempur-Pedic, which uses it as a distribution center.

In October, Logistics Property Co. finished constructing its first industrial development in metro Phoenix. Palm Gateway Logistics Center is a 615,000-square-foot, four-building spec project in Mesa, Ariz.

The post BGO Buys 1 MSF Logistics Center for $118M appeared first on Commercial Property Executive.

SKB, in joint venture with Arc Capital Partners, has acquired Fiesta Tech Center, a two-building industrial campus totaling 243,370 square feet of space in Gilbert, Ariz., for $19.1 million.

Cushman & Wakefield worked on behalf of both parties. The seller was Nearon Enterprises, that owned the properties since 2019, according to CommercialEdge. The industrial campus previously changed hands for approximately $18.1 million.

Fiesta Center is 100 percent leased to Kaiser Garage Doors & Gates—fully occupying the first building—and MKB Construction and Symage.

READ ALSO: Top 5 Markets for Industrial Transactions

The two industrial buildings came online between 1987 and 1997 and are within the Southeast Valley submarket of Phoenix. Situated at 1250 and 1300 N. Fiesta Blvd., they feature 16-foot clear heights, dock levelers and bumpers, grade-level loading doors, eight dock-high loading doors each, office space and a total of 523 vehicle parking spots, according to CommercialEdge.

The some 16-acre industrial campus provides easy access to loops 101 and 202, while being 13 miles from Phoenix Sky Harbor International Airport, 19 miles from Phoenix-Mesa Gateway Airport and within 28 miles of Glendale, Ariz.

Vice Chairman Phil Haenel, Executive Vice Chairman Will Strong, Director Foster Bundy and Associate Katie Repine with Cushman & Wakefield’s Private Capital Group brokered the deal on behalf of both parties.

Pricy Phoenix among best-performing metros

Industrial deals in metro Phoenix totaled $1.9 billion as of September, according to a recent CommercialEdge report. Assets traded at an average sale price of $159 per square foot, above the national average of $130. Across Western markets, Phoenix outperformed Denver ($142 per square foot) and Central Valley ($129 per square foot).

One significant industrial transactions that closed earlier this year include EQT Exeter’s $60 million acquisition of a 641,906-square-foot asset in Buckeye, Ariz. The vacant property is part of a 145-acre master-planned project that will include 1.2 million square feet.

Earlier this month, Indus Realty Trust marked its first industrial acquisition in Phoenix with a $72.4 million purchase. The company picked up a 393,484-square-foot, fully leased distribution center from CBRE Investment Management.

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Gateway Classic Cars has signed to become Greystar’s first tenant at the Class A three-building Caliber by Greystar industrial development in Peoria, Ariz.

Reportedly the world’s largest classic car sales company, Gateway currently operates 20 U.S. sales showrooms, as well as an online sales platform, all focused on classic, exotic, muscle, vintage and antique cars.

The company will occupy 43,809 square feet in Caliber’s 122,863-square-foot Building B. The 411,918-square-foot industrial campus also includes the 114,446-square-foot Building A and the 174,609-square-foot Building C.

Anthony Lydon, John Lydon, Hagen Hyatt and Kelly Royle of JLL represent Greystar as the exclusive leasing brokers for Caliber. Hyatt and Sam Wetherby, also of JLL, represented the tenant.

The industrial component of a mixed-use development

Caliber is the industrial component of Greystar’s $500 million, 88-acre Peoria Place master-planned development. At full build-out, the mixed-use property will include luxury apartments, build-for-rent homes and ground-floor retail in Peoria’s historic downtown.

The three industrial buildings were the first to get underway at Peoria Place, in May 2023. The mixed-use master plan is intended in part to revitalize downtown infill land and started rolling forward meaningfully back in 2020, when the city government approved rezoning.

READ ALSO: Phoenix Industrial Development Leads the US

The buildings are at 9303, 9451 and 9595 N. 79th Ave. and feature 32-foot clear height, 50- by 52-foot column spacing, LED lighting, ESFR sprinklers and 190-foot truck courts. The warehouses also include speculative office space with conference rooms, break rooms, open and private offices.

In addition, the electrical infrastructure of each facility offers tenants the opportunity to double their power capacity from 3,000 to 6,000 amps, supporting such capabilities as roof-mounted solar systems and EV charging stations.

Caliber is at the southwest corner of 79th and Grand avenues, directly along U.S. Route 60, 2 miles from Loop 101. The location has quick access to the Westgate Entertainment District, State Farm Stadium and Pioneer Community Park, an 83-acre public space with dog parks, an urban lake, public art and more than 10 lighted fields for various sports.

Desert emptiness

The metro Phoenix industrial space market saw 36 buildings totaling 9.6 million square feet delivered in the third quarter, according to a recent report from JLL. The 7 million square feet of this new supply that came onto the market vacant pushed overall vacancy up by 160 basis points quarter-over-quarter.

“Notably, properties built since 2023 account for nearly 75 percent of total availability, highlighting the rapid transformation of Phoenix’s industrial stock,” JLL reported. “Infill submarkets with older inventory and limited land availability have seen less speculative development and continued to maintain lower vacancy rates.”

The post Greystar Lands 1st Industrial Tenant at $500M Phoenix Mixed-Use appeared first on Commercial Property Executive.

Indus Realty Trust has acquired Phoenix Airport Logistics, a 393,484-square-feet warehouse/distribution center in Phoenix’s airport submarket. CBRE Investment Management sold the asset for $72.4 million, according to public records. The building was fully leased to five tenants at the time of the sale, including Amazon. Cushman & Wakefield advised the seller.

Ahead of the recent sale, the property carried a $27.2 million loan originated in 2020 by Pacific Coast Capital Partners. The property last traded in 2019, when Principal Real Estate Investors sold it for $38.8 million.

The cross-dock distribution center located at 3333 S. Seventh St. came online in 2016 It includes a 36-foot clear height, 96 dock-high doors and 62 trailer parking spaces. It is located near both downtown Phoenix and Sky Harbor Airport.

Indus Realty Trust, which specializes in logistics properties, owns or has majority ownership in 55 properties and projects under development, totaling 9.3 million square feet. Indus itself is largely owned by affiliates of Centerbridge Partners, a private investment firm, and GIC, a global institutional investor. Also, a subsidiary of the Abu Dhabi Investment Authority owns an interest in Indus.

Earlier this year, Indus acquired a recently completed 550,243-square-foot industrial facility in Jacksonville, Fla., that is fully leased to European retailer Primark. VanTrust Real Estate was the seller.

As for the Phoenix deal, Cushman & Wakefield Executive Vice Chair Will Strong, Director Michael Matchett and Senior Associate Molly Hunt brokered the deal as exclusive brokers.

Supply wall hits Phoenix industrial

The Phoenix industrial vacancy came in at 12.7 percent in the third quarter of 2024, the sixth consecutive quarterly rise, according to Cushman & Wakefield. The reason is straightforward: a rush of supply into the market immediately after 2020 that hasn’t been matched by demand, even though demand is still higher than it was in 2019.

Net absorption marketwide in the third quarter came in at 6.1 million square feet, a quarter-over-quarter drop from 8.1 million square feet. A lot of recent absorption has been build-to-suit completions, such as for TSMC’s 4.3 million-square-foot facility, the C&W report noted. The pace of construction, however, is now tapering off.

The Phoenix Airport submarket had a vacancy rate of only 6.5 percent in the third quarter, much lower than the metro figure, the same source shows. But even the Airport submarket is seeing a supply/demand imbalance: Year-to-date net absorption in the area is about 228,200 square feet, while construction completions in the third quarter alone totaled more than 1 million square feet.

The post Indus Enters Phoenix With $72M Buy appeared first on Commercial Property Executive.

Woodside Health has paid $20.9 million for Paradise Valley Plaza, a three-building, multi-tenant office and medical complex spanning 100,203 square feet in Scottsdale, Ariz., a Phoenix submarket. Cloud Peak Development LLC sold the asset in a deal brokered by Cushman & Wakefield.

The asset previously traded in September 2020, when Cloud Peak acquired it from Fenway Capital Advisors for $16.7 million—about $172.6 per square foot—according to CommercialEdge information.

The Class B campus came online in two phases in 1985 and 2000 and underwent cosmetic renovations in 2014. Its two-story buildings have floorplates of 30,000 square feet, CommercialEdge shows. Amenities include interior and outdoor courtyards, exterior loading suites and about 388 parking spaces.

READ ALSO: These Markets Top MOB Investment Activity

The property was 95 percent leased at the time of sale, with the tenant roster including office and medical/wellness companies such as HonorHealth, Next Level Physical Therapy and Forma Plastic Surgery.

Located at 5010, 5020 and 5040 E. Shea Blvd., the 6-acre complex is some 15 miles from downtown Phoenix and 14 miles from the Phoenix Sky Harbor International Airport. Medical providers in the surrounding area include Mountain View Medical Center, HonorHealth Medical Group and Dickerson Orthodontics.

Cushman & Wakefield’s Private Capital Markets Executive Managing Directors Eric Wichterman and Chris Toci, along with Managing Director Mike Coover, represented the seller.

MOB sector in the spotlight, despite some challenges

With an ever larger aging population driving demand, the U.S. medical office real estate market is projected to see further expansion in the coming years. Investors expect capital market activity to pick up as interest rates fall and the bid/ask spread narrows. However, the sector also faces challenges, such as a national shortage of medical specialists, which may impact growth despite the generally positive outlook.

Phoenix registered 31 medical office building sales over $1 million in the third quarter of this year, according to a CBRE report. Out of them, more than a quarter were part of portfolio transactions. Assets traded for $328.2 per square foot on average.

In October, Meridian purchased a 94,569-square-foot medical office building in Tucson, Ariz., from an affiliate of Tenet Health. The property will undergo a capex program slated for completion in early 2026 and will be fully occupied by El Rio Health.

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Built in 1963, Biltmore Fashion Park was Arizona’s first luxury outdoor shopping and dining center. The iconic property is known for its architecture, high-end retailers and restaurants and community events.

RED, a Phoenix-based commercial real estate company with a mixed-use and retail portfolio, acquired the remaining 50 percent ownership of the property from Macerich for $110 million in July, according to the Arizona Republic newspaper.

Earlier in the year, Macerich had filed plans with the city of Phoenix to build a mixed-use high-rise at the corner of 24th Street and Camelback ranging from 140 to 165 feet tall. The proposal is still under review but is expected to include residential offerings, upscale hotel accommodations and office space. Further details about RED’s plans for the mixed-use destination were not released at this time.

READ ALSO: How Dining Trends Are Reshaping Shopping Centers

However, RED is planning a strategic revitalization of Biltmore Fashion Park, including making improvements to landscaping and upgrading lighting. The company, which recently relocated its headquarters to the center, has also signed several new retail tenants. They will join anchors Macy’s, Saks Fifth Avenue and Life Time Fitness, and more than 65 specialty retailers including Anthropologie, J. Crew, Gorjana, Ralph Lauren, Lululemon, Pottery Barn and Sephora. The center’s dining options include Capital Grille, Blanco Cocina + Cantina, Zinburger, Ambrogio15 and True Food Kitchen.

Rye 51, a high-end menswear retailer offering custom suits, slacks, shirts and styling services, has relocated to a new 2,400-square-foot space between Tumi and Soma. Warby Parker eyewear company is slated to open in March 2025 in a more than 2,000-square-foot store next to Soma and Cornelia Park. Apex Tailoring, a luxury tailoring and custom suit boutique with a focus on menswear, will open in December in an 894-square-foot pop-up spot next to Macy’s. Another pop-up, PILLAR, an activewear and leisurewear retailer, is opening its first brick-and-mortar location in a 1,068-square-foot space next to Life Time Fitness this week.

More RED projects

RED Development, which is celebrating its 30th anniversary this year, is known for its mixed-use and retail properties across the Southwest and Midwest. Among its high-profile developments in the Phoenix area include PV, the $2 billion redevelopment of the former Paradise Valley Mall, and The Grove, a $500 million development on the Camelback Corridor. Last year, RED formed a joint venture with Globe Corp. to build a 150-acre mixed-use development in Goodyear, Ariz., that will create an upscale entertainment hub called GSQ with dining, retail, multifamily, office and hotel offerings.

In Dallas, RED and joint venture partner KB Asset Management Co. Ltd. refinanced the office and retail component of The Union, an 800,000-square-foot mixed-use property in the Uptown submarket, last month with a $227 million loan from Goldman Sachs.

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This recommendation reportedly is scheduled for a final vote by the county’s Board of Supervisors on Dec. 11.

The site is along U.S. 60, near the unincorporated community of Wittmann, Ariz., in the northwestern exurbs of Phoenix. If BNSF’s plans fully come to fruition, the 4,320-acre site will feature “a rail-served intermodal terminal, logistics center and logistics park,” according to the railroad.

One of the hurdles on the road to that, the PBJ reported, is a separate zoning case for the overall property that isn’t anticipated to make progress till next spring. Assuming that the rezoning occurs, BNSF plans to start construction later next year and have the project operational in 2028.

READ ALSO: How Infrastructure Investment Drives Industrial Space Growth

Local residents have “strongly opposed” the massive development since BNSF first invested in the area, the PBJ noted. It added that the incoming mayor of nearby Surprise, Ariz., has expressed concerns that the project will overtax the current road network, which he said is already beyond its designed capacity, and that BNSF’s plans to access groundwater also are problematic.

Rail power

Barely a month ago, Mohr Capital, of Dallas, completed West Summit at Surprise, a 707,380-square-foot, Class A industrial campus in Surprise. Mohr had acquired the 46-acre development site, part of Summit Business Park, in 2022 and broke ground on both buildings the following year. The 453,960-square-foot Building 1 has direct access to BNSF trackage.

In an interview with Commercial Property Executive last July, Mark IV Capital President & CEO Evan Slavik explained the strategies behind the company’s 4,300-acre Victory Logistics District in Fernley, Nev.

Slavik noted that one of the priorities for the park was ensuring that the site is served by both the Union Pacific and BNSF railroads. To leverage that, he said, Mark IV plans to build a private rail switching facility at the project, as well as a transload facility.

The post BNSF’s Plan for Huge Industrial Park Moves Forward appeared first on Commercial Property Executive.

Thompson Thrift continued its ongoing focus on Arizona markets with the completion of the first phase of Germann Commerce Center, an industrial development taking shape in the southeast Phoenix suburb of Queen Creek.

The initial phase of Germann Commerce Center comprises about 400,000 square feet of speculative light industrial space in five standalone buildings. The site covers approximately 26 acres at the southwest corner of Germann and Meridian Roads.

Phase I broke ground in January 2023. The buildings are front-park/rear-load facilities, with clear heights from 28 to 32 feet and frontage on East Germann Road. Thompson Thrift said the build-out of the speculative office space in phase I will be completed by the end of the year.

READ ALSO: Why Industrial Outdoor Storage Will Always Be In

Thompson Thrift will add approximately 622,000 square feet of industrial space during the project’s second phase, which is being marketed for build-to-suit and for-sale options. Upon completion, the full development will offer 1 million square feet of warehouse, distribution, light assembly and manufacturing space across 12 buildings on approximately 70 acres.

The company is also progressing on the first phase of Elliot Tech Center, a mixed-use project in Mesa’s Elliot Road Technology Corridor. More than 45 percent of the property is leased and it continues to see strong interest.

Phoenix’s active development market

A large data center at the Elliot Road Technology Corridor campus received funding earlier this year. EdgeCore Digital Infrastructure gained $1.9 billion in green financing to further develop its Mesa campus.

LG Energy Solution is constructing a $5.5 billion battery manufacturing complex that is expected to create 4,000 new jobs, making the company Queen Creek’s largest employer. The property will be near Germann Commerce Center and will offer 1.7 million square feet, with completion planned for early 2026.

The post Thompson Thrift Completes 1st Phase of 1 MSF Phoenix Project appeared first on Commercial Property Executive.

Lincoln Property Co. plans to redevelop an infill office project in Tempe, Ariz., to create Sky Harbor Logistics. Construction is expected to begin in the second quarter of 2025.

Lincoln paid $18.3 million for the 16.3 acres at 1515 W. 14th St. The existing infill space was built in 1977 as industrial space and renovated in 2016 into office product.

Will Strong and Molly Hunt with Cushman & Wakefield represented the sellers, Wentworth Property Co. and Northwood Investors. Jeff Wentworth, Mike Beall and Chris Walker, also of Cushman & Wakefield, provided property leasing support.

Office-to-industrial conversion plans

Today, the 218,268-square-foot, single-story office building is home, in part, to CarMax and is under a near-term lease expiration. It has a 1,044-space parking garage.

Lincoln will demolish the existing structures to make room for a pair of identical, 127,000-square-foot Class A buildings with a shared truck court. The project was designed for flexible single- or multi-tenant use and speed-to-market.

READ ALSO: Designing Buildings With Conversion in Mind

When complete, Sky Harbor Logistics will have a 32-foot clear height, 46 dock-high and 28 drive-in doors, as well as 3,600 amps of power per building. An HVAC system and LED lighting will be included and Early Suppression Fast Response sprinklers will be installed. In addition, clerestory windows are to surround each building to maximize natural interior lighting. Furthermore, Lincoln plans to reduce the parking area to 535 spaces.

The Class A industrial campus will be close to Sky Harbor International Airport and Interstate 10, providing connectivity to the entire Valley. The site is also proximate to the main campus of Arizona State University and the extensive shopping and dining amenities of downtown Tempe.

Butler Design Group is the architect for Sky Harbor Logistics. The firm has also designed EastGroup Properties’ two-phase industrial project in Phoenix’s Southeast Valley. Gateway Interchange is a seven-building, 655,400-square-foot complex on 50 acres in Mesa, Ariz.

Lincoln Property Co. broke ground last month on I-10 International, a 1 million-square-foot industrial campus in Tucson, Ariz. The $75 million first phase comprises three facilities totaling 562,245 square feet across 79 acres.

The post Lincoln Property Eyes Office-to-Industrial Conversion Project appeared first on Commercial Property Executive.

In the largest Greater Phoenix office sale of the year so far, Wide Open Excursions—a leisure service provider—acquired 24th at Camelback II for $97.9 million, public records show. Hines sold the 306,877-square-foot Class A asset with the assistance of JLL Capital Markets.

CommercialEdge data shows no other office asset traded for north of $97 million in the Valley since 2022. Back then, Aligned paid $115 million for Southwest Value Partners’ Continuum, a 231,829-square-foot property in Chandler, Ariz.

READ ALSO: H1 Office Deal Volume High in Phoenix

Designed by Pickard Chilton, 24th at Camelback II came online in 2009. The 11-story high-rise was 87.2 percent leased at closing, its tenant roster including Blue Origin, Dorsey & Whitney, Mercer, as well as Lucid and Squire Patton Boggs.

In alignment with green building trends, 24th at Camelback II attained LEED Platinum—the first multi-tenant office building to achieve such certification in Arizona—and Energy Star ratings through low-carbon emissions, water efficiency, waste reduction and renewable energy.

Located at 2325 E. Camelback Road, the office property is roughly 8 miles northeast of downtown Phoenix. A 314,000-square-foot open-air retail center, as well as multiple quick-service restaurants, are within walking distance.

The JLL team that spearheaded the sale on behalf of Hines included Senior Director Will Mast, Senior Managing Director Ben Geelan, Vice President Jack Miler and Analyst Gigi Martin.

Selling a renovated office campus

The office property is part of a two-building campus. In 2017, Hines began a repositioning effort focusing on the duo’s exteriors. One year later, the renovation efforts touched upon interiors. The overhaul included improvements to the lobby and common areas, conference room and suites.

In April, New York Life Real Estate Investors sold the campus’ other building, the 302,209-square-foot 24th at Camelback I, to Columbus Properties for $86.1 million, CommercialEdge data shows. New York Life Real Estate Investors had purchased it from Hines for $100 million in 2018.

Phoenix’s steady office investment scene

Year-to-date through September, the total office investment volume in Greater Phoenix reached $969 million, according to a CommercialEdge report. The metro ranked third for sales across Western markets. The Bay Area took the crown with $1.8 billion, followed by Los Angeles with $985 million.

In the Valley of the Sun, office assets sold on average for $174 per square foot during the first three quarters—slightly above the national average of $171 per square foot. Office properties were priciest in Los Angeles by a heavy margin ($345 per square foot), while the Bay Area’s figure of $278 per square foot lagged behind.

One other Great Phoenix office asset that changed hands this year was a 354,000-square-foot building in Scottsdale, Ariz. Net Lease Office Properties sold the asset for $71.5 million, using the proceeds to pay off existing debt.

The post Hines Sells Phoenix Office Asset for $100M appeared first on Commercial Property Executive.

The building is fully leased to The Home Depot for use as a return center, one of very few such facilities that the chain operates nationwide.

Located at 7200 W. Buckeye Road, the property has quick access to the junction of I-10 and Loop 202. It was completed in 2009 and sits on nearly 25 acres, according to CommercialEdge data.

The building features a fully air-conditioned warehouse, high-speed fans, equipment on every door, a gated yard area with a security station, about 4.5 percent of recently upgraded office space and roughly 4 acres of excess trailer parking that was customized by and for the tenant.

READ ALSO: Will CRE Market Conditions Improve?

Will Strong, Michael Matchett and Molly Hunt of Cushman & Wakefield’s National Industrial Advisory Group – Mountain West represented Cohen Asset Management in the transaction.

Based in Santa Monica, Calif., Karney Properties is a family-owned, institutionally operated real estate investor that for more than 70 years has acquired, owned, developed, financed and managed a portfolio of industrial, logistics, production and creative office properties. Most of these are in prime areas of the Los Angeles and Orange County markets, with the portfolio also expanding strategically in Phoenix and Las Vegas.

Rising vacancy

The Phoenix industrial market has seen vacancies rise across all submarkets, to an overall 12.7 percent, driven by both ongoing deliveries and growth in sublease space, according to a third-quarter report from Cushman & Wakefield. This in turn has undercut asking rental rates, though these seem to have stabilized more recently.

In the Southwest Valley submarket specifically, overall vacancy is 15.0 percent, with very modest net absorption of not quite 49,000 square feet in the third quarter, against an inventory of 191.5 million square feet.

In January, Bixby Land Co. sold two fully leased, last-mile industrial properties in Phoenix totaling 491,152 square feet in separate transactions to two buyers, both brokered by Cushman & Wakefield. LaSalle Investment Management acquired Canal Crossing, a 155,144-square-foot facility in the Airport submarket, and Link Logistics acquired Riverside @ 51, a 336,038-square-foot warehouse in the Southwest Valley submarket.

The post SoCal Investor Buys Home Depot Facility for $70M appeared first on Commercial Property Executive.

Logistics Property Co. has completed its first industrial development in metro Phoenix. Palm Gateway Logistics Center is a 615,000-square-foot speculative campus in Mesa, Ariz.

The developer broke ground on the four-building complex last January, financing its construction with a $62.9 million loan from Old National Bank, public records show.

Partners on the project included general constructor Alcorn Construction, architecture firm Ware Malcomb and civil engineer SWS Engineering. Lee & Associates is handling the leasing efforts.

READ ALSO: Lower Rates Signal Increase in Industrial Sales

Palm Gateway’s facilities range from 93,000 to 290,000 square feet, with clear heights between 28 and 36 feet. Built according to LEED standards, the property features a total of 140 dock-high doors and 16 drive-in doors, as well as 866 car parking spaces and 66 trailer spots.

Located at 8130, 8134 and 8142 E. Pecos Road, the campus is adjacent to Phoenix-Mesa Gateway Airport. Downtown Phoenix is within 37 miles, while the Phoenix Sky Harbor International Airport is 32 miles northwest.

Logistics Property is also working on a second project in the market, Olive Logistics Center. The two-building, 1 million-square-foot campus is expected to come online in the first quarter of next year.

Lee & Associates Principals Ken McQueen and Chris McClurg, along with Associates Blake Peters and Jack Sims, are the leasing representatives.

Phoenix’s industrial pipeline still tops the charts

Metro Phoenix had almost 37 million square feet of industrial space underway as of August, according to a recent CommercialEdge report. The market continued to lead nationwide for pipeline size, being followed by Dallas (16 million square feet) and Philadelphia (12.4 million square feet).

Taiwan Semiconductor Manufacturing Co. is working on the largest project underway in the metro, a 3.8 million-square-foot facility. The development is set to come online in the first quarter of next year and will be the most advanced semiconductor fabrication plant in the U.S.

Another significant development is Virgin Industrial Park, a 1.5 million-square-foot industrial campus in Glendale, Ariz. IndiCap and Invesco Real Estate completed the project’s first phase, totaling 1 million square feet, in August.

The post Logistics Property Completes Its 1st Phoenix Campus appeared first on Commercial Property Executive.

Located in the Airport submarket, the facilities were fully leased at the time of sale by a total of eight tenants with staggered lease expirations. The properties are 1980s and ’90s vintage, with spaces ranging from 37,000 square feet to 220,000 square feet.

The new owner plans to upgrade the buildings by air conditioning the warehouse space, adding LED lighting and renovating office suites as leases roll throughout the portfolio.

“This asset class is well-positioned for continued rent increases, driven by high demand and limited supply,” Cushman & Wakefield’s Molly Hunt told Commercial Property Executive. “The ability to raise rents across the portfolio is a direct reflection of how desirable this product type has become in the market.”

READ ALSO: E-Commerce Growth Revives Industrial Market

Hunt, along with colleagues Will Strong and Michael Matchett, all of the firm’s National Industrial Advisory Group-Mountain West, represented Link Logistics. In addition, Cushman & Wakefield’s Mike Haenel provided market leasing advisory in the sale.

EQT has about $266 billion in total assets under management in two business segments, private capital and real assets. The firm owns portfolio companies and assets in Europe, Asia Pacific and the Americas.

EQT Exeter has nearly $30 billion of equity under management, and is on an industrial buying spree. Earlier this month, the company acquired a 312,604-square-foot, three-building portfolio in Seattle and Portland, Ore., for $49.9 million. It has also recently bought a last-mile asset in metro Seattle for $82 million and an industrial property in Streetsboro, Ohio, near Cleveland.

Supply still outpacing demand in Phoenix industrial

The Phoenix industrial market turned in an overall vacancy rate of 11.5 percent in the second quarter of 2024, a quarterly increase of 90 basis points, according to Cushman & Wakefield. The vacancy rate has continued to rise—as it has in recent quarters—due to continued supply growth and an increase in sublease availability. Even so, the overall average asking rate eked out a 1.9 percent increase quarter-over-quarter to $1.08 per square foot. 

Phoenix’s construction pipeline remains the largest in the U.S., Cushman & Wakefield reports, with 35.4 million square feet underway. The warehouse/distribution sector dominates the development pipeline, with about 20.8 million square feet under construction.

Industrial vacancy in the Airport submarket of Phoenix stood at 6.2 percent in Q2 2024, the same report shows, and has seen nearly 1.4 million square feet of new leasing activity through the first half of 2024.

The post EQT Exeter Buys Phoenix Industrial Portfolio for $143M appeared first on Commercial Property Executive.

GTI will use the recently completed building at 17505 W. MC 85 in the 400-acre master-planned logistics campus for light manufacturing and battery casings assembly.

The company, which operates under GTI Energy in Phoenix, already leases 80,000 square feet at 3380 W. Durango St. in Phoenix. That facility, which opened in May 2023, is dedicated to advancing electrical/mechanical assembly, battery installation and rigorous testing for Battery Energy Storage Systems units, according to the GTI LinkedIn page.

A Cushman & Wakefield team represented both the landlord and the tenant in the six-year leasing deal. The team included Executive Vice Chairs Andy Markham and Mike Haenel, Vice Chair Phil Haenel, Director Foster Bundy, Associates Katie Repine and Justin Smith and Brokerage Coordinator Jordan Sims.

GTI chose the Lakin Park building because of its existing power and air conditioning, office space, immediate availability and proximity to the West Coast, according to the Phoenix Business Journal.

Property highlights

The Lakin Park facility is located on a 35.5-acre lot. The cross-dock building has 40-foot clear height, 88 dock high doors, four drive-in doors, 70-foot speed bays, 119 trailer stalls, 380 car stalls, and 200-foot concrete courts. The developers received a $34.6 million three-year construction loan from Old National Bank in November 2022, according to CommercialEdge data.

READ ALSO: Why Light Industrial Properties Will Continue to Shine

Lakin Park, located at Cotton Lane and MC 85, is being developed by Clarius Partners and Walton Street Capital. The industrial park, which will have 4.5 million square feet of space when built out, is 3 miles south of Interstate 10. It will also have frontage and access to the future Loop 303 and State Route 30.

Building 1B is the second asset completed at Lakin Park. The 730,000-square-foot Building 1A was leased by Qurate Retail Inc. in 2022, the business journal reported. The developers sold 1A, located at 17315 W. MC 85, in August 2022 to BentallGreenOak, the real estate arm of Sun Life Financial, for $109.2 million.

Clean energy growth

Clean energy and climate technology solutions companies are growing in the Phoenix region, including Kore Power, which is constructing a $1.25 billion battery plant in Buckeye, Ariz., and LG Energy Solution, which is building a $5.5 billion battery manufacturing complex in Queen Creek, Ariz. The LGES project includes two separate manufacturing facilities—one for cylindrical batteries for electric vehicles and another for lithium iron phosphate (LFP) pouch-type batteries for energy storage systems (ESS). The EV facility is slated for completion in late 2025 and the LFP facility is expected to be finished the following year.

LGES is one of GTI Energy’s clients, along with Confluence Energy and Honeywell International Inc., according to the business journal.

The federal Inflation Reduction Act is credited with spurring more than $10.6 billion in clean energy investments in Arizona and creating more than 14,100 new clean energy jobs.

The post Clarius Partners JV Lands Full-Building Lease in Metro Phoenix appeared first on Commercial Property Executive.

Dallas-based Mohr Capital has completed West Summit at Surprise, a 707,380-square-foot, Class A industrial campus in Surprise, Ariz. JLL handles leasing at the property.

Mohr Capital acquired the 46-acre development site within Summit Business Park in 2022 and broke ground on the two-building project the following year.

Building 1 measures 453,960 square feet and has a 36-foot clear height and access to the BNSF Railway, while the 250,512-square-foot Building 2 has a 32-foot clear height.

READ ALSO: Phoenix Industrial Development Leads the US

Each facility features 2,500 square feet of speculative office space, 50- by 56-foot column spacing, 3,000 amps of power, LED lighting, ESFR sprinklers, 60-foot speed bays and secured truck courts. Between them, they provide 157 dock-high and eight grade-level doors and can accommodate parking for 706 cars and 225 trailers.

The property is aimed at tenants of about 100,000 up to 453,000 square feet. JLL Executive Managing Director Anthony Lydon, Senior Managing Director John Lydon and Vice President Kelly Royle are West Summit at Surprise’s exclusive leasing brokers.

Located at 13401 W. Sweetwater Ave. and 12600 N. Summit Way, the campus provides direct access to Loop 101, Loop 303 and Northern Parkway. Downtown Phoenix is some 27 miles southeast.

Rail expands

Mohr Capital highlighted the property’s rail access, along the site’s western side, as a key strength.

In June, BNSF Railway announced plans to develop a new master-planned logistics hub in the Phoenix area. The 4,300-acre site in northwest Maricopa County will encompass a 1,770-acre intermodal facility, a 1,420-acre logistics park and a 1,130-acre logistics center providing direct-rail-served sites supporting local industry.

Greater Phoenix had nearly 36.8 million square feet of industrial space in its development pipeline as of August, according to a recent CommercialEdge report. A total of 10.6 million square feet started construction this year, the most of any market in the U.S.

In late June, Mack Real Estate Group nailed down $63 million in funding from Bank OZK and PGIM Real Estate for its 124-acre Mack Innovation Park Scottsdale. The project’s first phase consists of two buildings totaling 305,400 square feet, scheduled for delivery by late 2025.

The post Mohr Capital Wraps Up Rail-Served Industrial Project appeared first on Commercial Property Executive.

Fender Musical Instruments Corp. has broken ground on a 77,000-square-foot office project in Phoenix.

Upon its estimated completion, in the fall of 2025, the building will serve as Fender’s new co-headquarters. The guitar manufacturer is currently located at Oaktree Capital Management’s 17600 N. Perimeter Drive in Scottsdale, Ariz.

Designed by SmithGroup, the office building will rise three stories. Upon delivery, the property will comprise a shop for guitar and amplifier designers, a sound room, a cafe and meeting rooms, as well as flexible workspaces.

Taking shape near Cactus Road and Tatum Boulevard, Fender’s upcoming office building will be part of RED Development’s PV, the $2 billion reimagining of the former Paradise Valley Mall. Downtown Phoenix is roughly 15 miles northeast.

A Whole Foods facility will open this month within the 100-acre redevelopment. In addition, 400 multifamily units are slated to come online at the property in November.

Phoenix incentivizes office relocations

The Phoenix City Council signed the development agreement with Fender last year. Under the agreement, Fender will receive incentives to relocate its Scottsdale co-headquarters to the Paradise Valley Mall redevelopment.

The guitar manufacturer will benefit from performance-based job creation reimbursement through Phoenix’s strategic economic development fund. According to a report by the City of Phoenix, Fender’s facility is expected to provide an estimated economic output of $456.9 million over a decade.

Phoenix’s office pipeline remained tepid, in line with national office building trends. The Valley of the Sun had just 514,990 square feet under construction as of August, according to a CommercialEdge report.

Ryan Cos.’ One Scottsdale Medical, a 101,136-square-foot medical office development in Scottsdale, is part of the metro’s underway inventory. The project will come online at DMB Associates’ One Scottsdale, a 120-acre, 2.9 million-square-foot mixed-use campus.

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Monogram Health has signed a 26,042-square-foot, five-year lease at Hayden Ferry Lakeside II, a 318,240-square-foot office building in Tempe, Ariz. Cushman & Wakefield represented the tenant, while CBRE worked on behalf of the ownership, a fund managed by Cousins Properties.

The in-home, evidence-based care provider previously occupied 25,000 square feet within the building, under a sublease agreement with Gen Digital Inc., formerly known as NortonLifeLock, according to The Business Journals. About 105 Monogram Health employees are based in Tempe.

The 17-story building is part of a 43-acre, mixed-use master plan including 1.6 million square feet of office, retail and residential space, as well as a hotel. Cousins acquired three office assets within the master plan in October 2016 from the Teacher Retirement System of Texas, according to CommercialEdge information, in a portfolio transaction. The deal, which also comprised an Atlanta asset, totaled $279.1 million.

READ ALSO: Office Finance Freeze Begins Slow Thaw

Hayden Ferry Lakeside II came online in 2005 and went through cosmetic renovations earlier this year. The LEED Gold-certified building features floorplates averaging 25,000 square feet, six passenger elevators and about 4,900 square feet of retail space. Amenities at the master plan include a fitness center and two restaurants.

The property is located in downtown Tempe, at 60 E. Rio Salado Parkway. Phoenix Sky Harbor International is within 4 miles, while downtown Phoenix is 10 miles northwest.

Cushman & Wakefield Vice Chair Larry Downey, Executive Director Adam Madison and Senior Associate Taylor Hick represented the tenant in the transaction. CBRE Executive Vice President Bryan Taute and Associate Will Mask worked on behalf of the owner.

Phoenix’s vacancy rate remains below national average

Metro Phoenix’s office vacancy rate at the end of August clocked in at 18.2 percent, 120 basis points below the national average, according to the latest CommercialEdge office report. Additionally, the average listing rate within the market during the same month was $28.07, slightly below the $32.78 U.S. figure.

One of the largest leases in the second quarter of 2024 was Dutch Bros’ commitment to occupy 136,246 square feet at Liberty Center at Rio Salado in Tempe, according to a Cushman & Wakefield report.

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LaSalle Investment Management has acquired Buckeye85, an industrial building in Phoenix, on behalf of LaSalle Property Fund, its U.S. core open-ended investment vehicle. The previous owner was Lincoln Property Co. in conjunction with Goldman Sachs, according to CommercialEdge information.

Completed in 2023, the 321,892-square-foot warehouse is fully leased to Tempur-Pedic. The pillow and mattress manufacturer preleased the property last year and uses it as a distribution center. The cross-dock industrial building features a 36-foot clear height, 91 dock-high doors and concrete truck courts. 

The warehouse rises on 20 acres at 10333 W. Buckeye Road, at the southwest corner of 103rd Avenue and Buckeye Road/MC-85 Highway in the Interstate 10 Corridor. The location is 2 miles from a full-diamond interchange at I-10 and 107th Avenue. Amazon, McKesson, PepsiCo, Kroger and Home Depot, among others, operate nearby.

Leading the nation for industrial development

For many years now, Phoenix has been the country’s leading market for industrial development. The metro’s growth is propelled by high-tech sectors, including semiconductor manufacturing and data centers, infusing the area with advanced technology and innovation.

This development surge boosts the local economy and enhances Phoenix’s appeal as a hub for cutting-edge industries. DAUM Executive Vice President Chris Rogers, who specializes in Phoenix industrial assets, told Commercial Property Executive that the Valley’s industrial market remains a flagship destination for developers, owner-users and tenants.

For instance, Amazon and Logistics Plus have signed new leases totaling more than 4 million square feet in the metro since the start of 2024, Rogers said. In one of the more recent deals, Amazon leased 1.2 million square feet at a Prologis-owned business park.

“Meanwhile, nearly 40 million square feet of new industrial space has been delivered in 2024,” Rogers added. “Despite this significant growth, small-bay properties of 50,000 square feet or less have a vacancy rate of around 4 percent.”

The post LaSalle Acquires Phoenix Industrial Asset appeared first on Commercial Property Executive.

This surge in development not only boosts the local economy but also enhances Phoenix’s appeal as a hub for cutting-edge industries. Additionally, the city’s strategic location and robust infrastructure further contribute to its appeal for industrial investment.

A total of 375.7 million square feet of industrial space was under construction across the nation as of June—representing 1.9 percent of stock—according to a recent CommercialEdge report. Phoenix’s development pipeline was the largest in the nation.

READ ALSO: Top 5 Emerging Industrial Markets in 2024

In June, Phoenix’s under-construction pipeline stood at almost 39 million square feet across 125 properties, accounting for 9.3 percent of the total stock, surpassing by far the national average of 1.9 percent.

In the first six months of the year, almost 10 million square feet of industrial space broke ground in the metro in 51 properties, representing 2.5 percent of the total stock. The index was significantly higher than the national average of 0.6 percent, according to CommercialEdge data.

Notable properties currently underway include Taiwan Semiconductor Manufacturing Co.’s construction of the largest industrial property in Greater Phoenix, rising in the metro’s North Gateway submarket. The facility at 5088 W. Innovation Circle will be the most advanced semiconductor fabrication plant on U.S. soil, spanning 805 acres and encompassing a total of 3.8 million square feet. Construction began in 2021, while completion is expected at the beginning of next year.

Lucid Motors commenced construction on Lucid Advanced Manufacturing Plant-1, a 2.8 million-square-foot facility in Casa Grande, with completion planned later this year. Spanning over 470 acres, the development will become one of the largest industrial facilities in Phoenix.

Deliveries maintain a steady flow

Year-to-date through June, 17.4 million square feet of industrial space came online in Phoenix. Deliveries accounted for 4.3 percent of the market’s total stock, surpassing almost four times the 1.1 percent national average.

Among peer markets, the metro outpaced New Jersey (4.8 million square feet), Chicago (8.8 million square feet) and Atlanta (4.1 million square feet) for industrial deliveries, but trailed Dallas (20.4 million square feet) and the Inland Empire (18 million square feet).

At the beginning of 2024, US Capital Development completed The Paloma Vista Logistics Center Building 1, a 1 million-square-foot cross-dock facility located in Buckeye, Ariz.

In May, Kohler Co. also officially opened its almost 1 million-square-foot manufacturing facility in Casa Grande, Ariz. The developer broke ground on the project more than two years ago.    

Sale prices higher than the national average

Phoenix’s industrial sales volume registered more than $1 billion in transactions in the first half of 2024. Spread across 86 properties, almost 6.8 million square feet of industrial space traded across the metro.

Facilities changed hands for an average of $164.49 per square foot, surpassing the $134.92 national average. New Jersey ($244.88 per square foot) and the Inland Empire ($229.61 per square foot) recorded higher average prices, while Chicago ($98.52 per square foot) lagged behind.

In May, Stonelake Capital Partners expanded its Phoenix footprint with the acquisition of two industrial properties totaling 726,802 square feet in Goodyear, Ariz. CIM Group sold the pair for $108 million in an all-cash deal that was one of the largest industrial transactions in metro Phoenix this year.

EQT Exeter has recently purchased I-10 Gateway, a 641,906-square-foot industrial facility in Buckeye, Ariz., for $60.1 million. Developer BET Investments sold the vacant property, which represents the first phase of Buckeye I-10 Logistics, a 145-acre master-planned park.

Vacancy rates continue to grow

The industrial vacancy rate in Phoenix clocked in at 5.2 percent as of June. Indianapolis (5 percent) registered the lowest rate among peer markets, while Chicago (7.0 percent) and New Jersey (7.1 percent) fared worse.

In one of the the most significant recent deals in the metro, Amazon signed a 1 million-square-foot, full-building lease in Buckeye, Ariz. The company closed the 10-year lease at Paloma Vista Logistics Center’s Building B, located at 15301 W. Northern Ave. Tenant improvement plans have been submitted and include architectural, electrical, mechanical and plumbing changes.

Back in March, Amazon committed to another 10-year lease at The Cubes at Glendale’s Building B, a newly built 1.2 million-square-foot industrial facility in Phoenix’ West Valley. The submarket became an industrial hotspot in recent years, due to strong labor market access, a simplified tax system and low cost of doing business.

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The buildings feature 32- to 36-foot clear heights, dock-high and grade-level doors, up to 70-foot speed bays, and fully secured concrete truck courts. The property also offers 3,000 amps of power and parking for more than 2,200 autos and 167 trailers. Work started on the buildings in 2023.

The development’s Building A is a 564,320-square-foot cross-dock structure, while Building B is a 212,160-square-foot rear-load structure, and Building C is a 243,360-square-foot rear-load structure. Tenants have divisibility options down to 75,000 square feet.

The project is at 15748 W. Hatcher Road in Glendale, immediately east of Loop 303 and north of Northern Parkway, at Olive Avenue and Reems Road. IndiCap Vice President of Regional Development Todd Ostransky calls the area one of the fastest-growing industrial corridors in the region, with demand for large and mid-sized space.

READ ALSO: Top 5 Markets for Industrial Deliveries

“Today’s industrial spaces need to be adaptable to meet a range of client needs,” IndiCap’s Ostransky told Commercial Property Executive.

 “Industrial users are looking for amenities such as outdoor break areas, sports courts, nature trails for exercise, nearby restaurants and retail stores, on-site food options like food trucks and recreational areas like ping pong tables,” Ostransky said. “These features are important for attracting and retaining workers.”

Graycor Construction Co. was the general contractor for Virgin Industrial Park, with Deutsch Architecture as the project architect. Anthony Lydon, Marc Hertzberg, Riley Gilbert and Kelly Royle with the Phoenix office of JLL are the development’s leasing brokers.

Phoenix industrial still strong

Absorption in the Phoenix industrial market totaled 8.6 million square feet during the first half of 2024, indicating strong demand, according to JLL data. However, the market also saw a 1.7 million-square-foot increase in sublease vacancy, so total net absorption for the period was 7 million square feet.

Amazon’s leasing of three Greater Phoenix buildings during the second quarter of 2024 was indicative of the trend. The retail giant took 3.5 million square feet during the quarter, but it also placed about 570,000 square feet of space on the sublease market.

Spec completions persisted at an elevated level for the fourth consecutive quarter in the second quarter, adding more than 8.2 million square feet of new supply to the market, with a preleased rate of 36 percent, JLL reported.

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Libitzky Property Cos. has purchased Parc Germann, a 224,471-square-foot industrial campus in Chandler, Ariz. TA Realty sold the Class A for $43.3 million in an all-cash deal, according to public records. Cushman & Wakefield represented the seller.

TA Realty paid $28.5 million for the asset in 2020 shortly after its completion, according to CommercialEdge data. A joint venture between Jackson-Shaw and LaPour Partners sold the property.

The campus consists of two buildings—a 92,261-square-foot, rear-load facility and a 132,210-square-foot, front-load facility—with 28-foot clear heights. The property also features a 175-foot truck court and a combined 62 dock-door count, as well as a total of 14 drive-in doors and 262 parking spaces.

READ ALSO: First-Half Investor Darlings

Parc Germann was fully leased at the time of sale. Its three tenants, SKU Distribution, Walts TV and Adept Life Sciences, have 3.9 years of weighted average lease term remaining. Adept has been on the roster since the property previously traded four years ago.

Located at 2215 and 2225 E. Germann Road, the property is near the Chandler Municipal Airport and Arizona State Route 202. The Phoenix-Mesa Gateway Airport and Phoenix Sky Harbor International Airport operate some 11 and 22 miles away, respectively.

The campus is part of Chandler Airpark, a 9-square-mile area that witnessed industrial deliveries of 2.2 million square feet in the five years ending in 2020, according to the Chandler City Council. However, the park will not see its supply of large industrial buildings expand further as the city recently imposed strict regulations on future developments in the submarket.

Cushman & Wakefield Executive Vice Chair Will Strong and Director Michael Matchett, together with Senior Associate Molly Hunt and Senior Financial Analyst Callahan Conway, represented the seller.

Phoenix’s industrial absorption improves

According to a recent Cushman & Wakefield report, private investors in the semiconductor, battery production and energy storage technologies poured more than $60 billion into metro Phoenix’s manufacturing market.

To meet increasing demand, construction projects in Phoenix kept up. More than 35.4 million square feet of industrial space were underway in the metro as of June, the report shows. Of the 14.1 million square feet that developers completed in the second quarter, 84 percent were speculative.

Even with a year-to-date overall net absorption of 8.4 million square feet that outshined last year’s 7.1 million square feet during the same interval, the Valley’s industrial vacancy rate still climbed 90 basis points quarter-over-quarter, as well as 680 basis points year-over-year, and clocked in at 11.5 percent in June, Cushman & Wakefield reveal.

However, this hasn’t deterred investors. Earlier this month, MDH Partners acquired KV Buckeye 10, a 249,000-square-foot industrial asset in Buckeye, Ariz., for $51 million, while last month EQT Exeter purchased Falcon Park 303’s Phase II, a 326,018-square-foot industrial facility, for $50 million.

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Novva Data Centers plans to build a 300 MW campus on 160 acres in Mesa, Ariz. The company is slated to invest more than $3 billion, in two phases, over the next decade. The campus is Novva’s sixth and its first entry into Arizona.

Plans call for a first, 96 MW first phase, scheduled to deliver in late 2026. On completion, the campus will encompass five data halls, an office building and warehouse with a total footprint of 1.3 million square, off the 202 loop at Ellsworth and Warner roads.

The facility’s design will include a water-free air-cooling system, which Novva estimates will conserve up to 650 million gallons of potable water each year and avoid the discharge of about 350 million gallons of wastewater.

READ ALSO: More Data Centers, Please!

The campus reportedly will also feature:

• High-density deployments designed for direct-to-chip cooling applications, with liquid (non-water) cooling and air-cooling systems.
• Backup diesel generators designed to operate using second-generation biofuel and hydrotreated vegetable oil to reduce emissions.
• Heat-reducing asphalt sealant and ultra-reflective coatings to reflect more sunlight and reduce the heat island effect.
• Robot and drone surveillance programmed specifically for data center security.

The data halls will be oriented east-west to minimize the effects of solar exposure. Xeriscaping will emphasize native plants and downward lighting to minimize light pollution.

The campus will offer multiple outdoor gathering spaces and trails, for both employees and neighboring residents. In recognition of the pre-Columbian indigenous Hohokam people, the site will feature architectural details such as rammed-earth materials.

Phoenix, data center hot spot

Mesa will be Novva’s sixth location and joins campuses in West Jordan, Utah; Colorado Springs, Colorado; Reno, Nevada; Las Vegas; and San Francisco. This Mesa campus by Novva is one more part of Phoenix’s growth into what could become one of the world’s largest data center markets.

Metro Phoenix saw 148 MW of net data center absorption in the first half of this year and has 334 MW under construction, both figures in the context of a current inventory totaling 511 MW, according to a brand-new report from CBRE.

Overall vacancy was just 3.3 percent, CBRE reported, and lease renewal rents have increased by up to 20 percent.

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Abrazo Health and PMB have started construction on the Abrazo Health Litchfield Medical Building, a 46,000-square-foot health-care facility in Goodyear, Ariz. The project is expected to come online next year.

The two-story facility will mark the city’s first combination of medical offices and inpatient rehabilitation programs. Abrazo Health committed to 27,000 square feet at the building, while MedCure will occupy 5,000 square feet.

Partners on the development include architecture firm Devenney Group, general contractor Haydon and financing partner Siemens. PMB Real Estate will serve as property manager.

READ ALSO: MOB Tenants: What’s Hot and What’s Not

Services at Abrazo Health Litchfield will include rehabilitation, internal medicine, cardiology and hospitalists. The 24 inpatient rehabilitation beds will be used for patients recovering from strokes, brain injuries, spinal cord injuries, orthopedic injuries, neurological conditions, trauma and more.

The facility is rising at 1375 N. Litchfield Road within the Palm Valley shopping center and adjacent to the Abrazo West Campus hospital. The location is close to Interstate 10 and less than 1 mile from downtown Goodyear, while downtown Phoenix is 20 miles away.

MOB subsector faces challenges

Phoenix’s MOB development pipeline in the second quarter of this year decreased to 292,000 square feet, representing 1.1 percent of total stock, a CBRE report shows. However, in the first quarter, the metro was the top market for trailing-four-quarter medical office building investment, with a sales volume of $373 million.

In June, Hammes opened Buckeye Medical Plaza, a 48,000-square-foot medical office building in Buckeye, Ariz. The project, which broke ground last year, is now leased to eight tenants.

A few months earlier, Anchor Health Properties topped out HonorHealth Medical Campus at Peoria, a 100,000-square-foot development in Peoria, Ariz. The developer started construction on the three-story facility last year and expects to complete it in early 2025.

The post PMB, Abrazo Health Break Ground on Phoenix-Area Facility appeared first on Commercial Property Executive.

Denver-based developer Tract advanced the plan behind what would be one of the most extensive such facilities in the U.S. at full buildout. The development will also include a mix of industrial uses across more than 2,000 acres in the Buckeye Tech Corridor.

Earlier this month, the Buckeye City Council unanimously approved a new development agreement with Tract. The developer would receive up to $50 million in public infrastructure costs after generating $60 million in revenue for the city, the Phoenix Business Journal reported.

Metro Phoenix currently ranks fourth among the largest U.S. data center markets. It is where “some of the deepest pipelines remain … with hyperscalers doubling down on cloud regions and laying the groundwork for AI integration with cloud services,” according to a report from Cushman & Wakefield.

READ ALSO: AI Is Changing the Game for Data Centers

Upon completion, this project will position Phoenix as the world’s second-largest data center market, following Northern Virginia and surpassing Atlanta, said Howard Berry, principal of the national data center solutions division at Avison Young.

Graham Williams, CIO of Tract, told CPE that all the hyperscalers have data center campuses in the greater Phoenix market, and there is a robust lineup of wholesale providers, including Stack, QTS, Vantage, CyrusOne, NTT, Compass and others. However, data center development requires careful planning for land, power and zoning in those precise locations.

“Buckeye’s proactive and forward-thinking approach means that it is now in an advantaged position to attract thousands of good paying permanent tech jobs, many thousand skilled construction jobs, and a meaningful tax base to help support the expected continued residential growth,” Williams noted.

Gigawatt data center campuses were unthinkable a decade ago, according to Andrew Batson, JLL head of data center research for the Americas. There are about a dozen gigawatt projects across the U.S. in various forms of development. Phoenix is already in the top 5 U.S. data center markets in terms of current size, growth since 2020, capacity under construction and planned capacity pipeline.

“The addition of a gigawatt development in Phoenix would further establish the market as a national leader, especially as a top destination in the Southwest,” Batson said, adding that vacancy in the metro is among the lowest in the U.S. at 2 percent, giving hyperscalers the confidence to proceed with additional development.

Operating a data center in Phoenix is also among the most affordable in the U.S., Batson reasoned. “Both data center rents and power costs are in the bottom quartile of the nation’s markets. From the occupier side, this is driving demand. Proximity to a large and growing Southwest population is also a factor.”

Finding reasonably priced land at scale

Jacob Albers, head of the Alternatives Insights think tank with Cushman & Wakefield, told CPE that, since California data center development is facing a challenging mix of limited land availability, high land prices and high power prices, adjacent states have picked up the mantle. Phoenix, Portland, Ore., Las Vegas, and Reno, Nev., have also seen significant data center developments rise over the past five years.

READ ALSO: More Data Centers, Please!

“However, Phoenix has pulled far and away ahead of these markets in both live capacity (one of only a handful of gigawatt-plus markets) and development (with more than 3.5 GW under construction or planned),” he said. “The demand story for Phoenix has also remained strong, with … absorption exceeding 600 MW last year and on track to be similar in 2024.”

The U.S. has seen the size of data center campuses steadily grow around the country, along with an expanding trend of master-planned campuses that can be 1 to multiple gigawatts in size, according to Albers.

“This trend has begun to expand around the country where land can be purchased at scale for reasonable prices,” Albers continued. “(In) Phoenix—and Arizona at large—(it) makes logical sense for these mega campuses to grow, as a result of plentiful land, significant fiber connectivity, a substantial labor pool and low natural disaster risk, among many other factors.”

“The Buckeye project adds another submarket within Phoenix that supports the growth of cloud computing and artificial intelligence,” Johnathan Meade, CEO of Phoenix-based Meade Engineering, told CPE. “Hyperscale data center operators are rapidly expanding their physical footprint and Buckeye is now on the global radar of regions that can support the unique needs of these developments.”

Giving greater scrutiny to energy consumption

Phoenix is also among the growing number of data center hubs facing power generation constraints. Power issues notwithstanding, the region’s data center vacancy barely broke above the 2 percent mark.

Power—and water—consumption is now a primary focus for data centers of all sizes, particularly mega developments, which receive extra community scrutiny, Batson said.

“Counterintuitively, gigawatt developments can help ease the short- to medium-term strain on the power grid compared to the patchwork of uncoordinated development typically taking place in markets due to certainty and phasing,” he continued.

READ ALSO: Are Microgrids the Answer to CRE’s Power Struggle?

Additionally, the Southwest is booming with solar, battery storage and wind developments due to rising demand and the renewable incentives of the Inflation Reduction Act, Albers said.

“The West energy region (that includes Phoenix) has over 700 gigawatts in queue for connection to the grid. While most of this upcoming capacity is several years away, savvy developers are working early in their timetables to begin contracting with utility providers and energy developers in their projects’ planning and construction phases,” he concluded.

Williams said Tract will work with APS to secure transmission infrastructure and generation capacity, including sourcing new net renewable projects at the Buckeye campus.

Considering various cooling solutions

Data center water usage varies widely based on operator, use case and design. Current developments in the Phoenix area have already taken precautions to be conscious of water usage because of requests from state and local governments and water utilities.

“Thankfully, technology has been quickly evolving to meet the challenge,” Batson mentioned. “Most high-powered data centers currently under construction deploy a closed-loop cooling system that does not require a significant continuous flow of fresh water to cool the facility.”

He added that this technology requires a small fraction of the water used in prior generation data centers. Additional cooling methods such as direct-to-chip cooling and rear-door heat exchanges are also being deployed, improving energy efficiency.

Based on Meade Engineering’s experience working on large data center campuses, Meade expects that Tract’s collaboration with Arizona Public Service will lead to the construction of dedicated substations to meet the demands of hyperscale data centers.

READ ALSO: Adaptive Reuse Is a Growth Lever for Data Centers

“Water usage is a point of discussion in the data center world, especially as liquid cooling solutions continue to be adopted and explored,” Meade said. “We, as engineers, are responsible for providing excellent solutions that address water usage concerns while balancing the end user’s needs and requirements.”

Williams mentioned the data center park will use less than half of the water that would have been used by a multifamily residential development on the same land.

Aaron Tartakovsky, co-founder & CEO of Epic Cleantec, said a circular model of water—where it is continuously restored—is an alternative to the traditional linear approach.

“By implementing advanced water reuse systems, water can be treated and recycled as wastewater on-site, making it available for various beneficial uses, including data center cooling,” Tartakovsky mentioned. He added that the use of alternative water sources, such as reclaimed water, further decreases dependency on limited supplies.

“Strategically co-locating data centers near municipal wastewater treatment facilities allows them to utilize highly purified recycled water generated by local communities, ensuring a reliable and sustainable water source that supports data center operations without depleting the community’s supply,” Tartakovsky said.

Data centers position themselves as leaders in environmental stewardship when they address water scarcity appropriately, he continued.

“Given their rapid expansion and critical role in the digital economy, data centers must lead by example. By rethinking their approach to wastewater, data centers can foster sustainable development while coexisting harmoniously with the communities they rely on and share vital water resources with,” Tartakovsky concluded.

The post How to Become a Leading Data Center Market, the Phoenix Way appeared first on Commercial Property Executive.

MDH Partners has acquired KV Buckeye 10, a 249,000-square-foot Class A industrial property in Buckeye, Ariz., for $51 million. Kentwood Ventures sold the asset, with JLL brokering the transaction on its behalf.

The campus, which came online last year, consists of two buildings spanning 115,200 and 134,300 square feet. Features include a 170-foot truck court, 535 parking spaces, expandable loading doors—of which there are 34 including both grade-level and truck wells—and 28-foot clear heights, as well as 56-foot bay spacing.

Tenants include the City of Buckeye, which relocated some City Hall functions to the property, Hajoca Corp., Safelite and AVI-SPL. The park was 60 percent leased at the time of sale, according to JLL.

READ ALSO: It’s Time for Investors to Get Off the Sidelines

Located at 945 N. 215th Ave., the property is less than 1 mile from Interstate 10, while the Phoenix-Goodyear and Buckeye Municipal airports both operate some 12 miles away. Downtown Buckeye—the fastest-growing city in the U.S. between 2017 and 2022, with population up 54.3 percent according to SmartAsset—is within 10 miles, while central Phoenix is 26 miles away.

JLL Investment Sales and Advisory Senior Director Greer Oliver and Associate Connor Nebeker-Hay led the team that spearheaded the transaction on behalf of Kentwood Ventures.

Trading industrial assets in Buckeye

In 2021, Buckeye City Council approved the single-family to business park district rezoning request filed by Kentwood for the park. Construction began one year later, with estimates at the time placing development costs in the $30 million ballpark.

That same year, BET Investments broke ground on the multi-phase Buckeye I-10 Logistics, a 2.2 million-square-foot industrial development located just under 1 mile from KV Buckeye 10. Phase one—a 641,906-square-foot facility—debuted last year and EQT Exeter acquired it for $60.1 million this April.

Another Buckeye transaction, which at the time broke the municipality’s record for industrial building sales, involved 10 West Commerce Park, an 860,602-square-foot distribution center. In 2022, Creation sold the asset for $130 million to a joint venture between Intercontinental Real Estate Corp. and an affiliate of Cohen Asset Management.

Phoenix industrial vacancy inches upward, inventory expands

The Valley of the Sun saw more than $1 billion in industrial sales year-to-date through June, with the average price per square foot clocking in at $165, above the $139 national average for the period, a recent CommercialEdge report shows.

As developers delivered 17.9 million square feet during the first half of 2024, metro Phoenix’s industrial vacancy rate stood at 5.2 percent in June, showing a 150-basis-point increase year-to-date through June. The metro still has a substantial industrial pipeline, with more than 39 million square feet under construction, representing almost 10 percent of stock.

The post MDH Partners Buys Phoenix Asset for $51M appeared first on Commercial Property Executive.

One of North America’s largest automotive suppliers, Magna Steyr, is extending its manufacturing capacity with a 230,000-square-foot facility in Mesa, Ariz., within Power Industrial Park. Magna leased the building earlier this year, Phoenix Business Journal reported, and will build out the space according to its specific manufacturing needs.

The company worked in partnership with the Arizona Commerce Authority, Greater Phoenix Economic Council and city of Mesa. The multimillion-dollar investment will generate hundreds of jobs and further reinforce Arizona’s position as an attractive destination for the automotive industry.

READ ALSO: Top 5 Industrial Properties Under Construction in Phoenix

Power Industrial Park is a 583,955-square-foot campus developed by Newport Commercial Partners, Manncor Realty Advisors and Principal Financial Group.

Colliers Senior Associate Danny Schuster and Senior Vice President Brian Gleason helped Magna with the real estate search. CBRE is listed as being in charge of leasing operations.

Part of a bigger campus

The automotive supplier will occupy Building 4, the campus’ largest. The facility will incorporate innovative technologies and virtual tools, including simulations, to ensure quality and flexibility to expedite the integration of new products.

The developers broke ground on the facility on a speculative basis in August 2022 and completed it last year. Clayco was the general contractor, while DLR Group designed the project.

The building features 36-foot clear heights, office space, 41 dock-high loading doors and six drive-in doors. Additionally, the property has 383 parking spaces and 56- by 60-foot column spacing.

The complex’s other facilities range from 68,689 to 175,035 square feet. The 110,350-square-foot Building 2 is also fully leased.

Power Industrial Park is at 7035 E. Pecos Road, close to the Phoenix-Mesa Gateway Airport. Downtown Phoenix is within 33 miles, while the Phoenix Sky Harbor International Airport is some 29 miles away.

Phoenix remains a hotspot for industrial expansion

Metro Phoenix’s industrial vacancy rate clocked in at 5.2 precent as of June, 90 basis points below the national average, according to the latest Commercial Edge industrial report. The market’s average in-place rent was $9.0 per square foot, up 9.1 percent year-over-year.

In the first half of this year, Amazon was one of the most active companies in the area, leasing 3.4 million square feet in three separate deals. The most recent was a 1.2 million-square-foot commitment at Prologis 303 Business Park in Goodyear, Ariz., for 10 years.

And, in January, BlueScope Properties Group inked a full-building prelease at Blue Cactus Logistics, a 258,000-square-foot project in Surprise, Ariz. TriColor Auto will occupy the facility.

The post Magna Eyes Phoenix Manufacturing Plant appeared first on Commercial Property Executive.

In the latest of a string of dispositions, Net Lease Office Properties has sold a 354,000-square-foot office building in metro Phoenix to an unspecified buyer for $71.5 million.

Proceeds will repay about $55 million on the asset’s senior secured mortgage, which is held by J.P. Morgan, and about $8 million on its mezzanine loan.

This asset previously changed hands for $39.8 million in 2000, according to CommercialEdge information. Completed in 1977, the two-story building at 9501 E. Shea Blvd. is leased to CVS Health Corp., which is one of NLOP’s top 10 tenants in terms of space. The property occupies about 38 acres in Scottsdale, Ariz., some 21 miles northeast of downtown Phoenix.

READ ALSO: Top 5 Office Transactions in the US

The company, a publicly traded REIT, holds 46 properties totaling about 6.6 million square feet after the sale. Most of those—43 assets, primarily leased to corporate tenants on a single-tenant net lease basis—are in the U.S., while three are in Europe. NLOP is in the process of selling off its assets as part of the long-term plan.

W.P. Carey spun off the REIT last year as an important part of its strategy to exit the ailing office market. At the time, NLOP took ownership of 59 net leased office properties with an annualized base rent of about $141 million. Since then, NLOP has been selling these assets, with its current ABR totaling about $102 million.

During the six months ended June 30, 2024, NLOP sold six properties, realizing total proceeds, net of selling costs, of $195.2 million. Due to the depressed office market, the sales marked a net loss of $40 million.

Net lease market sluggish

Net lease deals, like most commercial real estate transactions, have slowed in the current higher interest rate climate. The relative dearth of transactions when compared to recent years means that the supply of net lease assets is rising—up 8 percent from the previous quarter—with no clear path toward reducing the inventory, according to The Boulder Group’s second quarter 2024 net lease report.

Many investors believe the current market strongly favors buyers over sellers in terms of asset pricing, according to the report, a fact that has been pushing overall net lease cap rates upward from 6.64 percent in Q1 to 6.7 percent in Q2 2024.

Net lease office properties in particular are seeing the number of properties, as well as cap rates, climb considerably. In the first quarter of this year, 590 office-related net lease assets were on the market, a figure that grew more than 11 percent by the second quarter. Office sector cap rates grew as well, up from 7.6 percent to 7.67 percent quarter-over-quarter.

The post Net Lease Office Properties Sells Asset for $72M appeared first on Commercial Property Executive.

A few months after withdrawing its application for a $14 billion data center campus in Phoenix, Denver-based Tract returned to the metro with an ever larger project, according to the Phoenix Business Journal.

The developer plans a 1,700-acre data center campus in Phoenix’s West Valley, just south of Interstate 10.

City officials in Buckeye, Ariz., will vote today on the rezoning of a former master plan for a residential community called Cipriani. Approval would permit about 1,700 acres of phased data center development and “a mix of industrial uses” across a total of more than 2,000 acres in the Buckeye Tech Corridor.

READ ALSO: More Data Centers, Please!

As part of the deal, Tract would chip in $18.5 million for a future I-10 interchange at Johnson Road, a temporary public safety facility and other improvements.

Tract did not respond to Commercial Property Executive’s request for information. The firm’s initial project was for a data center campus to rise on 1,000 acres and span 5.6 million square feet across 30 buildings.

The limits of power

Tract is no stranger to sprawling data center campuses in dry climates. In February, the company announced that it had acquired an additional 517 acres within the Tahoe-Reno Industrial Center in Storey County, Nev. The company had previously acquired more than 2,200 acres inside TRIC, in two parcels.

Metro Phoenix ranks number four among the largest U.S. data center markets, those where “some of the deepest pipelines remain … with hyperscalers doubling down on cloud regions and laying the groundwork for AI integration with cloud services,” according to a report from Cushman & Wakefield.

Unfortunately, Phoenix is also among the growing number of data center hubs that are facing power generation constraint. Power issues notwithstanding, the region’s data center vacancy barely broke above the 2 percent mark.

The post Tract Eyes Massive Data Center Campus Near Phoenix appeared first on Commercial Property Executive.

Phoenix office construction continued on a slow note in the first half of 2024, with developers commencing new office projects only across nine properties, according to CommercialEdge data. Even if pipeline fundamentals were low, Phoenix maintained its position as one of the nation’s leaders in terms of office investment, its sales volume placing it among the top three best-performing metros in the Sun Belt region and among the top five on a national level.

In June, Phoenix had 689,611 square feet of office space under construction across 13 properties, representing 0.4 percent of the existing inventory—below the national average of 1.4 percent. Following last year’s drop in construction activity, the metro’s pipeline remained the smallest across Sun Belt metros, with Dallas leading with 6.5 million square feet, followed by Austin (4.6 million square feet) and San Diego (3.8 million square feet).

Phoenix office construction activity still slow

Significant office development projects in Phoenix include Gilbert Spectrum’s Building 3, a 119,222-square-foot Class A building expected to come online by the end of August. The project is part of SunCap Property Group’s expansion plan of Gilbert Spectrum campus, a development that will include 850,000 square feet of office, tech and flex industrial space.

One Scottsdale Medical is also under construction, with delivery scheduled for September this year. Developed by Ryan Cos., the 101,136-square-foot medical office project is part of a 120-acre mixed-use campus dubbed One Scottsdale, that will include up to 2.9 million square feet of office, retail, residential and hospitality space in Scottsdale, Ariz.

Construction starts in the first half of 2024 totaled 479,161 square feet across nine properties, while developers delivered seven office projects, totaling 478,494 square feet of space.

Among significant office properties that debuted in the metro year-to-date through June is Levine Investments’ 135,000-square-foot office and R&D building at 8240 S. River Parkway in Tempe, Ariz. The Class A facility came online with the help of a $44 million construction loan and is part of ASU Research Park—a business, research and recreational campus operated by Arizona State University.

Second-best-performing Sun Belt metro for sales

Year-to-date through June, Phoenix’s transaction volume reached $590 million, with 3.7 million square feet of office space changing hands across 44 properties, at average sale price of $165 per square foot. Phoenix’s office investment volume was the second-largest among Sun Belt metros, after the Bay Area ($823 million) and followed by Chicago ($542 million), Miami ($379 million) and Los Angeles ($273 million). On a national level, Phoenix ranked fourth, while Washington, D.C. led with $1.5 billion.

One of the priciest office deals recorded in the first six months of the year is Columbus Properties’ $86.1 million acquisition of 24th at Camelback I, a 302,209-square-foot building that changed hands in April. The eight-story Class A asset was sold by New York Life Real Estate Investors.

Another significant transaction was the $56.2 million sale of The Beam of Farmer, a 184,163-square-foot property in Tempe, Ariz. Cross Ocean Partners picked up the five-story Class A asset in May, from seller Mortenson.

Among peer markets, prices in the Valley were higher than in Chicago ($91 per square foot), Philadelphia ($93 per square foot), Charlotte ($128 per square foot) and Dallas ($123 per square foot), but lower than in Austin, where office properties traded at an average sale price of $435 per square foot.

Phoenix office market posts steady vacancy

As of June, the metro’s office vacancy clocked in at 18.2 percent, on par the national rate of 18.1 percent. Among similar markets, Austin recorded the highest rate, at 22.9 percent, followed by Dallas (21.8 percent), the Bay Area (20.8 percent) and Chicago (19.1 percent). The only peer market with lower vacancy was San Diego, at 17.9 percent.

Landlords are continuing to update their assets. Vero Capital, through its office investment platform Vero A2R, started a $29 million redevelopment plan at INISIO at Kierland, a 410,000-square-foot, two-building office campus in Scottsdale, Ariz. Stream Realty Partners is overseeing leasing efforts at the redevelopment project, expected to be completed in the fourth quarter of 2024.

Attracting flex office providers

As of June, the metro’s coworking sector included 1.2 million square feet of space, accounting for 1.7 percent of the metro’s total leasable office space, surpassing Charlotte (1.6 percent), Philadelphia (1.4 percent) and the Bay Area (1.2 percent).

The flex office providers with the largest total footprints in Phoenix were Regus, with 549,382 square feet, Expansive, with 204,127 square feet, Industrious, with 201,712 square feet and Bellagio Executive Plaza, with 158,862 square feet. Since February, Regus, Industrious and Expansive have each expanded in the metro.

In April, Lucid Private Offices signed a deal to open its second coworking space in the metro by signing a 25,000-square-foot leasing agreement with landlord Artis REIT. The company’s new location will be at MAX at Kierland, a 260,000-square-foot office building in Scottsdale, Ariz., that will include more than 100 private offices, with opening scheduled for November this year.

The post H1 Office Deal Volume High in Phoenix appeared first on Commercial Property Executive.

Creation has sold Midway Commerce Center, a 301,994-square-foot industrial campus in Chandler, Ariz., for $57 million. Longpoint Realty Partners bought the three-building property, its first such acquisition in Arizona.

Cushman & Wakefield brokered the deal on behalf of the seller. Lee & Associates provides leasing and marketing services.

The developer completed the Class A campus this year. It funded its construction with three separate loans totaling $34.1 million, originated by Western Alliance Bank in June 2022, according to CommercialEdge information.

READ ALSO: Top 5 Industrial Properties Under Construction in Phoenix

Constructed by LGE Design Build, the buildings range from 96,000 to 110,400 square feet and feature 32-foot clear heights. Rentable space is divisible by 30,000 square feet. The campus also has 130- and 185-foot truck courts, 342 parking spaces, 12 drive-in doors and 68 dock-high loading doors.

The buildings are at 1835, 1905 and 1975 S. Hamilton St., less than 2 miles from downtown Chandler and some 26 miles from downtown Phoenix. Phoenix Sky Harbor International Airport is within 20 miles northwest.

Cushman & Wakefield Executive Vice Chair Will Strong and Senior Associate Molly Hunt brokered the sale.

Phoenix leads in industrial development

Metro Phoenix had the largest industrial construction pipeline in the U.S. as of June, nearly 39.1 million square feet, according to the latest CommercialEdge report. Phoenix also ranked sixth for sales volume, with more than $1 billion in assets changing hands in the first half of the year. Facilities traded for an average of $165 per square foot, above the $139 national figure.

In June, Stonelake Capital Partners acquired two industrial buildings in Goodyear, Ariz., for $108 million. CIM Group sold the assets, which total 726,802 square feet.

Earlier this year, EQT Exeter purchased a 641,906-square-foot facility in Buckeye, Ariz., and rebranded it as I-10 Gateway. Developer BET Investments sold the vacant asset for $60.1 million.

The post Creation Sells Phoenix-Area Campus appeared first on Commercial Property Executive.

Semiconductor company Amkor Technology has signed a non-binding preliminary memorandum of terms with the U.S. Department of Commerce to receive proposed funding as part of the CHIPS and Science Act. Terms include up to $400 million in proposed direct funding and access to $200 million in proposed loans.

The provider of semiconductor packaging and test services announced in November 2023 its plans to build its first domestic OSAT (outsourced semiconductor assembly and test) facility in Peoria, Ariz. The city approved the Phoenix-area project earlier this year.

Amkor expects to invest approximately $2 billion and employ approximately 2,000 people at the new facility. Upon completion, this will be the largest outsourced advanced packaging and test facility in the U.S.

READ ALSO: Semiconductor Boom Continues to Boost CRE

Amkor secured some 55 acres for the manufacturing campus, which will include more than 500,000 square feet of clean room space. The first phase of the facility targets production within three years.

President Biden signed the CHIPS Act into law on Aug. 9, 2022—creating a $52 billion investment to revitalize America’s domestic semiconductor industry and strengthen the country’s economic and national security. So far, $30 billion in funds have been issued.

Phoenix, a semiconductor epicenter

Phoenix is one of the country’s largest epicenters of the booming field, while the industry itself is transformative for the U.S. economy and one of the country’s main economic pillars looking forward.

In April, Taiwan Semiconductor Manufacturing Co. also announced it signed a preliminary memorandum to receive significant CHIPS and Science Act funding for what would be the largest-ever direct foreign investment in a U.S. greenfield development.

In March, Intel also signed a preliminary memorandum of terms for up to $8.5 billion. Proceeds are aimed at semiconductor project development and expansion in Arizona, New Mexico, Ohio and Oregon.

Bob Hess, vice chairman of global strategy at Newmark, told Commercial Property Executive that Phoenix has firmly established itself as a top-tier metro for advanced manufacturing and semiconductors.

“The region has sustained attraction of California companies, underpinned by a favorable business climate and a proactive approach to investment and infrastructure development,” Hess mentioned.

“What sets Phoenix apart is the collaboration between business executives, local governments and state agencies. True public-private sector partnerships that meet regularly.” He added that leaders such as Chris Camacho of the Greater Phoenix Economic Council and Sandra Watson of the Arizona Commerce Authority have been instrumental in strategic planning.

READ ALSO: How Will the Manufacturing Investment Boom Impact Industrial CRE?

Just recently, the U.S. Department of Commerce and National Science Foundation announced a partnership to advance semiconductor workforce development, which will be critical to ensuring a strong and sustainable talent pool to further drive economic growth.

“As Phoenix continues to grow, the housing market becomes a critical factor in site selection for companies,” Hess reasoned.

“The city has done well to manage challenges related to water, zoning and growth. However, there’s a need for more condos, apartments and multifamily housing to meet demand. Engaging with developers and industry leaders is essential to keep pace.”

“The expansion of companies like Amkor highlights the importance of workforce development, including addressing issues like childcare to support a diverse workforce. Arizona’s leaders, working with national think tanks and workforce committees, are looking outward for best practices to prepare for the future needs of the semiconductor industry.”

Phoenix investment from other industry players

John Leddy, managing director in the tech division with JLL Work Dynamics, told CPE that according to the Semiconductor Industry Association, major projects in the Phoenix area increasing semiconductor manufacturing capabilities total more than $100 billion.

“Those investments are expected to create over 11,500 skilled workforce jobs at those sites and require roughly 25,000 construction and skilled trade jobs to complete these projects,” Leddy summed up.

“Arizona is one of 12 states that have created or expanded upon existing tax incentives to attract private sector investment toward semiconductors. Arizona’s statewide incentives include funding for semiconductor infrastructure, workforce and research capabilities.”

Rusty Martin, Graycor general manager with the Southwest division, told CPE that the significant investments from companies such as Intel, Amcor and TSMC have led to additional investments from their suppliers and other businesses operating within the industry.

“Phoenix offers ample available land, a strategic location, robust infrastructure, a competitive cost of living, and a business-friendly environment, making it an attractive location for companies looking to establish a presence,” Martin added.

READ ALSO: Top 5 Industrial Properties Under Construction in Phoenix

The Phoenix market has transitioned over the past two decades into a diverse economy with large companies in tech and manufacturing relocating to the valley, according to Cory Sposi, vice president of sales & leasing at Commercial Properties Inc./CORFAC International.

“Plans that were put in place here decades ago in higher education and infrastructure, as well as keeping our core business-friendly values, allowed us to be a top choice for the future of domestic manufacturing and technology,” Sposi said.

The Phoenix industrial market also continues to remain one the nation’s frontrunners for small to mid-bay leasing activity, according to Morgan Hill, vice president of acquisitions at Stos Partners.

He told CPE that tenant demand for warehouse space continues to be fueled by 3PLs and construction-related occupiers, while significant growth continues in the advanced manufacturing and semiconductor chip-related industries.

“The market has experienced a recent surge in manufacturing with over $60 billion in private investments in the semiconductor, battery production, and energy storage sectors,” Hill mentioned. “Even with the significant construction pipeline, Stos Partners remains bullish on the Phoenix industrial market for functional, well-located industrial product.”

Multifamily and single-family also get a boost

Amkor’s major investment and the addition of 2,000 jobs in Peoria is expected to significantly boost the Phoenix economy, fueling demand for rental housing, according to Jeff Seaman, senior managing director at JLL Phoenix, who specializes in multi-housing.

“Multifamily owners can anticipate increased asset values and occupancy rates, creating a more robust and appealing investment landscape,” Seaman said.

“NexMetro has strategically invested in developing luxury leased home neighborhoods in the Northwest Valley because of the significant manufacturing company presence and investment in the region,” added Jacque Petroulakis, chief communications officer for NexMetro. “This industry creates high-wage jobs, and these homes are attractive to those who want the lifestyle of a detached home with a private yard, but don’t want to purchase a home at this point in their lives.”

The post $2B Phoenix Project Lands CHIPS Act Funding appeared first on Commercial Property Executive.

Construction has begun on the 20-acre site in the Phoenix suburb. Completion of the initial phase, which will have six buildings for more than a dozen retail and restaurant tenants, is expected to be completed by mid-2025, with a grand opening anticipated for the fall of 2025.

Construction on an adjacent 134-key Marriott Springhill Suites hotel is slated to begin next month and be delivered by early 2026. Future uses for the property are currently being designed. A master plan includes shared community spaces and a walking loop.

READ ALSO: Charting Luxury Retail’s Course in the New Economy

Okland Construction is the general contractor and Aline Architecture Concepts is the retail center architect. Bryan Babits and Alberto Caballero of Western Retail Advisors, a full-service brokerage based in Arizona and California that specializes in retail, are the exclusive retail and restaurant brokers.

Located on the east side of Santan Village Parkway between Williams Field and Ray roads in Gilbert’s restaurant and retail corridor, Northside at SanTan Village is near Macerich’s 1.2 million-square-foot super-regional shopping center SanTanVillage as well as Epicenter at Agritopia, a high-end residential and retail development with nearly 50,000 square feet of ground-level retail space and 320 luxury apartments.

Gilbert city officials are currently considering another project, Signature at San Tan Village, which would feature 326,731 square feet of retail, restaurant and commercial space. Possible tenants include Whole Foods Market and Dick’s Sporting Goods.

Strong tenant interest

Calling Gilbert one of Arizona’s most dynamic restaurant and retail markets, Babits said they are already getting strong interest from potential tenants. Caballero told Commercial Property Executive the developer will welcome chains if they are unique to the area.

“The goal is to provide Gilbert residents with retailers and restaurants that don’t have other locations within the immediate radius,” Caballero said.

He said the project’s two street-facing buildings are particularly suited for restaurant users because they each have 4,300 square feet of space with 1,200-square-foot patios. Both are in various stages of lease negotiations or interest, he added.

Caballero said the remaining buildings offer smaller spaces that can accommodate boutique retail concepts, quick-service food or services such as fitness or medspa users. He said Northside will provide space opportunities for unique restaurant concepts, boutique retail and specialized health and wellness spaces, adding balance to the area’s heavy inventory of large-scale national concepts.

“This is a very robust retail area with a regional mall, multiple popular big box shopping centers and numerous chain restaurants. Even with these developments, consumer and tenant demand in Gilbert remains extremely high, creating a steady undersupply of quality available retail and restaurant space,” Caballero told CPE.

The post Construction Begins on $100M Phoenix-Area Project appeared first on Commercial Property Executive.

CRG has sold The Cubes at Glendale – Building B, a more than 1.2 million-square-foot industrial warehouse in Glendale, Ariz., with the assistance of Cushman & Wakefield.

Multiple funds and accounts managed by BlackRock acquired the Amazon-leased asset for $128.1 million, according to Maricopa County records.

The warehouse is part of a 335-acre industrial park with both speculative and build-to-suit projects. Constructed in multiple phases, the campus will consist of 5.5 million square feet at full build-out. Tenants include Red Bull, White Claw, Walmart and FedEx.

The Cubes at Glendale Building B, up close

The developer completed the Class A distribution center in September 2022. A $111 million construction loan originated by Commerce Bank financed its construction, CommercialEdge information shows.

CRG’s parent company, Clayco, serves as the project’s design-builder, while Lamar Johnson Collaborative was the architect.

The cross-dock building features 40-foot clear heights, 213 dock-high loading doors and four drive-in doors, as well as 60-foot bay spacing. The property also has 694 parking spaces, 416 trailer stalls and 190-foot truck courts.

The 77-acre asset is at 15301 W. Northern Ave., some 9 miles from downtown Glendale and 23 miles from downtown Phoenix. In addition, Phoenix Sky Harbor International Airport is 27 miles southeast.

Cushman & Wakefield Executive Vice Chair Will Strong and Director Michael Matchett, together with Senior Associates Molly Hunt and Dean Wiley of the firm’s National Industrial Advisory Group, represented the seller in the deal.

CRG’s recent industrial transactions

CRG has developed about 220 million square feet of real estate properties over the years, across some 12,500 acres. The company’s development portfolio totals $14 billion in assets.

Last year, CRG sold another Cubes at Glendale facility, Building E. Fundrise acquired the 570,080-square-foot speculative industrial building for $82.6 million, in a deal brokered by Cushman & Wakefield.

In April, the firm sold 77 acres at The Cubes at West Port, a 764-acre industrial park in Ellabell, Ga., to third-party logistics company Lecangs. CRG, together with Clayco, will construct a more than 1 million-square-foot building for the new owner.

The post CRG Sells Phoenix Facility for $128M appeared first on Commercial Property Executive.

The freestanding building was delivered on a speculative basis in 2023 and is 100 percent leased to a single tenant. The building is part of a larger, new modern industrial campus totaling 925,504 square feet situated on nearly 60 acres.

Cushman & Wakefield has advised US Capital Development and another institutional investor in the transaction.

Falcon Park – Phase I totaling 599,486 square feet sold in 2023 to Cohen Asset Management for $81.7 million.

READ ALSO: Top 5 Industrial Properties Under Construction in Phoenix

Located at 15132 and 15152 West Camelback Road, respectively, Falcon Park 303 – Phase I and II are Class A assets in a core bulk-related warehouse location that is minutes from multiple major freeways including Loop 303, Loop 101 and Interstate 17.

“This investment reflects our continued commitment to the Phoenix market as we see opportunity in purchasing vacant and leased buildings of the highest quality.  Falcon 303 Phase II, in particular, stands out with its strong location and functional design, which allows the building to serve as a competitive logistics facility attractive to modern occupiers for decades to come,” Scott Guo, Investment & Leasing Officer with EQT Exeter told Commercial Property Executive.

Loop 303’s strong industrial demand

Loop 303 continues to be a focal point for developers of manufacturing and logistics facilities.

Anita Verma-Lallian, founder & CEO of Arizona Land Consulting told CPE that the deal proves how strong the Arizona market is for industrial development.

“Over the next few years, you can expect to see more of these types of projects as states such as California continue to make development challenging with higher taxes and new initiatives,” she said.

It is also less than a six-hour drive to the Port of Los Angeles and Long Beach and has complete transportation linkages via air, rail and ground.

Will Strong, Michael Matchett, Molly Hunt and Dean Wiley with Cushman & Wakefield’s National Industrial Advisory Group – Mountain West team represented USCD and another institutional investor in the disposition.

Cushman & Wakefield’s Mike Haenel, Andy Markham, Phil Haenel and Foster Bundy provided market leasing advisory in the sale as well as brokered the full-building lease with the existing tenant in the fourth quarter of 2023.

In 2021, USCD identified a defunct golf course as an industrial redevelopment site and the C&W Mountain West team secured USCD’s equity partner.

The brokerage team then represented both the tenant and landlord in leasing phases I and II.

The post EQT Exeter Pays $50M for Phoenix Industrial Building appeared first on Commercial Property Executive.

Queen Creek’s skyline, for example, is set for a radical change with the announcement of a $120 million development. Creation has unveiled plans for The Switchyard, a project that will span 10 acres at the bustling intersection of Ellsworth and Ocotillo roads. Plans call for The Switchyard to feature 54,000 square feet of space for restaurants, retail and office buildings, as well as multifamily units.

Construction is scheduled to begin later this year with the commercial component, which has already attracted several tenants. Postino, a popular industrial wine cafe, will establish a 3,800-square-foot restaurant here, while The Porch, a pub famous for its food, cocktails, games and sports-viewing facilities, will open its fourth Valley location spanning 11,900 square feet.

Designed by GFF Design, The Switchyard will be delivered in phases, with the first one expected to be completed in early 2026. Commercial Property Executive asked Creation Principal Alex Bez to elaborate on the project’s mix of uses and its anticipated impact on the Queen Creek community.

READ ALSO: Why Mixed-Use Developments Are All About the Right Synergies

What’s the inspiration behind The Switchyard?

Bez: This site originally came to us through a public RFP run by the Town of Queen Creek to anchor the town’s downtown core. The town was seeking to incorporate design principles honoring its historic, agrarian nature while introducing modern, walkable, urban design features that would make the project serve as a centerpiece for years to come.

For Creation, this fits perfectly into our wheelhouse. Our goal on every project is to create lasting, impactful spaces, with outstanding design and highly functional layouts incorporating just the right mix of uses. This site was the perfect canvas to do just that, and we’re thrilled to bring it to market.

How did you decide on the mix of restaurant, retail, office and residential components for this project?

Bez: One of the immediate things we identified for this site were the gaps in the market. Queen Creek has some of the strongest demographics in the Greater Phoenix metro but lacked both the neighborhood-oriented, design-driven urban retail that you would see in comparable submarkets and true luxury and amenitized multifamily. Given the continued growth we’ve seen here, we also wanted commercial space flexible enough to accommodate offices and businesses.

Ultimately, where we landed was a project that would bring 54,000 square feet of commercial space, anchored by a strong local restaurant and bar and an incredible roster of restaurants, along with 200-plus units of mid-rise multifamily that will also bring the first structured parking solution to Queen Creek in a for-rent residential project.  

What are some key architectural features of The Switchyard that will distinguish it from other mixed-use developments in the East Valley area?

Bez: One of the things we’re most proud of on this site will be the pedestrian experience within the project. A landscaped pathway with open spaces, direct access to patios and ample shade will connect the north end of the project all the way to the south.

We will also completely reconfigure the Queen Creek Library parking to create a fully integrated urban block that will stimulate activity throughout the day. From an architectural perspective, the varied canopy designs, materials and building heights will bring a different level of experience than the traditional retail that’s been built in Queen Creek to date.

READ ALSO: Phoenix’s CRE Market Is Hot. What Are the Best Opportunities?

What specific amenities and services will The Switchyard provide to residents, visitors and businesses?

Bez: In terms of restaurants, we’ll be bringing a mix of full-service, sit-down restaurants, elevated fast casual and bar/entertainment concepts across categories that will benefit both residents onsite and the surrounding community. On the multifamily side, the project will meet or exceed all modern amenity standards and offer both structured and tuck-under parking options for optimal convenience. The fact that all of this can be found in a cohesive, mixed-use environment creates a synergy that we’re excited to see come to fruition.

How will the outdoor gathering spaces be designed to foster community interaction and engagement?

Bez: Outdoor spaces are a huge part of what Creation does across our projects, and this is no different. From reconstructing the primary access drive into the site to creating a walkable pedestrian experience and developing small parks throughout the commercial core, The Switchyard is designed to give the community places to stop and enjoy the environment. The ample seating, shade and placement were a huge focus for us when programming the site.

Tell us a bit about the expected timeline for the project.

Bez: We’ll be breaking ground on the project in the fourth quarter of this year, starting with site work and infrastructure across the entire site. We expect the commercial to deliver by the end of 2025, with the multifamily to trail slightly, just given the longer construction timeline.

How do you anticipate The Switchyard to impact the Queen Creek community?

Bez: Queen Creek has seen so much growth, both from a population standpoint and new commercial and business activity. Our goal is to provide a project that meets the immediate needs of that growth, with dynamic restaurant and retail offerings and a residential experience that sets the standard for Queen Creek’s downtown core. We also hope this is a catalyst for continued development in the area.

The post Behind Creation’s $120M The Switchyard Project in Greater Phoenix appeared first on Commercial Property Executive.

West Coast Capital Partners has acquired Mountain View I, a 91,082-square-foot medical office building in Scottsdale, Ariz.

Represented by Newmark, Regent Properties sold the asset for $11 million. The buyer purchased the facility with the aid of a $12 million loan, provided by First International Bank & Trust, Maricopa County records show.

The property last traded in 2014, when the previous owner acquired it for $17.2 million from Principal Real Estate Investors, as part of a $34.6 million portfolio transaction that also included Ninety Mountain View II, according to CommercialEdge information.

READ ALSO: These Markets Top MOB Investment Activity

The three-story Mountain View I came online in 2000, on a 3.3-acre site and underwent cosmetic renovations in 2016. The LEED and Energy Star Certified property features 30,361-square-foot floorplates, two passenger elevators, controlled access and offers 455 car parking spaces.

The tenant roster includes Desert Plastic Surgery, Audiology of Scottsdale, MCS Biotech Resources and Paradise Valley Medical Clinic, among others. Mountain View I was 86 percent leased at the time of the sale.

Located at 9977 N. 90th St., in the Scottsdale Cure Corridor, the property is within walking distance of the 427-bed HonorHealth Scottsdale Shea Medical Center. The facility has access to U.S. Route 101 and is 24 miles northeast of downtown Phoenix. Other medical providers in the surrounding area include New Horizon Medical Center, Viva MedSuites, Banner Urgent Care and Halogen Medical Services, among others.

The Newmark team included Executive Managing Directors Barry Gabel, Chris Marchildon and Charles J. Osbrink.

The post West Coast Capital Buys Phoenix-Area MOB appeared first on Commercial Property Executive.

CBRE Investment Management has received local governmental rezoning and approval for the expansion of its data center in Chandler, Ariz., the Phoenix Business Journal reported.

Under the plan approved by the Chandler city council, the facility located at 2500 W. Frye Road in the East Valley of metro Phoenix will be expanded by 243,000 square feet. Its current size is roughly 150,000 square feet.

CBRE IM could not be reached for further information.

Interestingly, the building currently on the 16.4-acre site came online in 1988 and was used as an office building by Bank of America; its conversion into a data center occurred in 2008. CBRE Global Investors acquired it in 2019 for $72.8 million, according to CommercialEdge information.

READ ALSO: Prologis, Blackstone Double Down on Data Centers, but Hurdles Remain

The three-story expansion building will rise on an underused parking lot. Gensler designed the project, while Kimley-Horn & Associates Inc. will handle landscaping.

As part of the project, the nearby Salt River Project substation currently powering the data center will also be expanded. In addition, the owner will replace the entire facility’s old water-cooling system with an electric air-cooling method.

The PBJ report noted that local residents’ concerns about noise at the data center were a factor in delaying approval of the expansion.

Kristen Vosmaer, managing director on JLL’s Data Center Work Dynamics team, told Commercial Property Executive that noise is indeed a growing issue for data centers.

“Data centers do face scrutiny over noise, a factor increased in developments near residential areas, as well as around natural habitat,” she said. “Generators and air handlers both can emit noise above permitted decibel levels. We increasingly see permit applications facing the same level of scrutiny on noise as they receive over water, habitat, and right-to-light issues. Proper noise abatement strategies require zoning knowledge, understanding of one’s design and its implications, and effective mitigation strategies to counter the emittance in both greenfield and retrofit developments.”

Data in the desert

In May, QTS Realty Trust announced plans to develop a 3 million-square-foot data center campus in Glendale, Ariz. The 375-acre QTS PHX 3 project could include up to 16 buildings of about 180,000 square feet each.

QTS acquired the property, north of Camelback Road and west of Loop 303 along Cotton Lane, for $255.3 million in July 2022 from First Industrial Realty Trust.

Major considerations for data center development this year include innovative, energy-efficient approaches to powering and cooling these projects, according to a CBRE 2024 market outlook. In fact, some construction timelines have been delayed by as much as 24 to 72 months because of difficulties in securing adequate power supplies.

Demand for new data centers is expected to attract greater institutional investment, while the forecast for development in primary U.S. markets is about 3,000 MW.

The post CBRE IM to Expand Phoenix Data Center appeared first on Commercial Property Executive.

Haagen Co. has received a $29.2 million permanent loan to refinance Goodyear Centerpointe, a 320,000-square-foot retail power center in Goodyear, Ariz.

Gantry secured the 20-year, fixed-rate loan through a life insurance company. The note carries a 20-year amortization and a prepayment stepdown after 10 years.

Haagen purchased the retail center for $44.2 million back in 2014, according to CommercialEdge data. RGA Reinsurance Co. provided a $28.9 million acquisition loan.

READ ALSO: Coffee, Auto, Discount Retailers in Growth Mode

Completed in 2007 on some 31 acres, Goodyear Centerpointe incorporates seven buildings and features an inline anchor building, two out-parcel buildings and a series of free-standing pad sites. Its tenant roster includes a diverse mix of retailers such as Conn’s Appliances, EOS Fitness, Urban Air, Hobby Lobby, Turner’s Outdoorsman, Goodwill Industries, Eyeglass World, Olive Garden, Red Lobster and Texas Roadhouse, among others.

Located at 15277-15475 W. McDowell Road, in the West Valley suburb, Goodyear Centerpointe is just north of Interstate 10, which provides direct access to downtown Phoenix. The property is across from the Market at Estrella Falls shopping mall.

Gantry Principals Braden Turnbull and Patrick Barkley, Senior Associate Chad Metzger and Associate Alicia Sabanero brokered the deal, working on behalf of the borrower.

Phoenix’s retail scene

The West Valley suburbs’ strong fundamentals continue to generate retail performance, Barkley said in a prepared statement. As a consequence, a variety of lenders direct investments toward this asset class across the Phoenix metro.

The Valley has recorded approximately 3 million square feet of retail space under construction in the first quarter of this year, according to a recent Kidder Mathews report. The vacancy rate clocked in at 4.6 percent, while the average asking rents price stood at $1.53 per square foot.

The post Haagen Lands Refi for Phoenix Retail Asset appeared first on Commercial Property Executive.

The loan had originally closed in April, and the expansion now covers recent acquisitions by MDH in Phoenix and Chicago. Called Frontier Loan, the financing now supports more than 2.2 million square feet of MDH’s recent acquisitions and developments in Phoenix; Streamwood, Ill.; Savannah, Ga.; Indianapolis; El Paso, Texas; and Ocala, Fla.

MDH CFO Arun Singh and Michael Loffredo, capital markets associate, secured the loan, which was originated by Capital One’s Senior Vice President Mary Lucy Lester.

MDH did not reply to Commercial Property Executive’s request for additional information.

The Frontier Loan is MDH’s second term financing deal with Capital One in the past 12 months. The first was the $59.5 million Gemini Loan that closed in July 2023. The Frontier Loan supports acquisitions and developments from MDH’s Fund II, a discretionary fund equating to $750 million of equity, with $2 billion in buying power.

READ ALSO: Top 5 Industrial Properties Under Construction in Phoenix

The loan expansion includes 800 Phoenix Lake Ave. in Streamwood, Ill., just west of Chicago’s O’Hare International Airport. The 152,000-square-foot Class A facility is fully leased to two users.

The other property in the expansion is Freeport Distribution Center in Phoenix, a fully leased 245,000-square-foot Class A industrial facility.

Watery woes

Last December, MDH scored a big win when it leased the entirety of the Ocala Logistics Center in Ocala, Fla., to BroadRange Logistics. Avison Young Principal & Managing Director Clay Witherspoon represented ownership, and Strategic Real Estate Partners Principal John Gosnell represented the tenant.

Although industrial real estate investment cooled across the globe during the first quarter, a recovery in demand is expected in the second half of this year, according to a JLL report released at the end of May. Rental growth, though slowing, remains positive.

The report notes that “… climate-related disruptions were evident in the Panama Canal. East Coast port markets in the U.S. are also dealing with the aftermath of the bridge collapse in Baltimore, which will shift sea cargo volumes to nearby ports in the short term while wreckage is cleared, and a temporary shipping lane is created.”

The post MDH Partners Expands Loan From Capital One to $162M appeared first on Commercial Property Executive.

Mack Real Estate Group will soon break ground on the first phase of its 124-acre Mack Innovation Park Scottsdale in metro Phoenix, according to Phoenix Business Journal. The developer obtained nearly $63 million in construction financing.

Bank OZK originated $43 million in first mortgage debt and PGIM Real Estate provided $19.8 million in mezzanine financing to Mack affiliates. The JLL Capital Markets team of Chris Peck, Brad Miner, Jason Carlos, Tyler Peck and Jarrod Howard arranged the deal.

READ ALSO: Top 5 Industrial Properties Under Construction in Phoenix

The two-building, 305,400-square-foot first phase will rise on an infill Scottsdale, Ariz., site that has the capacity for an overall 1.2 million square feet across 11 buildings, with good access to Pima and Bell roads and the Loop 101 freeway. Mack acquired the property in 2022 for $125 million, in an Arizona State Land Department auction.

The initial two facilities are set to feature 32-foot clear heights, 53 dock-high doors, 20 grade-level doors and 516 parking stalls. Completion is expected by late 2025.

The project team for Mack Innovation Park Scottsdale includes Willmeng as general contractor, Butler Design Group as architect and Withey Morris Baugh PLC as land use counsel. Leasing agents are Mitch Stravitz and Rusty Kennedy of CBRE, James Cohn of Stream and Randy Shell of Shell Commercial.

Desert heat

It was just last month that Mack won at auction the rights to develop more than 2,300 acres of land in Phoenix’s North Valley and adjacent to the Taiwan Semiconductor Manufacturing Corp.’s campus. McCourt Partners is an investor in a development joint venture with Mack. Long term, this project could include industrial, retail and office space, along with up to almost 9,000 residential units.

That’s in addition to the 3 million-square-foot Mack Innovation Park Deer Valley underway about 20 miles from downtown Phoenix.

The metro Phoenix industrial space market saw vacancy in the first quarter tick up by 510 basis points year-over-year to 8.1 percent, according to a first-quarter report from Colliers. Net absorption was 4.4 million square feet, versus 9.7 million square feet delivered in the quarter, with a further 33 million square feet underway.

Amazon accounted for all of the three largest leases in the first quarter, two in Glendale and one in Goodyear, totaling more than 3.4 million square feet, also per Colliers.

The post Mack Real Estate Lands $63M for Phoenix Industrial Project appeared first on Commercial Property Executive.

Hammes has opened Buckeye Medical Plaza, a 48,000-square-foot medical office building in Buckeye, Ariz., near Phoenix. Cotton Architecture acted as architect and MJ Harris Construction served as general contractor. Integrity Commercial Real Estate Founder Melynn Wakeman handled leasing efforts.

The developer broke ground on the project in May 2023 and completed construction in April this year. Hammes acquired the 4.2-acre site from Wilson Property Services Inc. for $4 million.

READ ALSO: These Markets Top MOB Investment Activity

Upon completion, eight tenants will occupy the two-story facility providing various services including primary care, physical therapy, pediatric Autism, women’s care, lab, podiatry, oral surgery and dental.

Located at 865 South Watson Road, Buckeye Medical Plaza is near Interstate 10 and roughly 30 miles west of downtown Phoenix. It is also some 12 miles from Phoenix-Goodyear Airport and 10 miles from Buckeye Municipal Airport. Abrazo Medical Hospital and Banner Buckeye Hospital are slated to take shape near the property as well.

Phoenix office development activity contracts

Considering overall office development in the metro, Phoenix registered the smallest pipeline among Sun Belt markets as of February, with 940,968 square feet underway across 16 properties accounting for 0.6 percent of stock, according to CommercialEdge data. Construction starts also decreased with only 107,400 square feet breaking ground in the year’s first two months, compared to the 717,085 square feet registered in the same period in 2023.

Recently, Anchor Health Properties topped out HonorHealth Medical Campus at Peoria, a 100,000-square-foot medical office project in Peoria, Ariz. Developed in conjunction with HonorHealth and SMIL, the Class A facility broke ground in November 2023, and is slated to come online in early 2025.

The post Hammes Opens Phoenix-Area MOB appeared first on Commercial Property Executive.

Ryan Cos. has started construction on Schrader Farms Business Park, a three-building industrial project slated to bring 432,000 square feet to Chandler, Ariz.

The company acquired the project from the initial developer, Core5 Industrial Partners, for $16.1 million, according to Maricopa County public records. JLL represented both parties in the transaction.

In fact, Ryan Cos. purchased only the original project’s first phase, which encompasses three parcels totaling 32 acres. Core5’s initial design called for a six-building development totaling 946,042 square feet of space, according to the company’s leasing brochure.

The new development team includes Deutsch Architecture Group as architect of record. The industrial park is expected to come online in the third quarter of next year.

A new design

Schrader Farms Business Park will rise at the northwest corner of Queen Creek and McQueen roads, with each facility to feature 32-foot clear heights, LED lighting, air-conditioned warehousing spaces and ESFR sprinkler systems. Additionally, plans for the three buildings call for privately secured yards and ample vehicle and trailer parking.

READ ALSO: Top 5 Industrial Properties Under Construction in Phoenix

The industrial campus will be close to the Loop 101 and Loop 202 Interchange, as well as to Interstate 10, allowing easy access to the Southern California ports and to the Los Angeles area. The site is also 3 miles from Chandler Airport and within 22 miles of Phoenix Sky Harbor International Airport.

JLL Senior Managing Directors Pat Harlan and Kyle Westfall, together with Executive Vice President Jason Moore, worked on behalf of the buyer, while the team that represented the seller included Executive Managing Director Steve Larsen and Managing Director Bill Honsaker.

Phoenix’s industrial market still soars

As of April, the industrial under-construction pipeline in Phoenix totaled 41.8 million square feet, the highest in the U.S., according to a recent CommercialEdge report. The metro secured its top position in terms of development by a very significant margin, considering second-place Dallas-Fort Worth’s 23.4 million square feet under construction.

Last month, another industrial project broke ground in the metro: A joint venture between Creation and Clarion Partners started construction on the first phase of Park Algodon, a $250 million development in Phoenix. The two-phase project is expected to encompass some 1.3 million square feet.

The post Ryan Cos. Kicks Off Phoenix Industrial Project appeared first on Commercial Property Executive.

A joint venture between Bendetti and Westport Capital Partners has acquired Broadwood Business Centre, a 156,154-square-foot light industrial property in Mesa, Ariz., for $32.9 million.

BKM Capital Partners sold the multi-tenant campus in a transaction brokered by Cushman & Wakefield. The deal involved an $18 million loan originated by Grant Street Funding, according to CommercialEdge data.

BKM had acquired the property from Link Logistics for $18.4 million back in 2020, the same source shows. The $425.3 million portfolio transaction incorporated 19 properties totaling 2,542,588 square feet of industrial space.

READ ALSO: Phoenix Leads All Markets for Industrial Development

Completed in 1986, Broadwood Business Centre comprises 11 buildings across some 6 acres. The property can accommodate a broad range of user types such as showroom users, quasi retailers, manufacturers and distributors. At the time of the sale, the facilities were 100 percent leased to various tenants including Superior Silica, Diamond Select Lead Group, AKP Services, Mac Medical, Insider Local TV and Pinnacle Restorations, among others.

Located at 2450-2452 W. Birchwood Ave., in an Opportunity Zone, the industrial property is near Route 101 and some 15 miles from downtown Phoenix. Phoenix Sky Harbor International Airport is roughly 8 miles away.

Cushman & Wakefield Executive Directors Bob Buckley and Tracy Cartledge, along with Executive Vice Chair Will Strong, Director Michael Matchett and Senior Associate Molly Hunt, brokered the deal on behalf of the seller.

BKM has also recently sold Capitol Industrial Center North & South, a 335,701-square-foot, two-asset industrial portfolio in Sacramento, Calif., for $42.7 million. The firm had initially acquired the asset in the same aforementioned portfolio transaction.

Phoenix’s industrial sales boom

Fueled by a robust economy, an influx of residents from nearby areas and the rising demands of the e-commerce sector, Phoenix’s industrial market continues to soar. As of April, the metro recorded the third-largest transaction volume in the West, with investors closing $617 million in sales at an average of $159 per square foot, according to a recent CommercialEdge report.

One of the larger recent industrial deals in the greater Phoenix market was Stonelake’s $108 million acquisition of two assets in Goodyear. Cushman & Wakefield also brokered this transaction as well.

The post BKM Capital Sells Phoenix Industrial Park appeared first on Commercial Property Executive.

Diversified Partners has assumed leasing and brokerage duties for the under-development retail spaces at The Sydney and The Edge, two adjacent retail and mixed-use projects in Scottsdale, Ariz.

Locally based Palmer Development Group is developing the properties, which will include retail, entertainment and hospitality space.

The new assignment marks Diversified and Palmer’s third collaboration with development and leasing. In 2020, the companies worked together in similar roles at The Block at Pima Center, a 22-acre, 260,000-square-foot mixed-use district that includes medical office, retail, dining and hospitality spaces. This was Palmer’s first ever project.

The projects’ current states

The Sydney, which broke ground last year, is taking shape on 26 acres at the intersection of 90th St. and Loop 101, near the western edge of the Salt River Pima-Maricopa Indian Community. Butler Design Group served as architect, while Haydon Building Corp. is providing general contracting services, according to ConnectCRE.

Slated to come online in 2026, the $80 million development will include more than 122,000 square feet of retail space, in addition to an 180-key Hard Rock hotel. The campus will offer a mix of music and sporting venues, combined with traditional sit-down restaurants.

Among its already secured tenants is The Rustic, a chain of live-music focused bars and restaurants, which will add its first location outside of Texas to the property. Pickle & Social, an event space that includes a restaurant, bar, live entertainment space and pickleball courts, is also set to open its second location at the development.

READ ALSO: Street Retail Surges Toward Full Recovery

The Edge shopping center, located across Loop 101, has finished construction and will officially open later this year. The 10-building, 212,000-square-foot property already features some currently operating spaces, which include Little Fig, Cafe Rio, Thai Chili, Back Rock Coffee and Dirty Dough.

The properties’ sites are roughly 13 miles to the northeast of downtown Phoenix between Scottsdale Ranch and McCormick Ranch, two upscale master-planned communities. The Block at Prima Center, in addition to an array of sports, hospitality and office complexes, lines the southern bend of Loop 101.

The Valley of the Sun heats up

Driven by consistently strong population and job growth, Phoenix has retained positive retail fundamentals so far this year. A first quarter 2024 report from Avison Young clocks the city’s vacancy rate at 5.2 percent, just 30 basis points away from its historic low at the end of 2023.

Asking rents for all asset classes are on the upswing, with lifestyle centers, power centers and community centers seeing rates near or above $25 per square foot. The report shows that fast food offerings, superstores and shopping centers are the most popular types of properties, recording north of 30 million, 20 million and 15 million monthly visits, respectively.

Another large retail development currently underway in the Phoenix market is Sunbelt Investment Holdings’ 410,000-square-foot Buckeye Commons. The property broke ground in March, and is slated to encompass 18 buildings across 64 acres.

The post Diversified Partners Secures 2 Retail Leasing Assignments in Phoenix appeared first on Commercial Property Executive.

Texas-based real estate private equity firm Stonelake Capital Partners has expanded its Phoenix footprint with the acquisition of two industrial properties in Goodyear, Ariz., totaling 726,802 square feet.

CIM Group sold the pair for $108 million in an all-cash deal that was one of the largest industrial transactions in metro Phoenix this year. Cushman & Wakefield brokered the sale.

CIM Group, a Los Angeles-based firm which acquired the industrial assets in separate deals in 2021, made a $16 million profit on the sale of the properties, according to the Phoenix Business Journal.

READ ALSO: Top 5 Industrial Properties Under Construction in Phoenix

The purchases were made through the firm’s seventh opportunistic real estate fund, Stonelake Opportunity Partners VII LP, which closed in November with $746 million in total equity commitments. Stonelake VII exceeded its $700 million target and was the firm’s largest fund since its founding in 2007.

Stonelake, which has offices in Dallas, Houston and Austin, Texas, has raised a total of $1.7 billion of equity across three funds in the last three years. Similar to the strategy of its previous funds, Stonelake VII pursues real estate investments across 11 Sun Belt markets with a primary focus on acquiring and developing industrial warehouses.

Stonelake picked up 2250 S. Litchfield Road, a 450,619-square-foot facility, for $67 million, and 1675 S. Litchfield Road, a 276,183-square-foot building, for $41 million, according to the PBJ. The larger property is fully leased to Meyer Burger Technology AG, a Swiss solar panel technology manufacturer, and NPSG Global, a national third-party logistics provider. The smaller building is fully leased to Meyer Burger and is the company’s first solar module production facility outside of Europe.

‍CIM Group acquired the larger building, located across from the Phoenix Goodyear Airport, in August 2021 when it was newly built, from The Opus Group for $56 million. The cross-dock property features 36-foot clear heights, 73 dock-high doors, 190-foot truck courts, as well as ample car and trailer parking on a 29-acre site.

Upon its completion in December 2021, CIM Group purchased the smaller building. The rear-load facility has 36-foot clear heights and 48 dock-high doors, as well as ample car and trailer parking.

Both properties are located in a designated Foreign Trade Zone and offer proximity to the 1-10 freeway and a direct connection to the Ports of Los Angeles and Long Beach in California, Loop 303, Union Pacific Railroad and Sky Harbor International Airport in Phoenix.

A Cushman & Wakefield team including Executive Vice Chair Will Strong, Senior Associate Molly Hunt and Director Michael Matchett represented both Stonelake and CIM Group, the PBJ reported.

Stonelake Phoenix deals

In addition to Phoenix, Stonelake is active in South Florida; Orlando and Tampa, Fla.; Nashville, Tenn.; Atlanta and Dallas, Austin, Houston, El Paso and San Antonio in Texas. Stonelake owns about 1.8 million square feet of industrial holdings in the Phoenix area, where it has made more than 12 deals in the last three years.

Other Phoenix area assets include a 249,904-square-foot industrial property in Tolleson, Ariz., purchased in April 2023 for $38.2 million from Oxford Properties Group. The facility is fully occupied by Circle K as a data center and distribution facility. The single-story building was developed in 2000 and is located at 8313 W. Latham St. Strong and Hunt of Cushman & Wakefield were part of the team working on that deal as well.

Last July, Stonelake sold a 132,318-square-foot industrial property in Phoenix to FM Industries for $23 million. Located at 41450 S. Riverpoint Parkway in the Airport submarket, the two-story manufacturing building was completed in 2002.

The post Stonelake Capital Pays $108M for Phoenix Assets appeared first on Commercial Property Executive.

A joint venture between George Oliver Cos. and Ascentris has acquired the office building at 4141 N. Scottsdale Road, in Scottsdale Ariz. The partners paid $26.1 million for the 162,227-square-foot property. JLL represented the seller in the transaction.

Palisades Capital Realty Advisors last owned the asset, having picked it up in 2015 for $34.5 million, according to CommercialEdge data. In the same year, it became subject to a $26.5 million CMBS loan. Wells Fargo Bank provided the note with a 4.1 percent fixed rate and a 2025 maturity term, while Starwood Capital Group originated it, the same source shows.

READ ALSO: How Tech Tenants Grapple With Return-to-Office, Costs

Completed in 1985, the building has three stories of office space and two levels of subterranean parking. It underwent a cosmetic renovation in 2012. CommercialEdge data shows that the building’s roster includes Spring Venture Group, Pegasus Solutions, Ascentium Capital and Great Western Bank.

George Oliver Cos. plans to redevelop the property, with construction start scheduled for 2025. Additions are slated to include amenities such as a fitness center, yoga facilities, game areas, dog patios and EV charging stations, in line with the company’s past projects.

Located at the intersection with Indian School Road, 4141 N. Scottsdale Road is within old town Scottsdale. The roughly 3-acre property is in walking distance of various retail options and some 12 miles from Phoenix.

JLL Senior Managing Director Ben Geelan, along with Senior Director Will Mast represented the seller in the transaction. Last year, the same team represented RED Development in the $48.5 million sale of a 70,000-square-foot medical office building in Phoenix.

Phoenix office investment picks up

Year-to-date through April, some $349 million worth of assets have changed hands in metro Phoenix, according to a recent CommericalEdge report. The metro had the third highest office investment volume in the U.S. in this period, behind Dallas and Washington, D.C. The average price per square foot clocked in at $199.

One of the larger recent sales in Phoenix was Younan Properties’ $25 million acquisition of 3200 Central. DPC Cos. sold the 25-story, 350,049-square-foot building, having initially purchased it in 2016 for nearly $50 million.

The post George Oliver JV Pays $26M for Phoenix Office Asset appeared first on Commercial Property Executive.

A private investor has paid $44.3 million for the leasehold interest in Sky Harbor Center, a recently renovated, 534,849-square-foot office campus in Phoenix. The buyer financed the purchase with a $43.6 million loan from Zions Bank, public records show. Cushman & Wakefield arranged the sale, reportedly the largest office transaction by square footage in metro Phoenix so far this year.

The buyer was Mark Heymann, of Dallas, and the seller was Link Logistics, according to CommercialEdge information. The latter had acquired the Class B asset from KBS Realty Advisors in December 2012 as part of a $242.5 million portfolio deal.

Bank of America is Sky Harbor Center’s sole tenant. The banking institution has occupied the entire property since 1989.

A Class B office campus in Phoenix

Sky Harbor Center came online in 1989 and is subject to a 65-year unsubordinated net ground lease held by the City of Phoenix, CommercialEdge data shows. The lease expires in June 2053.

In addition to five office buildings of two or three stories, the approximately 37-acre campus at 1825 E. Buckeye Road includes a parking garage. Amenities include a fully renovated café, coffee/juice bar and conference center, as well as outdoor areas for seating and events.

Cushman & Wakefield’s Steve Lindley and Alexandra Loye represented the seller in the transaction, in cooperation with Will Strong and Molly Hunt of the firm’s National Industrial Advisory Group – Mountain West and Eric Wichterman and Mike Coover with the firm’s Private Capital Group. In addition, Jerry Roberts and Pat Boyle provided leasing advisory.

Careful growth

Lindley said in a prepared statement that office properties are selling again as price discovery emerges and lenders slowly return to the market, but buyers pursue mostly office assets that have credit tenancy, a strong location and appealing on-site or nearby amenities.

The metro Phoenix office market has been holding steady as a Sun Belt leader in deal volume, according to a recent CommercialEdge report. The Valley witnessed $349 million in office sales year-to-date as of April, ranking third after the Bay Area ($469 million) and Dallas-Fort Worth ($357 million).

At the end of May, Younan Properties bought 3200 Central, a 25-story, 350,000-square-foot office tower in Phoenix, from DPC Cos. for $24.5 million. Newmark brokered the deal that closed for half of what the building had sold for in 2016.

The post Bank of America-Leased Campus Sells for $44M in Phoenix appeared first on Commercial Property Executive.

Cushman & Wakefield brokered the transaction, representing both seller and buyer. At the time of the sale, 21st Street Center was 100 percent leased to three tenants.

Clarion Partners had purchased the property from Crow Holdings back in 2002, CommercialEdge data shows. The sale was part of a $1.6 billion portfolio transaction in which Clarion acquired 287 properties throughout the U.S., the vast majority of them industrial.

Completed in 1996, 21st Street Center comprises two buildings spread on some 8 acres. The property features 26-foot clear heights, climate control, insulated ceilings, sky lights and 142 car parking spaces.

READ ALSO: Phoenix Leads All Markets for Industrial Development

Cushman & Wakefield Executive Vice Chair Will Strong, Director Michael Matchett and Senior Associate Molly Hunt from the company’s National Industrial Advisory Group, Mountain West, worked on behalf of the seller and buyer. The team of Executive Vice Chair Rob Rubano, Executive Managing Director Brian Share, Director Max Schafer and Analyst Becca Tse from the Equity, Debt & Structured Finance team placed the acquisition loan.

Phoenix industrial sector continues to thrive

Located at 455 and 465 West 21st Street, the industrial center is in Phoenix’s Airport submarket. The property is near Phoenix Sky Harbor International Airport and at the confluence of Interstate 10, Loop 202 and U.S. Route 60.

Phoenix recorded the third-largest transaction volume in the West as of April, with investors closing $617 million in sales at an average of $159 per square foot, according to a recent CommercialEdge report. Phoenix is leading the nation in terms of industrial development, as the metro had 41.8 million square feet of space under construction as of April, representing 10.8 percent of existing stock.

In joint venture with Creation, Clarion Partners recently broke ground on the first phase of Park Algodon, a $250 million industrial and mixed-use campus in Phoenix. Upon completion, the two-phase project will comprise some 1.3 million square feet.

The post Founders Properties Pays $30M for Phoenix Asset appeared first on Commercial Property Executive.

High-tech industries, such as semiconductor manufacturing and data centers, are driving growth bringing cutting-edge technology and innovation to the region and enhancing its attractiveness. The table below highlights the largest industrial projects underway in the Phoenix metro as of the end of April, according to CommercialEdge data. These projects encompass manufacturing plants, distribution hubs and data centers.

1. 5088 West Innovation Circle, Phoenix

Taiwan Semiconductor Manufacturing Co. (TSMC) is currently constructing the largest industrial property in Greater Phoenix at 5088 W. Innovation Circle, in the metro's North Gateway submarket.

This facility will be the most advanced semiconductor fabrication plant on U.S. soil, boasting a production capacity of more than 20,000 chip wafers per month. Spanning 805 acres, the property will encompass a total of 3.8 million square feet. Construction began in May 2021, with completion anticipated at the beginning of 2025.

TSMC plans to add a third fabrication facility, bringing the total investment to more than $65 billion. This significant project is supported by $6.6 billion in direct U.S. funding provided under the CHIPS and Science Act. According to an announcement by the U.S. Commerce Department in April, the entire project is expected to be fully operational by the end of the decade.

2. Lucid Advanced Manufacturing Plant-1, Casa Grande, Ariz.

Lucid Motors has commenced construction on the Lucid Advanced Manufacturing Plant-1 (Lucid AMP-1), a 2.8 million-square-foot facility in Casa Grande.

The electric vehicle manufacturing plant aims to enhance the company's production capabilities ahead of the launch of its new fully electric SUV, the Lucid Gravity. When completed, it will be one of the largest industrial properties in Phoenix.

The expansion will include a manufacturing facility and warehouse, consolidating several functions onto one campus. Upon completion, the site will feature a new general assembly line, new quality and semi-knock down centers, expanded body and paint shops, a relocated logistics center and an expanded powertrain facility.

According to CommercialEdge data, the property is scheduled for completion later this year. The development spans over 470 acres at 317 S. Thornton Road, approximately 50 miles south of downtown Phoenix. The site benefits from its proximity to Interstate 10 and is near major Walmart distribution centers.

3. Ross Distribution Center, Buckeye, Ariz.

In June 2022, Ross Stores started construction on a 1.7 million-square-foot distribution hub in Buckeye. Situated at 23255 W. Southern Ave., the facility is scheduled for completion this summer and will create more than 1,300 jobs. Covering 215 acres, the site is near Interstate 10, at the intersection of Southern Avenue and Watson Road, across from a Walmart distribution center and adjacent to a Union Pacific rail line.

Ross Stores acquired the site in 2022 for $28.3 million. The same year, Ross Stores opened 100 new locations, maintaining its status as the largest off-price apparel and home fashion chain in the U.S.

4. Meta Mesa Data Center–Building 3, Mesa, Ariz.

Last July, Meta broke ground on Building 3, a 1.5 million-square-foot facility at the Meta Mesa Data Center in Mesa.

This project, located on 200 acres at 3841 S. Ellsworth Road, is the metro's fourth-largest industrial development currently underway and is expected to come online in early 2026.

The Meta Mesa Data Center, first announced in August 2021, is a greenfield development featuring a five-building campus with more than 2.5 million square feet of data center and administrative space. California-based contractor DPR Construction is responsible for building the $1 billion facility.

Upon completion, the campus will be one of the most advanced, energy- and water-efficient operating data centers, providing some 200 operational jobs to the local community. It will also be Meta's 18th data center globally and its 14th in the U.S.

5. Luke Field–Building C, Glendale, Ariz.

Lincoln Property Co.’s 1.3 million-square-foot Building C at the Luke Field campus in Glendale ranks fifth among the metro's largest industrial projects. Construction began in November last year, with completion expected by the end of this year. Bank OZK financed the development with a $74.2 million loan.

Situated next to Luke Air Base on the eastern side of Route 303, Building C is the largest of three facilities planned for the nearly 140-acre site, located about 24 miles northwest of downtown Phoenix. The other two buildings, Alpha and Bravo, are also under construction and will add a combined 1.1 million square feet upon completion.

The post Top 5 Industrial Properties Under Construction in Phoenix appeared first on Commercial Property Executive.

DPC Cos. has completed the sale of 3200 Central, a 25-story, 350,049-square-foot office building in Phoenix. Los Angeles-based Younan Properties picked up the property for $24.5 million, public records show. A Newmark brokerage team, led by Executive Managing Directors Chris Marchildon, CJ Osbrink and Barry Gabel, acted on behalf of the seller.

The asset’s current sale price was half the one of its previous trade, as DPC had acquired it for $49 million in 2016.

The acquisition of 3200 Central, also known as Great American Tower, marks Younan’s second investment in the Valley of the Sun. The firm also owns 4041 Central Plaza, a 20-story, 405,993-square-foot office tower that it purchased in 2004.  

Great American Tower, up close

At the time of its construction in 1985, Great American Tower was the ninth tallest building in Phoenix. The high-rise features 14,000- to 15,403-square-foot floorplates and has an adjacent 1,118-space multi-level parking structure. Its tenants are in the law, financial services and architecture fields.

READ ALSO: Law Firm Office Leasing Continues to Rise

During its ownership, DPC invested in cosmetic renovations at the property’s office suites, building systems, lobby and amenity spaces, adding a fitness center, conference facility, deli and bank. In addition to these capital improvements, the tower underwent a previous cosmetic renovation in 2007, according to CommercialEdge information.

Located at 3200 N. Central Ave., Great American Tower is a straight, 2.6 mile shot north of downtown Phoenix. The building is adjacent to the Osborn/Central Ave stop of the Valley Metro Rail system and Sky Harbor International Airport is 4.5 miles southeast.

A mixed bag for Phoenix’s office sector

Year-to-date as of April, Phoenix has seen $349 million in transactions, the fourth highest investment volume in the nation, according to CommercialEdge’s latest office report. The metro’s vacancy rate of 17.5 percent was 130 basis points below the national average. At the same time, the construction pipeline has floundered, amounting to just 650,000 square feet in April, the second smallest in the Western U.S.

One of the largest office sales to close in the metro in the first four months of the year was Columbus Properties’ purchase of 24th at Camelback I, a 302,209-square-foot building in Phoenix’s Biltmore submarket. New York Life sold the Class A asset for $86.1 million in a transaction also arranged by Newmark’s Osbrink team.

The post Younan Properties Buys Phoenix Office Tower appeared first on Commercial Property Executive.

Biscuit Flats Dev LLC was the only bidder at Tuesday’s land auction held by the Arizona State Land Department for the right to lead the development of what could be more than 28 million square feet surrounding the TSMC campus. TSMC has already committed $65 billion in its rapidly growing facilities with significant further investment expected.

The Phoenix Business Journal reported MREG spent more than $56 million to win the auction for the land surrounding the 1,100-acre TSMC site that will be known as Sonoran Oasis Science and Technology Park. Three semiconductor fabs are already under construction by TSMC and another three fabs are planned for a potential total investment of $120 billion. TSMC’s Arizona subsidiary has recently received as much as $6.6 billion in grants through the federal CHIPS Act toward construction of the third Phoenix fab. The company may also benefit from subsidies included in the federal Inflation Reduction Act.

READ ALSO: Mastering Supply Chain Challenges

The company is expected to be a huge economic and employment driver in the region with at least 10,000 permanent jobs created by TSMC and up to 80,000 jobs created in the Phoenix MSA by the TSMC business ecosystem. The influx of workers will drive demand for commercial and residential development across a variety of sectors including industrial, retail, office and residential.

Control of the site

Under an agreement with ASLD, the MREG and McCourt partnership will control land sales within the 2,300-plus-acre site, which will take place in stages over several years. The partners will also oversee the necessary infrastructure improvements, which PBJ stated could reach $1 billion. The joint venture will also have the right to develop approximately 600 acres across multiple uses.

MREG estimates up to 8,960 residential units will be built along with industrial, retail and office space. There are no specific plans outlined at this time for any of the projects, but PBJ reported MREG can develop or sell parcels to other developers once it meets certain requirements, including the infrastructure improvements. Infrastructure work could start as soon as 2025. Industrial uses are expected to be built on the western portion of the site that is situated on the northwest corner of Loop 303 and I-17 with mixed-uses like multifamily, retail and office space developed on the eastern section of the site closer to the interstate.

Phoenix footprint

MREG, a national real estate investment and development firm, already has a strong Phoenix presence. The firm is currently building more than 4 million square feet of industrial space across Mack Innovation Park Deer Valley. In October 2022, MREG selected Stream Realty to be the leasing agent for the master-planned industrial development located within 10 minutes of TSMC. MREG is also building an industrial development on 124.7 acres in North Scottsdale known as Mack Innovation Park.

Additionally, MREG’s multifamily portfolio in Phoenix consists of more than 900 units owned or under development. Since 1987, Mack-related entities have invested in or developed more than 10 million square feet of industrial, office, retail, and multifamily properties in Phoenix.  

The post Mack Real Estate to Develop 2,300 Acres Near Phoenix appeared first on Commercial Property Executive.

Vero Capital’s office investment platform—Vero A2R—and Stream Realty Partners have started work on a $29 million redevelopment at INISIO at Kierland, a 410,000-square-foot, two-building office campus in Scottsdale, Ariz. The project is estimated for completion in the fourth quarter of 2024.

Vero purchased the assets in two phases. In 2021, the firm bought Kierland I for $58 million from Velocis, backed by a line of credit from Column Financial, according to CommercialEdge. A year later, Vero acquired Kierland II for $47 million from LBA Realty, with financing provided by Western Alliance Bank, the same source shows.

The company first announced the renovation plans back in November 2023. Willmeng Construction is the general contractor while Zebra Projects and Good City Studio provided design services.

READ ALSO: Phoenix’s CRE Market Is Hot. What Are the Best Opportunities?

Stream Realty Partners oversees the development and provides leasing services. The company recently signed leases at INISIO with Liberty Mutual, Healthcare Realty, as well as Prudential. Furthermore, Kierland I is now fully occupied.

The repositioning includes a 5,000-square-foot gym, hospitality-inspired lobbies and common areas, libraries, focus booths, as well as a 5,000-square-foot outdoor area featuring pickleball courts, among others. A new restaurant will also open on campus. Moreover, the renovation will bring five new speculative suites ranging between 3,900 and 7,700 square feet, slated for delivery in the fall of 2024.

Located at 16430 N. Scottsdale Road and 16260 N. 71st St., the two office buildings are more than 2 miles away from Arizona 101 Loop. Downtown Scottsdale and Phoenix are some 10 and 22 miles away, respectively.

Phoenix’s office vacancy improves, pipeline struggles

A recent CommercialEdge report highlights Phoenix’s office resilience superimposed over a growing national vacancy rate. While the U.S. rate grew to 18.8 percent—a 210-basis-point increase—year-over-year as of April, Phoenix’s vacancy rate slid down to 17.5 percent, decreasing by 80 basis points for the same period.

The metro’s pipeline is shrinking, at 650,385 square feet under construction as of April, representing 0.4 percent of existing stock. Meanwhile, other Sun Belt metros continue to have significant pipelines, including Dallas-Fort Worth at 4.9 million square feet, and San Diego with 3.7 million square feet under construction.

The post Stream JV Kicks Off $29M Phoenix Office Reno appeared first on Commercial Property Executive.

A joint venture of Creation and Clarion Partners has broken ground on the first phase of a $250 million industrial and mixed-use campus in Phoenix. Upon completion, Park Algodon, a two-phase project, is set to total some 1.3 million square feet.

The first phase of the infill project consists of four buildings totaling 766,000 square feet. Configurations will cater to tenants ranging from 16,000 square feet to 317,000 square feet. The second phase of the project will be a single-building development totaling 556,000 square feet.

Commercial Edge data shows that Building B will total 319,200 square feet, Building C will be 122,720 square feet, Building D will deliver at 156,200 square feet and Building E will be 156,200 square feet.

READ ALSO: Phoenix’s CRE Market Is Hot. What Are the Best Opportunities?

Designed by LGE Design Build, both phases are anticipated to feature 32- to 36-foot clear heights, access to power and parking. Future tenants can vary across the industrial spectrum. The first buildings are expected to deliver in the third quarter of 2025.

Creation and Clarion Partners originally acquired the land for the project late last year. Situated on 87-acres, Park Algodon is located on the northwest corner of Loop 101 and Indian School Road. Interstate 10 is within proximity of the project, while downtown Phoenix is some 15 miles east.

Cushman & Wakefield’s Mike Haenel, Andy Markham and Phil Haenel will head up leasing for Park Algodon.

Creation, separate from the joint venture development, is also building more than 14,000 square feet of restaurant and retail space on an adjoining site to Park Algodon. The project, The Shops at Park Algodon, is situated on 7 acres. Matt Milinovich and James DeCremer with Avison Young are heading up leasing.

The post JV Breaks Ground on $250M Phoenix Campus appeared first on Commercial Property Executive.

QTS Realty Trust is expanding its presence in metro Phoenix. Plans call for a 3 million-square-foot data center campus in Glendale, Ariz., called QTS PHX 3, that could include 16 buildings of approximately 180,000 square feet each.

The 375-acre development site is north of Camelback Road and west of Loop 303 along Cotton Lane. QTS acquired the property in July 2022 for $255.3 million from First Industrial Realty Trust.

Designed to meet rapid, large-scale deployments, QTS Glendale is expected to have more than 750 megawatts of critical power capacity. A 29-acre substation is also slated for the site that has room for future growth, the Phoenix Business Journal reported.

READ ALSO: Where Innovation Drives CRE Demand

While development timetable was not provided, the project is expected to take several years to build once it receives approvals. QTS filed the initial plans with the City of Glendale in early 2023, several months after purchasing the site, according to PBJ.

“Data centers are large, complicated projects that require both thousands of skilled construction employees and specialized maintenance professionals once the site is in operation. We choose markets like Phoenix and Glendale because of access to a highly skilled and motivated workforce,” a QTS spokesperson told Commercial Property Executive.

QTS’ expansion in the Valley

The Glendale site will be the third location for the Blackstone-owned QTS in the Phoenix metro area. Last year, the company started building another phase at its 85-acre campus at 1200 40th St. in Phoenix. The multi-building campus is planned for 280 MW of capacity.

Another QTS data center is at 120 E. Van Buren in Phoenix. The facility has a 288,000-square-foot building and 32 MW of utility power capacity.

“QTS is investing in Arizona as a long-term partner and will continue to work with the state, counties and cities where we operate to ensure growth is additive to the area. As a colocation provider, we look to enter areas that are attractive to potential tenants as well,” the spokesperson concluded.

Private equity giant Blackstone acquired QTS, based in Overland Park, Kan., for $10 billion in June 2021. In July 2023, Blackstone announced it sold off other assets to fund an $8 billion commitment to build new data centers through QTS.

Phoenix, a growing data center market

A recent JLL North America data center report classified Phoenix as a primary data center market along with Atlanta, Chicago, Dallas-Fort Worth, Northern Virginia, Northern California and New Jersey. The secondary markets included Salt Lake City, Los Angeles, New York, Denver, Houston and Austin, Texas.

The Phoenix market ranked second after Northern Virginia for new transactions in 2023, totaling 784 megawatts, according to the report. The Valley had nearly 700 MW under construction at the end of last year, representing 100 percent of stock. The metro is expected to grow at significant rates over the next 5 years, alongside Dallas-Fort Worth, Chicago and Northern Virginia.

The post Blackstone’s QTS Eyes Phoenix Data Center No. 3 appeared first on Commercial Property Executive.

In a little bit of good news for the sector, MOBs sold for an average of $288 per square foot in the first quarter, up by $1 from the fourth quarter. While only a small step up, it was the first increase in the past six quarters, the brokerage firm’s U.S. Medical Outpatient Buildings report for the first quarter of 2024 stated.

CBRE also noted 13 of the top 20 markets for investment volume saw year-over-year increases. However, high interest rates and inflation continue to impact MOB investment activity. On a quarter-over-quarter basis, markets were evenly split, with 10 seeing increases and 10 marking decreases.

READ ALSO: Medical Office to Perform Well

That split was even starker in the top 10 markets with only sixth-place Tucson, Ariz., (up 122.4 percent) and 10th place Houston (up 167.7 percent) registering increases. Top market Phoenix saw a 7.9 percent decrease in MOB investment volume followed by second-place Atlanta down 70.8 percent; third-place Washington, D.C., down 91.5 percent; fourth-place Los Angeles down 88 percent; fifth-place Chicago down 44.8 percent; the seventh-place Northern New Jersey market down 39.6 percent; eighth-place Boston down 70.8 percent and ninth-place Seattle down 85.2 percent.

On a regional basis, CBRE reported the Midwest was the top region for first-quarter investment volume with $462 million, followed by the Southwest with $393 million. CBRE tracked a total of 185 transactions in the first quarter. While the Midwest has the highest investment volume by dollar figure, the Southeast had the highest number of transactions at 58, compared to 42 for the Midwest.

The high interest rate environment and ongoing inflation has resulted in increased cap rates for most commercial real estate asset types and MOBs are no exception. The average MOB cap rates have increased for six consecutive quarters, ending the first quarter at 7.0 percent versus 7.4 percent for traditional office buildings, according to CBRE. The average MOB cap rate had steadily declined between 2020 and mid-year 2022 before increasing by 90 basis points between the third quarter of 2022 and the first quarter of this year.

Rent and absorption

MOB asking rent growth has far outpaced traditional office buildings since 2020, primarily due to increased demand for health-care services. MOB rent growth ticked up in the first quarter of this year, remaining at 6.5 percent above its first quarter of 2020 level, compared with 0.8 percent growth for traditional office space, CBRE reported. The average MOB asking rent reached a record $24.70 per square foot in the first quarter of 2024, a 0.5 increase from the fourth quarter of 2023. Markets with the greatest year-over-year rent increases were Louisville, Ky., up 8.6 percent; Cleveland, up 4.4 percent, and Grand Rapids, Mich., up 4.1 percent.

Development of higher quality MOB inventory is expected to keep asking rents on the rise for the near future, CBRE notes. Absorption should increase significantly going forward as new MOB projects are slated to deliver over the next two years. MOB construction completions totaled 1.7 million square feet and brought the trailing-four-quarter total to 10 million square feet. Vacancy is expected to peak in late 2024 and start falling in 2025 as those high-quality deliveries are absorbed. The average vacancy rate rose by 0.3 percent quarter-over-quarter and 0.9 percent year-over-year to 9.7 percent.

Spotlight on deals

Of the 24 deals listed in the CBRE MOB report, several were featured recently by Commercial Property Executive. In January, Remedy Medical Properties purchased a six-building, 145,308-square-foot portfolio of medical office buildings in Northern Kentucky and the outskirts of Cincinnati from Zalla Cos. for approximately $43 million, according to CBRE. CPE stated all the buildings are leased to St. Elizabeth Physicians, a multi-specialty organization with practices in Kentucky, Ohio and Indiana.

Also in January, the University Hospitals Wellness Campus at 8655 Market St. in Mentor, Ohio, has changed hands for approximately $37 million. Lake Health, part of the University Hospitals Health Systems, occupies the entire two-story, 86,000-square-foot facility.

In May, a joint venture of Remedy Medical Partners and Kayne Anderson Real Estate acquired a 37-property medical office portfolio spanning 13 states and more than 700,000 square feet for $252 million from Broadstone Net Lease. The largest property in the portfolio was the 120,000-square-foot Ridgeway Medical Campus near Rochester, N.Y., that is fully leased to Rochester Regional Health. CBRE reported the 145,308-square-foot asset sold for $43 million.

The post These Markets Top MOB Investment Activity appeared first on Commercial Property Executive.

ICSC Las Vegas was held from May 19th to May 21st, 2024. Image by Fotios Tsarouhis

The doyens of the retail real estate world struck a sunny tone on the sidelines of ICSC Las Vegas this week, with several telling Commercial Property Executive that the sector is healthier than it has been in years.

“This is the first time people are saying ‘optimistic’ without putting ‘cautious’ in front of it,” Kristin Mueller, president of JLL’s Retail Property Business, told CPE.

Mike Sladich, regional managing director for the Commercial Investment Sales team in Northmarq’s Atlanta office, pronounced the sector “alive and well”, recalling that “retail, a few years ago, was kind of a bad word, and now it’s the belle of the ball again.”

“The retail fundamentals, in terms of retailer performance and retail real estate, could be at one of their best points in history,” said Daniel Taub, national director of Marcus & Millichap’s Retail Division and Net Lease Division. “You have now been experiencing 10-plus years of very little to no net new development; therefore, existing retail real estate has become more valuable, because there’s less new product. The consumer has continued to do what they do best: two-thirds of GDP is consumption.”

Sun Belt states continued to dominate discussions. “That’s where the population is, and we’re all about people,” said Mueller. “Retail follows rooftops.” However, she added that the demand for retail properties remains robust nationwide.

READ ALSO: Street Retail Surges Toward Full Recovery

“The Sun Belt is easy to sell because people are moving there, there’s just a lot of growth,” Sladich told CPE, who noted that retail is booming across the U.S. due to high demand and low unemployment.

Still, “occupancy and rent growth are amazing” in the Sun Belt, according to Ryan Ash, vice president of development at Vestar. The firm’s primary growth-focus markets are West Texas, California, Arizona, Utah and Colorado, with Vestar particularly focused on the Phoenix metro. “Arizona is the one where the population has exploded,” said Ash. “That’s really where we see growth right now.”

Education, health care and revitalization

Retail’s approach to anchor tenants and how to organize properties is evolving, with new assets incorporating all types of grocery, entertainment, education, health-care and life science uses.

“We’re becoming much more diverse through our leasing efforts,” said Mueller, whose firm has developed lifestyle centers with various kinds of anchor tenants, including athletic facilities.

As much as real estate is a business that follows major trends and money, new opportunities can often arise from the needs of downtown areas undergoing revitalization.

“What we love to do is go into underserved communities and bring in quality essential goods and services,” Cary Lefton, CEO of Agora Realty & Management, told CPE. North Las Vegas, Nev., home to several Agora projects, is exactly that kind of municipality. “We saw that there was a tremendous void in the northeast valley of this southern Nevada area.” Agora initially redeveloped a retail center in the city and eventually acquired property owned by the local government to develop further projects.

“Our tenants were doing three times the national average” at the initial property, said Lefton, “and we were thrilled that our tenants were doing so well, but the city was also thrilled that we turned around a blighted center and made it vibrant, and new and thriving.”

Agora’s public-private collaboration with North Las Vegas’ government allowed the firm to meet city needs, like more access to health care, employment and education, Lefton said. “They shared with us what they would like to see, and there was a lack of health care, there were still additional needs for essential goods and services.” The company is also partnering with a state university on a satellite campus in the area.

Among Agora’s North Las Vegas projects was a medical office building, representative of an asset class that has begun to play an increasingly prominent role in retail.

From community colleges to charter schools, educational institutions are becoming a focus for developers, said Mueller. And it’s the same for health-care assets.

“I think a trend across our portfolio is bringing in more health and wellness tenants,” Ash agreed.

Even prior to COVID-19, there had been a trend toward the opening of more urgent care centers. “We’ve seen that be wildly successful and almost every one of our properties now has an urgent care,” said Ash, noting that the advent of telemedicine and small-format general practices is influencing the trajectory of medial retail space.

In Newark, N.J., education is already a major part of life in a city where renewal efforts are drawing in younger residents and more entrepreneurs. Home to one of Rutgers University’s campuses, as well as the New Jersey Institute of Technology and Essex County College, Newark aims to help local residents open businesses even as it welcomes new investors, and many of the efforts are associated with the arts.

“We work very closely with the mayor and with the city hall to make sure that everybody, residents and business owners alike, are benefiting from all the investment and development that is happening,” said Marcus Randolph, CEO of Invest Newark. “We really honor the people that are already here, but we want you to join the community.”

New ground-floor retail has been an important part of the city’s retail landscape as more residential properties have come online. In turn, retail opportunities have emerged as parts of Newark have grown. “It’s a growing community, it’s going to need amenities and services,” said Randolph.

Staying location

“Retail has been as battle-tested as any asset class, between the creation of Amazon, the internet and e-commerce shopping, and COVID,” said Taub. “It has weathered and probably come out on the better side of all of those.

The past few years have ensured that physical retail spaces are here to stay, said Taub, even if they need to be reconfigured, something many stores have begun to do.

Sladich agreed, saying “people don’t want to be just completely sedentary and have everything delivered to them… there’s some stuff people want to go and touch and feel.”

Macro concerns

Concerns over monetary policy impacting investing remained a constant theme throughout the conference. “There’s still a lot of dry powder out there,” said Sladich. “There’s a lot of cash chasing deals. It’s definitely not a capital issue per se, it’s more of just a need to get financing.

“The investor demand, whether it’s private capital or institutional capital, is bountiful,” said Taub. “That’s not an issue in the equation.” However, the volatility in the capital markets remains a top factor in the number of transactions. “The volatility in the capital markets and the cost of capital have created an impasse on the bid-ask spread between sellers and buyers and sellers are loath to sell, because they’ve got a high performing asset class, there’s demand on the leasing side, they’re getting rent growth, properties are cash flowing.”

In the current climate, developers and property owners have been dealt the best hand, said Taub. High-performing assets mean that, in many instances, owners do not need to sell. However, demand for quality retail assets remains high.

“Sellers are not in a situation, for the most part, where there’s a force behind them that is making them have to become a seller,” said Taub. “They’re deciding in many instances to be a seller if they can achieve a certain amount of pricing. The good thing is that there’s plenty of capital from the demand side that wants to invest in retail because of the long-term sustainability that we’ve been witnessing.”

The post ICSC Special Report: Retail’s the ‘Belle of the Ball’ Again appeared first on Commercial Property Executive.

Kohler Co. has officially opened its almost 1 million-square-foot manufacturing facility in Casa Grande, Ariz., a Phoenix submarket. The kitchen and bath product firm partnered with general contractor Mortenson and broke ground on the project in February 2022.

The facility occupies a 216-acre site and has room for future expansion. Besides the manufacturing plant, the property also encompasses an ancillary warehouse, distribution center, office space and cafeterias, as well as a showroom. The development has brought more than 400 full-time jobs to the local market.

READ ALSO: How Important is Sustainability in CRE Business?

The factory produces STERLING brand bath and shower fixtures. Kohler will integrate sustainability measures aimed at decreasing greenhouse gas emissions, water consumption, as well as solid waste. Additionally, the firm will incorporate electric boilers and install a 21 MW solar array microgrid.

The property is at 21680 West Clayton Road and provides easy access to interstates 8 and 10, while downtown Phoenix is some 50 miles away. Phoenix Sky Harbor International Airport is within 46 miles.

Phoenix’s industrial pipeline still leads nationally

Metro Phoenix had almost 42 million square feet of industrial space under construction as of March, according to the latest CommercialEdge industrial report. The market led nationally, being followed by Dallas (24.5 million square feet) and Charlotte (12.3 million square feet). Additionally, Phoenix’s vacancy rate during the same month was 3.9 percent, 130 basis points lower than the national average.

In March, a joint venture between Ryan Cos. and ESI Ventures started construction on Surprise 34, a 145,000-square-foot campus in Surprise, Ariz. The two-building development is scheduled for completion in the first quarter of next year.

A month before, Creation broke ground on Thunderbird Commerce Park, a 243,360-square-foot building in Scottsdale, Ariz. The $60 million project is expected to come online by the end of the year.

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In the heart of the desert Southwest, Phoenix’s CRE market stands out due to its vibrant economy and burgeoning demographics. The recent influx of employment giants that promise significant job additions is further enticing in-migration from other parts of the country. But amidst this boom, opportunities and challenges converge, so understanding the local economic conditions is paramount to navigating the market’s complexities.

With more than 15 years of experience in the medical office, office and industrial sectors, Avison Young Vice President Drew Sampson knows firsthand the intricate relationship between Phoenix’s economic landscape and its commercial real estate investment dynamics. Here’s what he told Commercial Property Executive.

How are the local economic conditions today impacting Phoenix’s CRE market?

Sampson: The Phoenix economy is robust, boasting a low unemployment rate of 3.8 percent and a steady population growth of approximately 4.0 percent annually, with the latest U.S. Census in 2020 recording a population of 1.6 million. While national interest rates are high, their impact is primarily felt in the Phoenix housing market. With minimal anticipated cuts until the summer of 2024, investors are waiting for opportunities to enter the Phoenix market. Moreover, the recent entry of market giants such as TSMC and Amazon is expected to fuel significant job market growth, attracting further migration into the Valley.

However, the current housing rates are leading to heightened competition for rental apartments, exerting upward pressure on the multifamily market amid a shortage of supply. Despite challenges in the office market, other real estate sectors and industries in Phoenix are thriving.

Which sectors are growing exactly? Are there any particular trends you’ve noticed in the market?  

Sampson: The retail sector is experiencing rapid growth, a shortage of supply and high demand. The result is the lowest historic vacancy rate in 40 years recorded at 4.9 percent for direct spaces in our Q4 2023 Avison Young retail market report.

The industrial sector is witnessing extensive construction and deliveries, with a notable presence of warehouse/data centers and increased interest in entering the market. Medical offices are emerging as a bright spot in the office sector.

READ ALSO: How AI is Boosting the Data Center Market

A Yardi Matrix report from last year noted that inflation in Phoenix rose faster than at the national level. How has inflation evolved? Tell us a bit about its effects on CRE investment.

Sampson: According to a recent Bloomberg report, inflation in Phoenix has decreased from 13 percent in August 2022 to 2.2 percent last month, attributed to a moderation in housing costs. This creates an opportune moment for investment and attracts new movers into the market, especially with the influx of major players in the AI industry. Compared to other major cities, Phoenix offers a more affordable cost of living while providing abundant opportunities, making it an appealing destination.

You previously mentioned some of the major moves in the Phoenix CRE market. For example, Amazon leased a combined 2.2 million square feet across two facilities in Buckeye and Glendale. What signal does the presence of big brands in the metro send to the market?

Sampson: The commitment of large users absolutely signals confidence for the future in Phoenix not only on their behalf, but for other occupiers and related industries looking to move or expand in Phoenix. This level of activity/absorption also helps justify the amount of speculative development that has taken place in this market. The West Valley marketplace continues to be the beneficiary of companies comparing operational and logistics costs between California and the overall Phoenix industrial market.

The semiconductor sector is also growing in the metro. Among other investments, Amkor Technology recently received approval from the Peoria City Council to build a $2 billion advanced semiconductor packaging and test facility. Has Phoenix become a semiconductor hub?

Sampson: With the recent level of activity within the semiconductor sector, the Phoenix area has become a semiconductor hub. The challenge for these projects will be the availability of labor to construct and deliver these facilities. The TSMC project has already severely impacted access to various trades, specifically electrical, so general contractors and developers will need to figure out how to deal with the limited construction labor force and the impact it will have on the completion timelines for these projects.

Bolstered by government support and a growing 55+ population, the medical office sector has also been thriving. Can you expand on this demand surge?

Sampson: The growth of the medical office sector in Phoenix is fueled by several factors, including population growth, strong demographics and shifts in health-care delivery methods. Phoenix’s population has increased by over 200,000 residents since 2020, driven by job growth and migration. Additionally, the city has been known to be a retirement destination for aging populations, with retirees who require increasing medical care moving from colder weather states. Moreover, there’s a notable change in how medical care is administered, with more procedures being conducted on an outpatient basis. This shift is driving the demand for additional medical buildings beyond traditional hospitals, leading to an increased need for medical office building space.

The increase in medical office contrasts with the decline in traditional office. What should we expect in this direction?

Sampson: While traditional office building development has stalled due to declining leasing activity and rising vacancy rates exceeding 25 percent, the medical office sector tells a different story. The construction of several new hospitals necessitates additional MOBs. Pre-leasing activity in the medical space is strong, making finding medical office space challenging, particularly in the burgeoning areas of metro Phoenix.

As suburban populations expand, there are opportunities for new ground-up developments, particularly evident in the west and southeast valley. Despite this growth, Arizona ranks 12th in the country for states with the highest percentage of residents aged 65 and older, at 18.5 percent. However, there’s also an influx of younger migrants, particularly from California, alongside the increasing demand for high-tech employment, shaping the evolving landscape.

READ ALSO: Phoenix Office Deal Volume Among Largest in the Nation

How does the CRE market in Phoenix compare to other major U.S. cities in terms of investment opportunities and returns?

Sampson: The CRE market in Phoenix offers promising investment opportunities compared to other major cities, particularly in the industrial sector, as it is not overly saturated yet ripe for entry. However, there is substantial ongoing development in this sector. Being part of the Sun Belt markets, Phoenix experiences significant cyclical pressure, especially in logistics and multifamily properties. Notably, Phoenix stands out in the forefront of data center development, presenting additional potential for investors seeking exposure to this rapidly expanding sector.

What are some other considerations for investors looking to enter the Phoenix commercial real estate market?

Sampson: Investors interested in Phoenix’s CRE market should focus on the rapidly growing data center sector. Ranking second in total colocation power nationwide, it has seen commissioned power double to over 1.4 GW in 2023. With 3 GW of planned power in the pipeline and the expansion of colocation providers and hyperscale users like AWS, Microsoft and Google, this sector offers significant growth potential.

Distressed multifamily assets also present a substantial opportunity due to cyclical macroeconomic headwinds. The Phoenix MSA continues to show positive population growth, twice the national average. Elevated interest rates have reduced the pool of prospective homeowners, increasing demand for multifamily housing. Debt maturities in the region don’t exceed $10 billion annually until 2028, limiting the number of non-distressed assets entering the market. Despite a 34 percent year-over-year decrease in investment volume, private investors dominated Phoenix acquisitions in 2023, indicating their strong interest in this market.

Where will investment opportunities lie going forward?

Sampson: Phoenix’s commercial real estate landscape offers promising investment opportunities in sectors like data centers, life sciences—particularly in R&D with health-care applications and medical office properties. Major institutional investors are attracted to the data center sector, demonstrated by Brookfield’s $775 million acquisition of Cyxtera, which added 40 facilities to their portfolio, including several in Phoenix.

Life sciences, fueled by private equity and venture capital, hold significant growth and innovation potential. Medical office properties are a substantial investment opportunity, given Phoenix’s large retiree population and its reputation as a health-care destination with top-ranked institutions like Mayo Clinic-Arizona. Despite entry barriers, health care offers potential for long-term growth and returns.

The opportunistic multifamily sector is another promising investment area. With many investors having overpaid for assets in 2021 and 2022, and rising capital costs, distress is anticipated, providing opportunities to acquire assets below replacement cost for potentially high returns. Among these sectors, current market dynamics highlight opportunistic multifamily as a standout investment choice.

The post Phoenix’s CRE Market Is Hot. What Are the Best Opportunities? appeared first on Commercial Property Executive.

Anchor Health Properties has topped out HonorHealth Medical Campus at Peoria, a 100,000-square-foot medical office building in Peoria, Ariz. Project partners also include health-care provider HonorHealth and SMIL, a physician-owned provider of imaging services.

Architecture companies DAVIS and ArchSol, together with construction management firm Oakland Construction, are part of the development team. The project broke ground in November and is slated for delivery in early 2025.

As of April, Phoenix had a total of 48 medical office buildings various stages stages of development, set to add approximately 4.8 million square feet to the existing inventory, CommercialEdge data shows.

HonorHealth Medical Campus at Peoria, up close

Upon completion, the Class A, three-story facility will host a variety of services such as cancer care, primary care, physical therapy, gastroenterology, breast surgery, outpatient surgery and medical imaging, among others. HonorHealth and SMIL will be on the property’s tenant roster.

HonorHealth Medical Campus is taking shape on the east side of the Loop 101 on 83rd Avenue, between Thunderbird Road and Bell Road. Downtown Phoenix is some 16 miles southeast of the site. Other health-care providers in the surrounding area include Digestive & Liver Disease Center, Star Surgery Center, Phoenician Primary Care and Banner Thunderbird Medical Center, among others.

Outpatient development doesn’t seem to be as affected by macroeconomic factors as other sectors, hence some perspectives remain fairly optimistic. Mervyn Alphonso, executive vice president of development and acquisitions at Anchor Health, previously told Commercial Property Executive that medical outpatient construction has been on the rise since 2022 and peaked last year; for this year, he expects the construction volume in the sector to be fairly steady.

The post Anchor Health Tops Out 100 KSF Phoenix MOB appeared first on Commercial Property Executive.

Echo Real Estate Capital has completed Echo Park 303, a 676,176-square-foot, two-building industrial park in Glendale, Ariz. JLL is in charge of leasing. LGE Design Build served as general contractor.

Last year, Echo obtained a $53.6 million construction loan for the development, which broke ground in September 2022. Pacific Coast Partners provided the funds.

The property is within the Loop 303 corridor. Building A, measuring 220,240 square feet, is fully leased to HubStarr Logistics. The building’s features include 56 dock-high loading doors, two drive-in doors, 32-foot clear heights and some 440 parking spaces.

The 455,936-square-foot Building B consists of 109 dock loading doors, four drive-in doors, 40-foot clear heights and 50- by 56-foot column spacing, as well as more than 305 spaces. Additionally, the campus comprises 150 trailer spaces.

The 40-acre park is at 9501 and 9701 N. 151st Ave., 5 miles from Phoenix-Goodyear Airport and has easy access to Interstate 10. Downtown Phoenix is less than 20 miles away, while Phoenix Sky Harbor International Airport is 24 miles southeast.

Phoenix leads nation in industrial development

Phoenix led the nation for industrial development in February, a recent CommercialEdge industrial report shows. The metro had nearly 42.7 million square feet of industrial space underway, and also boasted the lowest vacancy rate among Western markets, clocking in at 3.2 percent.

This week, Martens Development Co. started construction on Brickyards on Ellsworth, a 909,553-square-foot in Mesa, Ariz. The eight-building campus is scheduled for completion in the second quarter of next year.

In February, Creation broke ground on Thunderbird Commerce Park, a 243,360-square-foot development in Scottsdale, Ariz. The $60 million project is anticipated to come online later this year.

The post Echo Real Estate Completes 676 KSF Phoenix Campus appeared first on Commercial Property Executive.

EQT Exeter has acquired a 641,906-square-foot industrial facility in Buckeye, Ariz., for $60.1 million. It will rebrand the asset as I-10 Gateway. Developer BET Investments sold the vacant property.

The divisible building represents the first phase of Buckeye I-10 Logistics, a 145-acre master-planned park. BET Investments received city approvals last year for the development of an additional facility of nearly 1.2 million square feet. A third building, measuring 448,913 square feet, is also planned.

I-10 Gateway broke ground in 2022 and came online last year. Features at the 40-acre property include 40-foot clear heights, 124 dock-high loading doors, four drive-in doors and 500 parking stalls, as well as 60-foot speed bays and 190-foot truck courts.

Additionally, the warehouse has heavy trailer parking and speculative office space. The building is at 440 N. 215th Ave., some 27 miles from downtown Phoenix and 31 miles from Phoenix Sky Harbor International Airport.

Cushman & Wakefield Executive Vice Chair Will Strong, Senior Director Kirk Kuller and Director Michael Matchett, along with Senior Associates Molly Hunt and Dean Wiley brokered the transaction on behalf of both parties. Executive Managing Director Andy Markham and Executive Vice Chair Mike Haenel will serve as leasing brokers.

Phoenix maintains lead for industrial development

Phoenix ranked first nationwide for industrial development, with 42.7 million square feet underway as of February, a recent CommercialEdge report shows. In terms of sales, the metro registered $298 million in assets change hands in the first two months of the year, at an average of $168 per square foot—$36 above the U.S. figure. Among Western markets, only Los Angeles ($435 million) and the Bay Area ($321 million) surpassed Phoenix for total sales volume.

In March, Cohen Asset Management bought Elwood Rising, a 120,000-square-foot speculative facility in Goodyear, Ariz. Atlas Capital Partners sold the asset for $21.8 million.

Earlier this year, Clarion Partners sold a six-building industrial portfolio in Gilbert, Ariz. ViaWest Group acquired the 428,427-square-foot property for $71.1 million.

The post EQT Exeter Pays $60M for 642 KSF Phoenix Facility appeared first on Commercial Property Executive.

The Brickyards on Ellsworth project received unanimous approval from the Mesa City Council last year. The price of the multi-building development is estimated at $153.6 million, according to the Phoenix Business Journal.

Martens purchased 44 acres for a little over $19 million for the first phase late last year, according to The Mesa Tribune. First American National Bank provided construction financing for the project, CommercialEdge data shows.

FCL Builders serves as general contractor and Ware Malcomb as main architect. Other partners include Hunter Engineering, TLCP and Peterson Associates. CBRE will manage leasing.

Upon completion, Brickyards on Ellsworth is slated to comprise eight buildings ranging from 35,000 to 250,000 square feet. The facilities will have a mix of spec options and build-to-suit configurations, with each also featuring approximately 10 percent office space. Target tenants include warehouse, distribution, manufacturing and employment park companies.

Most active for industrial construction

Brickyards on Ellsworth will rise on more than 63 acres at the intersection of Willis and Ellsworth roads, just south of Phoenix-Mesa Gateway Airport. The industrial park will be situated within the Pecos Advanced Manufacturing Zone and near the SRP 69kV transmission line. The development is also in a Foreign Trade Zone, which reduces or defers tariffs and duties on products produced in the FTZ and can reduce property taxes for qualified users.

The completion of Brickyards on Ellsworth will see Martens Development boasting more than 5 million square feet of industrial product. The company has been developing in Mesa for 8 years due to its growth and friendly business environment, according to Principal David Martens.

Phoenix is the most active U.S. market for industrial construction, according to recent CommercialEdge data. The metro had the most significant development pipeline, with 42.7 million square feet underway, accounting for 11.1 percent of stock—the highest nationwide.

The metro also had the lowest vacancy rate among Western markets, 3.2 percent as of February, followed by Portland (4.1 percent), Orange County (4.5 percent) and the Bay Area (4.6 percent), the same source shows.

The post Martens Breaks Ground on 910 KSF Phoenix Industrial Park appeared first on Commercial Property Executive.

The international development and management company broke ground on the Class A industrial development back in 2022.

Derek Builders serves as the project’s general contractor, along with Deutsch Architecture Group as the main architect. CBRE’s Jackie Orcutt, Kevin Cosca, Pete Wentis and Jonathan Teeter are the project’s exclusive leasing brokers.

Gateway Grand Phase I comprises two 537,429-square-foot buildings featuring 40-foot clear height, 60-foot x 60-foot column spacing, 70-foot speed bay, ESFR sprinklers and 7-inch slabs, along with 98 dock-high and 4 grade-level doors each. The facilities are also equipped with 3600 amps of power—easily expandable via additional SES electrical gear on order—while supporting approximately 518 auto parking spaces.

READ ALSO: Industrial Momentum Slows Down

The one-story buildings also include as many as 3,200 square feet of move-in-ready office space with onsite HVAC. The speculative office space features conference rooms, break rooms, restrooms and open and private offices.

Second phase coming soon

At full build-out, Gateway Grand will comprise three buildings totaling more than 2.1 million square feet. The second phase of the project will feature the development of a 1.1 million-square-foot building.

Gateway Grand Phase II is set to incorporate the same features as the already completed Phase I buildings, with an expanded 192 dock doors, 843 auto parking spaces and 2,000 square feet of speculative office space.

The facility will be adjacent to Union Pacific’s planned Pecos Industrial Rail and Train Extension. Due to its Foreign Trade Zone capability, the Gateway Grand project has the potential to reduce property taxes by more than 72 percent in perpetuity for qualified users.

Last year, Greystar Real Estate Partners broke ground on the second and last phase of a five-building industrial development in San Marcos, Texas. Full completion of the Class A project is expected this year.

Phoenix leads in industrial development

Located at 7852 and 8016 E. Pecos Road, Gateway Grand Phase I is within the city of Mesa’s Pecos Advanced Manufacturing Zone. The development is near the Phoenix-Mesa Gateway Airport and the intersection of Loop 202 and Route 24, which allows easy access across the Phoenix metropolitan area.

For industrial development, Phoenix has maintained its status as the nation’s undisputed leader. As of January, more than 42.6 million square feet of industrial space was under construction in the market—representing 11.2 percent of existing stock—according to a recent CommercialEdge report.

The metro recorded some 32.5 million square feet of industrial space delivered last year, encompassing 152 projects, or 8.6 percent of total stock. Among peer markets, Dallas came in second place, accounting for 6.6 percent of existing stock.

In 2023, 106 properties broke ground in metro Phoenix, accounting for 6.2 percent of total stock. This figure is significantly above the 1.3 percent U.S. average, according to the same source.

The post Greystar Delivers 1st Arizona Industrial Project appeared first on Commercial Property Executive.

The project is the initial phase of a four-phase expansion in metro Phoenix for XNRGY, which is headquartered in Saint-Hubert, Quebec, in metro Montreal. The company reports its total investment in this expansion is about $300 million. The end result will be a 1 million-square-foot sustainable manufacturing hub.

XNRGY’s customers include data centers, industrial and institutional buildings, life science facilities, health-care facilities, and lithium-ion battery plants.

The company’s development partner is The Boyer Co., of Salt Lake City, which also provided financing for this initial phase, and the facility was designed by Gensler. XNRGY was working at least as early as January 2022 to get this project rolling, according to a statement at that time from the Arizona Commerce Authority. 

The 38.4-acre site is at the intersection of East Elliot Road and South Signal Butte Road in the Elliot Tech Corridor, less than 9 miles from the Phoenix-Mesa Gateway Airport and around 40 miles east of downtown Phoenix. The location has easy access to Highways 202 and 60.

Could be hotter

The metro Phoenix industrial space market has seen a recent uptick in overall vacancy, to 10.6 percent, according to a first-quarter report from JLL. Fortunately, the construction pipeline is contracting, yet only about one-third of the space that’s underway is preleased.

Meanwhile, rent growth is slowing and concessions are rising, also according to JLL, which indicates that “vacancies may reach an inflection point during the first half of 2025 and then begin a period of gradual decline.”

The post HVAC Manufacturer Launches $300M Project appeared first on Commercial Property Executive.

Texas-based flexible office provider Lucid Private Offices has signed a lease agreement with landlord Artis REIT to bring 25,000 square feet of coworking space in Scottsdale, Ariz. This is the company’s second location in the state and is slated to open in November 2024. Cresa and Locate AI represented the tenant in the transaction, while Newmark worked on behalf of ownership.

The coworking space will comprise more than 100 private offices within suite 300 of the MAX at Kierland building. Artis REIT acquired the 260,000-square-foot property from Trammell Crow in 2012 for $79 million, according to CommercialEdge data.

READ ALSO: How Flight-to-Quality Is Leading the Flex Office Evolution

Built in 2008, MAX at Kierland rises six stories and features ground-floor retail and a parking ratio of 4 spaces per 1,000 square feet. Other tenants at the LEED Gold-certified property include Global Strategic Investment Solutions, Ameriprise Financial and Willis Personal Lines Insurance, the same source shows.

Located at 16220 N. Scottsdale Road, the property is roughly 21 miles north of downtown Phoenix and less than 2 miles from Scottsdale Airport. The Max at Kierland is also within walking distance of the Kierland Commons and Scottsdale Quarter shopping malls.

Cresa Principal John Pelletier and Vice President Austin Studebaker, along with Locate AI Managing Principal Jim Sadler, represented Lucid. Newmark Senior Managing Director Patrick Devine and Executive Managing Director Michael Garlick worked on behalf of Artis REIT.

Lucid grows in Phoenix

Lucid’s first Arizona location is also in metro Phoenix, spans 26,910 square feet and will open on May 1st. The flexible office provider will occupy a full floor at the 24th at Camelback II building owned by Hines and Invesco Real Estate.

There were some 1.2 million square feet of coworking space in the Phoenix office market as of February, according to recent CommercialEdge data. The volume of flexible space accounted for 1.5 percent of total office stock, slightly below the 1.7 percent national rate.

The post Lucid Private Offices to Open 2nd Phoenix Coworking Location appeared first on Commercial Property Executive.

CBRE’s Senior Vice President Joseph Compagno and Vice President Benjamin Farthing brokered the all-cash transaction, working for both parties. At the time of the sale, the property was 96.6 percent leased.

Scottsdale Commons last traded in 2007 when C&H Development acquired it for $17.6 million, CommercialEdge data shows. In 2015, the property became subject to a $15.1 million CMBS loan originated by Deutsche Bank, according to the same source.

READ ALSO: Retail Investors Are Adapting to Disruption. Here’s How.

The neighborhood center came online in 1980. The tenant roster at the retail center includes a diverse mix of retailers such as Rosati’s Chicago Pizza, Green Corner Mediterranean, The Diamond Vault, Rusty Nail Meats, U.S. Egg, Companion Pet Partners and BevMo.

The acquisition of Scottsdale Commons was funded through Whitestone’s capital recycling program, intended to improve the overall quality of its portfolio through targeted dispositions and the acquisition of greater long-term value properties. The program commenced in 2022 and has since amassed acquisitions exceeding $100 million in value.

Phoenix sustains a robust retail sector

Located at 7119 E. Shea Blvd., Scottsdale Commons is within Phoenix’s Scottsdale/Shea Corridor submarket. The shopping center is on the corner of the intersection of Scottsdale Road and Shea Boulevard, in an area with a daily traffic count of 107,557 vehicles, according to Whitestone. Scottsdale Commons serves more than 334,392 households within a 10-mile radius, with the average household income within a 3-mile radius of approximately $179,144.

Whitestone REIT currently owns 29 shopping centers throughout Scottsdale and Phoenix. The company has recently sold Mercado at Scottsdale Ranch, a 118,751-square-foot retail center in Scottsdale, Ariz., for $26.5 million.

The retail sector’s robust fundamentals have been sustained by Phoenix’s population growth. The metro ended last year strong, with 2.3 million square feet of retail space under construction, according to a recent Avison Young report. The high level of development in 2023 also contributed a total of nearly 1.5 million square feet of retail space delivered to the market.

The post Whitestone REIT Buys Phoenix-Area Retail Center appeared first on Commercial Property Executive.

Phoenix, already a top industrial and advanced manufacturing hub in the U.S., can expect to attract even more investments across all commercial real estate sectors now that Taiwan Semiconductor Manufacturing Co. plans to add a third fab for a total investment of more than $65 billion aided by direct U.S. funding of $6.6 billion under the CHIPS and Science Act.

According to a non-binding preliminary memorandum of terms signed with the U.S. Department of Commerce, the federal government also proposes providing TSMC with up to $5 billion in loans for a total of more than $11 billion in direct funding and loans. TSMC’s announcement Monday marked the largest foreign direct investment in Arizona history and the largest foreign direct investment in a greenfield project in U.S. history.

READ ALSO: How AI is Boosting the Data Center Market

“The manufacturing push in Greater Phoenix has been building over the past decade and shows no signs of slowing down. This sustained momentum is expected to contribute to an even more diverse economy in the region over the coming decade,” said Rusty Kennedy, executive vice president, CBRE’s Capital Markets, Investment Properties, and member of CBRE National Partners, an industrial and logistics investment sales and finance platform. “When megaprojects select Phoenix, it sparks a flurry of activity in the industrial market from suppliers, distributors, third-party logistics companies, contractors and various other users that service these campuses.”

And it’s not just the industrial sector that will benefit, according to Bob Hess, practice leader & senior principal for Newmark’s Global Consulting and Strategy Solutions Group, who specializes in corporate strategy, site selection and incentive negotiations.

Hess said even without the construction jobs at the TSMC site, for every job created, there should be another two created in the region. The megaproject will also result in other kinds of CRE development in the region.

“Just draw a 10- to 15-mile range around that TSMC facility and look what’s going to happen over the next five to seven years,” Hess told Commercial Property Executive. “Everybody thinks it’s all manufacturing. No, it hits every type of office, industrial, retail, housing. That’s why everybody wants these plants.”

READ ALSO: Where Innovation Drives CRE Demand

TSMC Arizona’s three fabs are expected to create approximately 6,000 direct high-tech, high-wage jobs, building a workforce that will help to support a vibrant and competitive global semiconductor ecosystem that enables leading U.S. companies to gain access to domestically manufactured, cutting-edge semiconductor products alongside a world-class semiconductor foundry. According to an analysis by the Greater Phoenix Economic Council, this increased investment in three fabs will create more than 20,000 accumulated unique construction jobs, and tens of thousands of indirect supplier and consumer jobs.

The first fab is on track to begin production leveraging 4-nanometer chip technology in the first half of 2025. The second fab will produce the world’s most advanced 3-nanometer technology with production slated to begin in 2028. The third fab will produce chips using 2-nanometer or more advanced processes, with production expected to begin by the end of the decade.

Arizona’s semiconductor history

TSMC is not the only major semiconductor manufacturer focused on the Phoenix metro. Intel Corp., which has a long history in the state, reaffirmed its commitment to Arizona in 2021 by announcing plans to build two fabs in Ocotillo for a total investment of $20 billion. The expansion is expected to create more than 3,000 high-tech jobs along with 3,000 construction jobs. It will also likely support an additional 15,000 indirect jobs within the local community.

Other industry leaders with operations in the Greater Phoenix area include ON Semiconductor, NXP Semiconductors, Microchip Technology and others, according to Chris Camacho, president & CEO of the Greater Phoenix Economic Council.

READ ALSO: Why Industrial Is Falling Back to Earth But Not Off a Cliff

 AJ Lydon, CSCMP, executive managing director with JLL’s Industrial team in Phoenix, said the recent announcement underscores metro Phoenix’s sustained growth and leadership as a national security market and tier-one global logistics/supply chain destination.

“TSMC will be served by regional amenities including Arizona State University—the nation’s largest engineering school with more than 30,000 enrolled, 160 operating semi-conductor employers, robust demographic growth, low natural disaster risk and best-of-class infrastructure management,” Lydon said. “The region has made thoughtful, deliberate workforce/infrastructure choices over the past decade that continue to flourish.”

Hess also credited the local, regional and state governments for attracting industrial and advanced manufacturing industries to Arizona. When selecting sites for mega projects, Hess said companies go where they feel welcomed and the people will be aligned around an industry and strategy.

“I’ll tell you right now there are no issues in Arizona and Phoenix. They want the semiconductor industry and will do whatever they can to make it successful,” he said.

Hess noted everybody pulled together around these industries because they create good jobs and good economic impact. He said almost half of the high-paying jobs created will only need a high school or community college degree.

Kennedy said mega projects generate significant investments in their neighboring communities, play a role in fostering a flourishing and diverse economy, and serve as catalysts for attracting other large corporations looking for the right municipality to establish their operations.

From a capital markets perspective, Kennedy said mega campuses drive lower cap rates for industrial space located within proximity.

“This is due to increased user demand, which drives higher year-over-year rental rate growth, a lower vacancy rate, and, typically, a better credit profile. Investors want to understand the story behind what they are buying and want to know that the demand in the area is robust and that there are multiple sustainable growth drivers,” he told CPE.

Mehtab Randhawa, JLL global head of Industrial Research, pointed to impacts on the industrial and logistics sector.

“As semiconductor companies expand their operations in strategic logistics markets like Phoenix, it is likely to attract suppliers and partner companies to establish a presence in nearby areas. This development will drive an increased need for industrial real estate by suppliers and support services like 3PLs and trucking companies,” Randhawa said.

According to Kennedy of CBRE, North Phoenix, particularly the Deer Valley area, has benefited from TSMC’s investment at Loop 303 & I-17.

“Since TSMC broke ground on its project, Mack Innovation Park | Deer Valley, a development we lease and is being developed by Mack Real Estate Group, has experienced increased demand from manufacturers, suppliers and distributors. This activity does not account for the companies that haven’t yet been allocated funding through the CHIPS Act. Fortunately, North Phoenix and the Southeast Valley are home to various thriving subsectors of the manufacturing revolution in Phoenix, such as medical device, electric vehicle, aerospace and defense manufacturing, to name a few, and are not dependent on these suppliers and activity generated by these mega campuses,” Kennedy said.

‘We have already seen a clustering of vital supply chain components move into Greater Phoenix in conjunction with TSMC’s announcement, establishing the region as a national fulcrum for the future of domestic production. Since April 2021, 36 semiconductor-related companies have announced their expansion into the region, and we anticipate that number to continue growing as TSMC’s first fabs begin production and Intel expands its facilities in Chandler,” Chris Camacho, president & CEO of Greater Phoenix Economic Council, told CPE.

Federal influence

In a February report published by NAIOP Research Foundation in partnership with Newmark, Liz Berthelette, head of Northeast Research & National Life Science Research at Newmark, said the confluence of the CHIPS Act, Inflation Reduction Act and Infrastructure Investment and Jobs Act represent an amount of federal spending aimed at catalyzing U.S. industrial development that has few parallels in the nation’s history.

John Leddy, managing director with JLL’s Technology Division and Semi-Conductor Manufacturing Team, said the CHIPS Act alone set aside $280 billion to support investment in domestic manufacturing of advanced semiconductors.

“We’re starting to see major announcements from leading semiconductor companies, with projects recently announced in Arizona, California, New Mexico, Oregon and Ohio, with the aim to increase the U.S.’s capabilities to produce 20 percent of the world’s leading-edge chips by 2030,” he said.

Intel announced last month it could receive as much as $8.5 billion under the CHIPS Act. The company also intends to claim the U.S. Treasury Department’s Investment Tax Credit—to reach up to 25 percent of investments of more than $100 billion over five years. In addition, the signed memorandum grants Intel the option to obtain federal loans of as much as $11 billion. In addition to Arizona, Intel plans to use the federal funding to develop and expand projects in New Mexico, Ohio and Oregon.

TSMC also plans to apply for the U.S. Treasury Department’s Investment Tax Credits of up to 25 percent of the qualified capital expenditure at TSMC Arizona.

In February, GlobalFoundries said it would use a potential $1.5 billion investment from the CHIPS Act to expand its Malta, N.Y., facility, including the construction of a new fab, as well as modernize its Essex Junction, Vt., facility.

Hess said the incentives provided by the U.S. government are a “leveler” to help the U.S. compete with Asia and other lower-cost areas of the world.

But at the end of the day, Hess said, “Incentives can’t make a bad location good. They’re typically tie-breakers or they’re part of a strategic investment. It takes a village. It’s not just the feds, state, local and regional (leaders). It really has to be a partnership to make these hubs work.”

“Industrial growth is not going to slow down, and federal funding that has gone to TSMC, Intel, ASU and others will increase Greater Phoenix’s stature among companies seeking new opportunities to grow. Much of this is driven by international interest, as a record 26 percent of GPEC’s prospect pipeline is companies from outside the U.S. We have also seen an increase in office deals recently, a positive signal for return-to-office trends,” Camacho said.

The post How TSMC’s $65B Campus Will Impact Arizona’s Industrial Market appeared first on Commercial Property Executive.

Amazon is continuing to expand its presence in metro Phoenix. The retail giant has signed a 1.2 million-square-foot lease at Prologis 303 Business Park in Goodyear, Ariz., Phoenix Business Journal reported.

The company has committed to a 10-year tenancy. JLL represented the owner, Prologis.

This lease is the latest in a series of recent commitments Amazon has made in the area. Last month, the company inked a 1.2 million-square-foot lease at the newly-built The Cubes at Glendale in the West Valley region, followed by another 1 million square feet at Paloma Vista Logistics Center in Buckeye, Ariz. All lease agreements were signed for a 10-year period.

New addition to the Loop 303 industrial corridor

Prologis broke ground on the business park in March 2023. The $190 million property encompasses two developments that are slated for completion later this year: Building 1—the warehouse leased by Amazon—and the 404,800-square-foot Building 2, CommercialEdge data shows.

Building 1 features 238 dock high doors, four grade level doors, ESFR sprinklers, R-30 insulation, 991 car parking stalls and 561 trailer parking stalls. The facility has been proposed for LEED certification.

Prologis 303 Business Park took shape on 113 acres in a designated Foreign-Trade Zone, at 4780 N. Cotton Lane. The campus is less than 1 mile from Loop 303 and has access to Interstate 10 and U.S. Route 85. Downtown Phoenix is some 25 miles east. Companies in the surrounding area include UPS, Pepsi and Ferrero USA, among others.

A leading industrial market

A national leader for industrial development, with 42.7 million square feet in the pipeline as of February, Phoenix also had the lowest vacancy rate among Western markets, a recent CommercialEdge report shows. The index clocked in at 3.2 percent that month, 180 basis points below the national average; Portland (4.1 percent), Orange County (4.5 percent) and the Bay Area (4.6 percent) followed.

The same research shows average rents for new leases signed in Phoenix in the last 12 months also surpassed the national average of $7.68 per square foot. The Valley’s leasing deals averaged $11.03 per square foot year-over-year as of February, the metro being one of the three markets outside California where the index outpaced the national figure.

The post Amazon Expands Phoenix Footprint With 1.2 MSF Lease appeared first on Commercial Property Executive.

As of February, Phoenix had 940,968 square feet of office space under construction across 16 properties, accounting for 0.6 percent of the existing inventory. The metro’s pipeline was the smallest across Sun Belt metros, where Dallas led with 6.7 million square feet underway, followed by San Diego (5.5 million square feet) and Austin (4.3 million square feet.)

A significant office project currently under construction is Verde Investments’ Tempe Vale, a 132,972-square-foot Class A building in the metro’s Tempe Mill submarket. The property broke ground in May last year and is scheduled for delivery by the end of May 2024.

Another notable office development underway is Gilbert Spectrum’s Building 3, that commenced construction in July 2023 and is expected to be completed this May. The 119,222-square-foot Class A building is part of SunCap Property Group’s expansion of Gilbert Spectrum, a business campus that will total 850,000 square feet of office, flex industrial and tech space.

One Scottsdale Medical, scheduled to come online in September this year, will encompass 101,136 square feet of medical office space. Ryan Cos. started construction on the facility in June 2023. The project is part of a 120-acre mixed-use development dubbed One Scottsdale, designed to include 2.9 million square feet of office, hospitality, retail and residential space.

A drop in construction starts

Construction starts in the first two months of the year totaled 107,400 square feet across three properties. In 2023, a total of 717,085 square feet of office space started to rise, spread among 12 projects.

Last year, there were 10 completed properties, encompassing 639,219 square feet and accounting for 0.4 percent of the existing stock. One of the Phoenix market’s significant deliveries remains Wentworth Property Co.’s Rio Yards at Novus Innovation Corridor’s Building A, totaling 148,356 square feet of Class A office space. The Tempe, Ariz., property reached completion in August last year.

In the first two months of 2024, there was only one delivery in the metro: a 35,587-square-foot medical office building in Gilbert, Ariz. Dubbed Verde Medical Center, the three-story property is owned by Sina Cos. and is part of the 23-acre mixed-use development known as Verde at Cooley Station.

Phoenix among best-performing metros for office deals

As of February, 915,740 square feet of office space, or 16 properties, changed hands in the metro, for a total investment volume of $139.6 million. This amount marks a 23.6 percent decrease from the first two months of 2023. The metro’s sales volume was the second-highest among Sun Belt cities, following The Bay Area’s $371.6 million, while Nashville came in third place with $61.6 million in investments.

Last year ended with 7.4 million square feet of space changing hands for a total of $1.1 billion. The amount places Phoenix second among the top three best-performing Sun Belt metros, between the Bay Area ($1.3 billion) and Denver ($1 billion).

Office deals fluctuated in 2023—the first quarter ended with $279.7 million in office sales, while the second quarter showed a slight drop. Sales picked up in the third quarter, when 2.4 million square feet of space changed hands for $344.4 million, while the year’s last three months brought an additional $258.4 million in office investments.

Last year, Phoenix office properties changed hands at an average $180.9 per square foot. Among its peers, Phoenix was pricier than Philadelphia ($154.1 per square foot), Charlotte ($131.1 per square foot), Houston ($123.9 per square foot) and Dallas ($117.9 per square foot), but had lower prices than San Diego ($328.2 per square foot).

So far in 2024, office assets traded in Phoenix at an average price of $166.5 per square foot, placing the metro among the cheapest office markets, while Austin led with $542.8 per square foot, followed by San Diego ($301.8 per square foot) and the Bay Area ($210.3 per square foot).

One of the priciest office deals of 2023 remains Virtus Real Estate Capital’s $48.5 million acquisition of Banner Health Center Plus at The Grove. The 70,000-square-foot medical office building is part of RED Development’s the Grove, a $400 million mixed-use development that will total more than 750,000 square feet.

Phoenix office vacancy matches national average

Office vacancy in The Valley clocked in at 17.9 percent as of February, on par with the national rate. Houston had the highest rate among similar markets, at 24.5 percent, followed by Denver and Austin with 22.1 percent, Dallas with 21.1 percent and the Bay Area with 20.8 percent.

In 2023’s largest office lease, Peckham Inc. signed a full-building commitment at Menlo Equities’ One Compass Center. Cushman & Wakefield represented the landlord in the 136,194-square-foot deal.

Phoenix’s second-largest deal was Vanguard Group’s 133,634-square-foot office expansion at Northsight Corporate Center, in the Scottsdale Airport submarket. CIM Group is the owner of the Class A office property.

Coworking sector slowing down

As of February, The Valley’s flex office inventory comprised 1.2 million square feet of space, lagging Dallas (2.5 million square feet), Atlanta (2 million square feet), as well as Houston and the Bay Area, each with 1.8 million square feet. The metro’s share of coworking space as percentage of total leasable office space reached 1.5 percent, below the national figure of 1.7 percent.

Year-to-date through February, Cubework had the largest footprint of leasable office space in Phoenix, with locations totaling 1,944,745 square feet. Additional flex office providers with significant footprints in the metro were Regus, with 512,756 square feet, Industrious, with 194,570 square feet, and Expansive, with 146,032 square feet.

In October, Industrious opened its sixth Arizona location, a new 27,263-square-foot coworking space at Kierland Commons in Scottsdale. Macerich owns the mixed-use building spanning 466,700 square feet.

The post Phoenix Office Deal Volume Among Largest in the Nation appeared first on Commercial Property Executive.

Camelback 303 Logistics Center will comprise two buildings and will also provide space for a variety of industrial outdoor storage uses. Completion is scheduled for the fourth quarter of this year.

Stevens-Leinweber Construction serves as the general contractor, along with Butler Design Group as the project architect. CBRE’s Executive Vice Presidents Pat Feeney and Danny Calihan and Associate Tyler Vowels oversee the leasing activity.

JPMorgan Chase Bank provided two construction loans totaling $56.3 million, according to CommercialEdge data.

READ ALSO: Industrial Momentum Slows Down

The two buildings are planned to measure 303,500 and 312,000 square feet. The development will feature 36-foot clear heights, LED lighting, ESFR fire sprinklers, 79 dock-high and four drive-in doors, 3,000 amps of power,185- to 370-foot secured concrete truck courts, electric vehicle charging stations, parking for more than 300 cars and 212-214 trailers. The developer aims to meet LEED certification.

Located at 16395-16565 W. Camelback Road at the corner of Camelback Road and Pebble Creek Parkway, the development is within PV303, a 1,600-acre master planned industrial park by Merit Partners. Tenants at Camelback 303 will have quick access to the metro via Interstate 10 and major thoroughfares to adjacent industrial hotspots, such as California, Nevada and New Mexico.

Phoenix ranks first among industrial markets

Phoenix remained the nation’s unchallenged leader in industrial development, ranking first in the U.S. last year. A total of 106 properties broke ground within the Phoenix market last year, accounting for 6.2 percent of total stock—significantly higher than the U.S. average of 1.3 percent, according to CommercialEdge data. Last year, some 23.6 million square feet broke ground in Phoenix, substantially more than the 8.9 million square feet recorded in 2022.

The post Brookfield Properties Breaks Ground on Phoenix-Area Industrial Facility appeared first on Commercial Property Executive.

Mercado at Scottsdale Ranch, a 118,751-square-foot shopping center in Scottsdale, Ariz., has changed hands for $26.5 million. The property was 94.8 percent leased at the time of sale.

Ziff Real Estate Partners purchased the asset from Whitestone REIT, according to Commercial Edge data, thus entering the Arizona market. Protective Life Insurance Co. provided a $15.7 million acquisition loan, the same source shows. Newmark represented the seller.

Mercado at Scottsdale Ranch previously traded in 2013, when Whitestone purchased it for $21.2 million. The acquisition included an $11.1 million debt assumption and a $10.2 million equity requirement which was funded by Whitestone’s unsecured revolving credit facility.

READ ALSO: Retail Investors Are Adapting to Disruption. Here’s How.

The 1987-completed neighborhood center comprises retail, office and service space across six buildings. Anchored by Planet Fitness, Walgreens and Goldie’s Sports Café, Mercado at Scottsdale Ranch features a diverse mix of tenants such as Samurai Sam’s, Suburban Sole, Crave Grounds, Fred Astaire Dance Studios and Global Minds.

Located at 10135 E. Via Linda, in the North Scottsdale/Shea Corridor submarket, the shopping center is in an area where the daily traffic count reaches approximately 34,000 vehicles, according to Newmark. Mercado at Scottsdale Ranch is near Route 101, which allows easy access across the Phoenix metropolitan area.

Newmark Senior Managing Directors Steve Julius and Jesse Goldsmith and Director Chase Dorsett negotiated on behalf of the seller.

Phoenix maintains strong retail fundamentals

Phoenix’s population growth has helped the retail sector maintain strong fundamentals. New deliveries in the metro totaled 58,019 square feet and more than 385,000 square feet remained under construction in the fourth quarter of last year, according to a recent CBRE report.

The Phoenix retail market also experienced 45,527 square feet of positive net absorption in the last three months of 2023. North Phoenix and North Scottsdale lead all other submarkets, the net absorption totaling 77,098 square feet and 52,601 square feet, respectively.

The post Whitestone REIT Sells Phoenix-Area Shopping Center appeared first on Commercial Property Executive.

IndiCap and AECOM-Canyon Partners have completed the 65-acre, five-building, 978,837-square-foot first phase of Eastmark Center of Industry, a Class A industrial park in the Gateway Airport submarket of Mesa, Ariz.

The buildings range in size from 83,347 to 426,569 square feet of space with clear heights from 30 feet to 36 feet, accommodating a broad spectrum of industrial uses. At full buildout, the project is expected to span more than 1.6 million square feet of space across 10 buildings.

Plans for the second phase have been put on hold, according to the Phoenix Business Journal. The business publication reported that the project’s architect, Deutsch Architecture Group, filed for a one-year extension on the Phase 2 approved site plan with the City of Mesa in February. The target to begin the second phase is the second quarter of 2025, according to the journal.

READ ALSO: Phoenix Leads All Markets for Industrial Development

IndiCap acquired the 118-acre site in April 2022 for $48 million, marking its entry into the Phoenix metro market. The partners broke ground on the first phase in November 2022.

The purchase of the Mesa property began a period of aggressive expansion for the Las Vegas-based developer in Arizona. The company currently has 10 projects totaling more than 13 million square feet of Class A industrial space in development across key Arizona corridors. Projects include Virgin Industrial Park, a five-building, 1.5 million-square-foot industrial project in Waddell, Ariz., being developed in a joint venture with Invesco Real Estate, that broke ground in March 2023.

Project details

Located within the Elliot Tech Corridor, Eastmark Center of Industry is about 32 miles from downtown Phoenix and 2 miles from the full-diamond interchange at Santan Loop 202 and State Route 24 extension. The development site is also close to Phoenix-Mesa Gateway and Phoenix Sky Harbor Airports. It also has easy access to major freeways including AZ-60 and Loop 101. It is situated within the Eastmark mixed-use, master-planned community, benefiting from proximity to more than 15,000 residential units and 20 million square feet of commercial space. Major companies in the area include Google, Microsoft, Facebook (Meta), Apple, Amazon, Lowe’s and Niagara Bottling.

The five structures are mid-bay and cross-dock buildings. Features include a concrete slab on grade, tilt-up exterior walls and a hybrid wood roof system, ensuring durability and flexibility. Select buildings have as many as 7,200 amps of power. There is a parking ratio of 1.28 per 1,000 square feet of rentable space.

JLL is leading the leasing efforts. Layton Construction served as general contractor and Kimley Horn handled civil engineering.

Indicap Co-Founders Mike Chernine and Jason Kuckler along with Todd Ostransky, senior vice president of regional development, and Geovanni Villalta are leading the development efforts in Arizona.

The post IndiCap JV Delivers Phase 1 of Phoenix-Area Industrial Park appeared first on Commercial Property Executive.

Creation will start work on its first project in Tempe, Ariz. The developer has received final city approvals for the construction of Nexus Commerce Center, a three-building, 274,000-square-foot industrial campus.

Site work at the 16-acre property will begin in October and completion is expected in the third quarter of next year. The campus will rise in place of a soon-to-be-demolished, two-story office building that was foreclosed. The 215,320-square-foot property, dubbed Elliot Corporate Center, was previously anchored by the University of Phoenix as a call center.

READ ALSO: How Reshoring Is Driving Industrial Real Estate Demand

Partners on the project include design and construction firm LGE Design Build, while Amherst and CrossHarbor Capital Partners provided financing services. Cushman & Wakefield Executive Vice Chair Mike Haenel, Executive Managing Director Andy Markham and Vice Chair Phil Haenel will oversee leasing efforts.

The campus will feature suites ranging from 15,000 to 100,000 square feet. The property will rise at 875 West Elliot Road, within the Interstate 10 industrial corridor, 9 miles from Phoenix Sky Harbor International Airport and 24 miles from Phoenix-Mesa Gateway Airport. Downtown Phoenix is some 13 miles northwest.

The industrial park will also be within 2 miles of a 149,755-square-foot building that changed hands last year in a $97.8 million portfolio transaction.

Creation expands industrial inventory

The news comes on the heels of Creation having completed a development in Fort Worth, Texas. The three-building campus measures 531,601 square feet and was already 70 percent leased upon delivery.

In February, the firm broke ground on Thunderbird Commerce Park, a 243,360-square-foot building in Scottsdale, Ariz. The $60 million project is expected to come online later this year.

Largest industrial construction pipeline nationally

Metro Phoenix had the largest industrial supply pipeline as of February, at almost 42.7 million square feet under construction, according to the latest CommercialEdge industrial report. The market’s vacancy rate in the same month clocked in at 3.2 percent, 180 basis points lower than the national average and the lowest among Western markets.

Last month, a joint venture between Ryan Cos. and ESI Ventures broke ground on a two-building industrial campus in Surprise, Ariz. The 145,000-square-foot project is expected to come online by the first quarter of next year.

In February, Amkor Technology received approvals from the Peoria City Council to build a more than 500,000-square-foot advanced semiconductor packaging and test facility. The $2 billion development will be the largest outsourced advanced packaging plant in the U.S. The property will be completed by September 2034.

The post Creation to Develop 274 KSF Industrial Campus Near Phoenix appeared first on Commercial Property Executive.

Situated at 18900 W. McDowell Road, the Class A logistics property includes Building 1, leased by Amazon, and Building 2, a speculative 423,345-square-foot project. The owner of the facility, US Capital Development, completed the first building this year.

The Paloma Vista Logistics Center is a cross-dock facility designed by Ware Malcomb and built by Willmeng Construction. It features 40-foot clear heights, loading doors and 552 parking spaces, CommercialEdge data shows.

Located along North Perryville Road, the building is nearby interstates 10 and 17, with distribution access to Greater Phoenix and other western metros. Downtown Phoenix is approximately 24 miles east of the facility. Phoenix Sky Harbor International Airport is 29 miles away.

According to public permit records, tenant improvement plans have been submitted and include architectural, electrical, mechanical and plumbing changes.

Cushman & Wakefield’s Andy Markham, Mike Haenel and Phil Haenel are heading up leasing for the property.  

Amazon in Arizona

The Palomo Vista Logistics Center marks the tech giant’s first location in Buckeye and its second leasing deal in suburban Phoenix this year. The transactions also mark the largest industrial leases in the metro so far in 2024.

Amazon has recently signed a 1.2 million-square-foot lease at The Cubes at Glendale industrial park. The company will occupy Building B, a recently completed property featuring 40-foot clear heights, 213 dock-high doors and four grade level doors, as well as ESFR sprinklers and high-efficiency LED lighting.

The Cubes at Glendale is 6.5 miles from Interstate 10 and 15 miles from the Paloma Vista Logistics Center.

The post Amazon Leases 1 MSF in Suburban Phoenix appeared first on Commercial Property Executive.

The project will provide mid-size, flexible light industrial space and is intended to target manufacturing, logistics and supply chain users throughout the West Valley. The industrial park is scheduled to reach completion by 2025’s first quarter.

Surprise 34 will rise near Dysart and Waddell Roads and will allow access to Loop 303 and U.S. Highway 60. The buildings will include 28-foot clear heights and dock configuration. The project will be situated within Surprise Pointe, a 290-acre mixed-use business campus that currently has several build-to-suit options.

ESI Ventures’ Surprise Pointe campus was in need of multiple infrastructure improvements, such as water lines, power or roads. The company attracted more than $20 million in investments so far, with several developers working on various projects. Clients include Crescent Crown, Seattle-Tacoma Box Co., Amazon and E&V Investments, among others.

Phoenix continuing to be the leader

Since the start of 2024, Phoenix has maintained its position as the nation’s leader for new industrial supply, a recent CommercialEdge report shows. The metro secured the first spot across the top 30 U.S. industrial markets, with 41.6 million square feet of space underway as of January, accounting for 10.9 percent of existing stock.

Significant industrial projects coming in the metro include Creation’s Thunderbird Commerce Park in Scottsdale, Ariz. The company broke ground last month on the $60 million development, planned to encompass 243,360 square feet of Class A industrial space.

In late 2023, a significant industrial addition consisted of Lincoln Property Co.’s second phase of Park303 in Glendale, Ariz. It added nearly 2.5 million square feet of space in the area, bringing Park303 to full buildout.

The post ESI Ventures, Ryan Cos. Break Ground on Phoenix Industrial Project appeared first on Commercial Property Executive.

Buckeye Commons will feature 18 buildings of various sizes across 64 acres. Butler Design Group serves as main architect, along with CHASSE Building Team as general contractor.

A 160,938-square-foot Costco store will anchor the retail center upon its completion. Costco Wholesale Corp. paid 5.7 million for the 22-acre site in November 2022, according to Maricopa County records, and the store opened last July.

The developer, alongside a Phoenix Commercial Advisors team, has already executed leases with Starbucks, Jimmy John’s, Over Easy, The Joint Chiropractic, State Farm and DIP Nail Bar. Negotiations are currently underway for an additional eight leases, which, when combined with existing agreements, encompass approximately 60 percent of the shopping center’s first phase, including shops and pads. The first store is expected to open in mid-2025.

READ ALSO: Property Management Success: Reimagining Retail

The development of the Buckeye Commons project also includes an agreement with the City of Buckeye, according to AZBEX. Around $8 million will be reimbursed by the city for public infrastructure improvements in the area, such as installing a permanent four-lane street with various components.

An area booming with residential growth

Located at the intersection of Interstate 10 and Verrado Way, in the Western Maricopa County submarket, Buckeye Commons is in a rapidly developing area where the daily traffic count reaches approximately 200,000 vehicles per day, according to the developer. The center will rise adjacent to Buckeye Commons West, another one of Sunbelt’s planned retail centers.

Phoenix continues to be one of the fastest-growing cities within the U.S., with the number of households increasing by 2.0 percent year-over-year to 1.9 million, a Cushman & Wakefield report shows. Approximately 475,000 square feet of new retail space were under construction in the metro at the end of 2023, while the vacancy rate clocked in at 4.9 percent.

The post Sunbelt Investment Breaks Ground on Phoenix-Area Shopping Center appeared first on Commercial Property Executive.

Cushman & Wakefield brokered the transaction, working on behalf of both seller and buyer. State Farm Insurance Co. provided a $10 million loan for the property’s acquisition, according to CommercialEdge data.

At the time of the sale, Elwood Rising was fully leased to a global industrial field services powerhouse, which signed a long-term lease while the property was still under construction. JLL’s Senior Managing Directors Pat Harlan and Kyle Westfall served as the project’s leasing team and negotiated the existing lease.  

READ ALSO: Top 5 Emerging Industrial Markets in 2024

Senior Director Kirk Kuller, Executive Vice Chair Will Strong, Director Michael Matchett, Senior Associates Molly Hunt and Dean Wiley were part of Cushman & Wakefield’s National Industrial Advisory Group – Mountain West team that represented both parties in the sale.

Delivered this January, Elwood Rising features a massive all concrete and secured truck court with a maximum depth of 220 feet, around 3,600 square feet of office space, 32-foot clear heights and approximately 85 parking spaces.

Phoenix demonstrates its resilience

Located at 3750 S. 156th Ave., the industrial development is within the Southwest Valley submarket. Elwood Rising is near several major freeways including Interstate 10 and Loop 303, which provide easy access across the Phoenix metropolitan area.

Last year, Cohen acquired a pair of Class A industrial and logistics facilities in the Dallas and Phoenix metros. The company added a 920,275-square-foot building in Dallas and a 599,486-square-foot facility in Glendale, Ariz., to its southwestern portfolio in two separate transactions.

Phoenix’s industrial market continues to thrive. The metro’s overall sales volume reached $1.8 billion last year, according to a recent CommercialEdge report. About 160 industrial assets changed hands in 2023, totaling more than 13 million square feet of space.

Phoenix was also the number one market for industrial development in the U.S. in 2023. As of January, more than 42.6 million square feet of industrial space was under construction in the metro, representing 11.2 percent of existing stock.

The post Cohen Asset Management Buys Phoenix-Area Industrial Building appeared first on Commercial Property Executive.

Amazon has committed to a 10-year lease at a newly built 1.2 million-square-foot industrial facility at The Cubes at Glendale in Phoenix’ West Valley that Chicago-based developer CRG has listed for sale.

Amazon is expected to occupy Building B, located at 15301 W. Northern Ave., in Glendale, Ariz., as soon as possible, said Will Strong, executive vice chair and lead of the Mountain West region for Cushman & Wakefield’s National Industrial Advisory Group.

The Amazon deal is considered the largest known industrial lease deal in metro Phoenix since 2022, according to the Phoenix Business Journal.

“It’s a good sign for the market,” Strong told Commercial Property Executive.

The Cushman & Wakefield team, which includes Strong, Kirk Kuller, Michael Matchett, Molly Hunt and Dean Wiley, are marketing the building for sale as an exclusive advisor to CRG.

READ ALSO: Why Industrial Is Falling Back to Earth But Not Off a Cliff

A JLL team consisting of Bill Honsaker, John Lydon and Kelly Royle are the leasing brokers for The Cubes at Glendale. Mike Freret, a market leader for KBC Advisors in Phoenix, represented Amazon in the lease deal, the business journal reported.

Other tenants at the 335-acre industrial park include Williams Sonoma, US Merchants and Saddle Creek Logistics Services, which leased Building E, a 570,080-square-foot building in October. Fundrise acquired Building E, which had been completed in 2022, nearly a year ago from CRG for $82.6 million. Strong, Kuller, Hunt, along with Phil Haenel and Micki Strain, all from Cushman & Wakefield, represented CRG in the sale of Building E.

CRG and Phoenix-based Bird Dog Industrial broke ground on the master-planned industrial park in January 2021. It is being developed in phases over a five-year period with both speculative and build-to-suit assets and will have about 5.5 million square feet of industrial properties at build out.

In addition to Building E, CRG had previously sold off the 1.2 million-square-foot Building A to LaSalle Investment Management and the 637,000-square-foot Building D to US Merchants.

Building B details

CRG parent company Clayco received a nearly $111 million construction loan in September 2022 from Commerce Bank with a maturity date of September 2025, according to CommercialEdge data.

The cross-dock warehouse features a 40-foot clear height, 620-foot building depth, 213 dock-high doors and four grade level doors, as well as an ESFR fire sprinkler system and high-efficiency LED lighting. The 76.9-acre property also includes 416 trailer parking stalls and 694 auto parking stalls.

The site has easy access to Loop 303 and the Northern Parkway. The facility is 6.5 miles to Interstate 10 and 30 miles from Phoenix Sky Harbor International Airport. The location makes it easy for tenants to serve Arizona as well as key markets in the Western U.S. including San Francisco, Ports of Los Angeles and Long Beach in California, Utah, Nevada and New Mexico.

Industrial hotspot

The West Valley submarket in metro Phoenix has become an industrial hotspot in recent years due to a strong labor market, access to major markets, simplified tax system and low cost of doing business.

Strong told CPE the Phoenix metro benefits from challenges facing states like California, leading to a very active industrial market. He said development and transactions had not slowed down in the metro as it has in other markets because of the high interest rate environment.

“Phoenix is still ripping. It’s pretty wild. Phoenix continues to have the same growth trajectory,” he said.

Phoenix retained its position as the top industrial development market in 2023, according to newly released CommercialEdge data.

As of January, more than 42.6 million square feet of industrial space was under construction in the market, representing 11.2 percent of existing stock. Last year, about 32.5 million square feet of industrial space was delivered in the metro, encompassing 152 projects, or 8.6 percent of total stock, according to CommercialEdge data. In 2023, 106 properties broke ground within the Phoenix market, accounting for 6.2 percent of total stock—significantly higher than the U.S. average of 1.3 percent.

The post Amazon Inks 1.2 MSF Lease for New Phoenix Industrial Asset appeared first on Commercial Property Executive.

Bixby Land Co. has recapitalized five industrial assets with a $200 million note through its newly established Bixby Industrial Fund 1. The proceeds will also allow for future investments. Accord Group Holdings served as financial advisor to Bixby in creating the fund, with negotiations having started in April last year.

Goldman Sachs Alternatives and Ares Management Real Estate Secondaries are equity investors in the newly established fund.

Two of the warehouses are located in Mira Loma, Calif., an Inland Empire submarket, while one is in Atlanta and two in Phoenix. The five-property portfolio measures more than 836,000 square feet. The facilities are fully leased to 10 tenants and carry a weighted average lease term of 2.4 years.

The Atlanta facility is the largest, encompassing 281,000 square feet. According to CommercialEdge data, Bixby acquired the asset in June 2019 in a portfolio transaction from Stream Realty. The warehouse features 54 dock-high loading doors, two drive-in doors, 185-foot truck courts and a 32-foot maximum clear heights.

Located at 7375 Graham Road, the distribution center is some 12 miles from Hartsfield-Jackson Atlanta International Airport and 20 miles from downtown Atlanta.

Focused on tier one and two markets

Bixby’s portfolio consists of more than 9.5 million square feet of industrial and logistics properties. The firm is focusing on acquiring assets between 50,000 and 350,000 square feet in tier-one and tier-two markets.

Earlier this year, the company sold two last-mile industrial assets in Phoenix. LaSalle Investment Management acquired the 155,144-square-foot Canal Crossing Logistics Center, while Link Logistics purchased the 336,038-square-foot warehouse dubbed Riverside @ 51.

The post Bixby Secures $200M Recap for 836 KSF Portfolio appeared first on Commercial Property Executive.

Libitzky Property Cos. has obtained two eight-year loans amounting to $30 million for a pair of adjacent industrial campuses in Tempe, Ariz., totaling 298,324 square feet, CommercialEdge data shows. Lincoln National Life Insurance Co. provided the $10.3 million and $19.8 million notes that carry partial interest-only and prepayment flexibility, according to public records.

Gantry Principal Tony Kaufmann and Associate Joe Foley led the team that secured the refinancing.

Two properties rebranded as one

After acquiring the properties, Libitzky rebranded them together as Tempe Industrial Park. The company purchased one of the assets, a 1996-completed, 203,224-square-foot campus in 2017 from Kieckhefer Properties for $19.1 million, according to CommercialEdge. The eight-building park features 28 drive-in doors and four dock loading doors with levelers and bumpers. Tenants include Hunter Douglas Group, RCS Countertops and Trotec Solutions.

The other refinanced asset is a 95,100-square-foot property consisting of five buildings. The firm acquired it in March 2021 from BKM Capital Partners for $10.5 million, the same source shows. The asset came online in 1987 and went through cosmetic renovations in 2020. The facilities feature a total of 14 drive-in doors and five dock-high loading doors. Center for TOX Services, Gummi World and America’s Motors are some of the tenants at the 8-acre campus.

Libitzky’s recent industrial expansion

Located at 1805 W. Drake Drive, 7160 S. Harl Ave. and 1819-1849 W. Drake Drive, the facilities are some 13 miles from downtown Phoenix and within 9 miles of Phoenix Sky Harbor International Airport. The campus is also less than a mile from a 149,755-square-foot industrial portfolio that traded in a $97.8 million transaction last year.

At the time of the deal, Libitzky had 24 industrial properties across the country, amounting to more than 3.6 million square feet, CommercialEdge information shows. In April last year, the company acquired Gateway Technology Commerce Center, a fully occupied, 138,692-square-foot industrial park in Mesa, Ariz. MIG Real Estate sold the 2019-completed asset for $25.4 million.

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MDC Realty Advisors has purchased a 114,907-square-foot industrial asset within Phoenix’s Sky Harbor submarket, for $24.3 million. Tenant American Refrigerator Supplies Inc. sold the property and signed a leaseback agreement.

The one-story facility is at 2632 E. Chambers St. Built in 1996, it features 28-foot clear heights, HVAC climate control systems, six grade-level loading doors, dock levelers and bumpers, a 30,500-square-foot office component and 132 vehicle parking spots.

The 7-acre asset is near Interstate 10 and Arizona State Route 143. It is also 4 miles from Phoenix Sky Harbor International Airport, 16 miles from Glendale, Ariz., 19 miles from Chandler, Ariz. and within 31 miles of Phoenix-Mesa Gateway Airport. The ports of Los Angeles and Long Beach are within a 6-hour drive.

Cushman & Wakefield Vice Chairman Phil Haenel, Executive Vice Chairman Will Strong, Senior Associate Foster Bundy and Associate Katie Rapine negotiated the transaction on behalf of both parties.

Industrial sales placing Phoenix among top metros

According to a recent CommercialEdge report, Phoenix recorded $161 million in industrial sales in January, at an average sale price of $152 per square foot. The metro was outpaced by Denver ($210 million) and the Bay Area ($229 million).

Recent industrial investments included G.W. Williams Co.’s $38 million acquisition of Koll Cotton Center, a flex industrial campus totaling 228,605 square feet. United of Omaha Life Insurance Co. provided acquisition financing in the form of a $17.5 million, 5-year loan.

ViaWest Group paid $71.1 million in Gilbert, Ariz., acquiring a 428,427-square-foot, six-building portfolio. Clarion Partners sold the 98-percent-leased portfolio.

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TerraCap Management has sold Koll Cotton Center, a seven-building, 228,605-square-foot flex industrial campus in Phoenix. G.W. Williams Co. paid $38 million for the asset, financing the purchase with a 5-year, $17.5 million loan from United of Omaha Life Insurance Co., public records show. Cushman & Wakefield brokered the deal.

The seller had acquired the asset in 2021 from BKM Capital Partners for $30.9 million. A $23.2 million loan originated by Voya Investment Management funded the transaction.

The almost 18-acre park came online in 2000 and was renovated between 2016 and 2018, according to CommercialEdge data. TerraCap implemented further improvements—such as new roofs and exterior upgrades—and repositioned the vacant suites, enabling the firm to complete some 160,000 square feet in leases. The property was 98 percent occupied at the time of sale.

A Phoenix flex campus

Koll Cotton Center comprises both office and industrial spaces. Buildings 1, 2 and 3 feature 78,400 square feet of office space with floorplates ranging from 21,987 to 28,752 square feet, as well as more than 385 parking spaces. Tenants include Ewing & Ewing Attorneys, AXIS Appraisal Management and MSI Tec, according to CommercialEdge data.

The other four buildings are industrial facilities with 20-foot maximum clear heights, 28 drive-in doors and a total of 548 parking spaces. Arcadia Solar, Atlas Copco and Acosta are some of the industrial tenants at the property, the same source shows.

READ ALSO: How Reshoring Is Driving Industrial Real Estate Demand

The campus is at 4050 E. Cotton Center in the Airport Industrial submarket, providing easy access to interstates 10 and 17. Downtown Phoenix is some 7 miles away, while Sky Harbor International Airport is within 4 miles.

Koll Cotton Center is part of Cotton Center Business Park, a 286-acre development encompassing more than 3 million square feet of real estate. Last year, Loloft signed a 51,902-square foot lease within the master plan, the location including shared warehousing and coworking spaces.

Cushman & Wakefield Senior Director Kirk Kuller, Executive Vice Chair Will Strong and Director Michael Matchett, together with Senior Associates Molly Hunt and Dean Wiley, arranged the deal. Executive Directors Tracy Cartledge and Robert Buckley secured the financing for the buyer.

Phoenix’s thriving industrial sector

According to a recent CommercialEdge industrial report, the Phoenix market saw some $2 billion in assets changing hands last year for an average of $159 per square foot, considerably higher than the $129 national figure. The metro’s vacancy rate clocked in at 3.2 percent as of December, 140 basis points lower than the country’s average.

In one of 2023’s most significant transactions, Prologis acquired a 2.7 million-square-foot industrial park in Goodyear, Ariz., setting the record for the largest multi-building industrial park sale in the state. The asset changed hands for $184 million.

A few months earlier, ViaWest Group and Walton Street Capital purchased a 586,915-square-foot industrial portfolio from TA Realty. Those facilities traded for $97.8 million.

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Amkor Technology received approval from the Peoria, Ariz., City Council on Tuesday night to build a more than 500,000-square-foot, $2 billion advanced semiconductor packaging and test facility—the largest outsourced advanced packaging plant in the U.S.—in a multi-phase project that will bring 2,000 jobs to the Arizona community.

Called a pivotal milestone in advancing semiconductor manufacturing within the U.S., the 55-acre campus will be built at Five North at Vistancia, a 320-acre mixed-use lifestyle and employment core that is part of the larger Vistancia master-planned community located about 40 miles northwest of downtown Phoenix. The first phase of the state-of-the-art manufacturing plant is targeted to be ready within the next two to three years and the final buildout must be finished by Sept. 30, 2034.

The plant will package and test semiconductor chips that will be produced for Apple at the $40 billion Taiwan Semiconductor Manufacturing Co. facility located about 10 miles from the Vistancia site. Amkor, based in nearby Tempe, Ariz., said Apple will be its first and largest customer at the plant when it opens.

Amkor, the world’s largest U.S.-headquartered outsourced semiconductor assembly and test service provider, has been located in the Greater Phoenix area since 1984. The company’s plans for the new Peoria facility call for it to support critical markets including high-performance computing, automotive and communications. Giel Rutten, Amkor’s president & CEO, said in a prepared statement last night they were excited and proud to help spearhead the development of a robust American semiconductor ecosystem in the heart of the ‘Silicon Desert.’

READ ALSO: How Reshoring Is Driving Industrial Real Estate Demand

Mayor Jason Beck said in prepared remarks he was proud of the Peoria team that was bringing the project and high-quality jobs to Peoria, state of Arizona and U.S.

Amkor is seeking funding from the $280 billion federal CHIPS and Science Act. As part of the program, the federal government will award $39 billion to U.S. companies in competitive grants to finance construction, expansion or modernization of facilities and equipment for the semiconductor industry. On Monday, the U.S. Department of Commerce announced it would provide $1.5 billion direct funding from the CHIPS and Science Act to GlobalFoundries to expand its Malta, N.Y., semiconductor manufacturing facility, build a new 358,000-square-foot fab and modernize its Essex Junction, Vt., facility. GlobalFoundries produces essential chips for automotive, IoT, aerospace, defense and other vital markets.

Project details

The Peoria property is owned by Vistancia Development LLC, (VDV) which has agreed to sell the development site to Amkor. Under a three-way joint development agreement between VDV, Amkor and the city, VDV will build the roads and provide utility delivery to the development with the city reimbursing about $3 million toward the cost of the public infrastructure.

Amkor must close on the land acquisition by the end of October and begin construction on or before Sept. 30, 2025. Failure to do so will result in the loss of land and water rights.

The development agreement calls for Amkor to develop one or more facilities in Peoria with a minimum capital investment of $350 million in the first phase and an additional $350 million in the second phase.

Under phase one, Amkor must employ at least 550 full-time employees no later than Sept. 30, 2029, with two other employment milestones set for September 2027 (300 employees) and September 2028 (425 employees). The company must also have completed the design, construction and begun operation of at least one manufacturing facility including all ancillary support systems and buildings by the end of phase one.

By phase two, Amkor will have to employ an additional 300 full-time employees for a total of 850 workers on the property. While the company will have to make an additional $350 million investment in capital expenditures, it does not need to expand the size or footprint of the facility.

The development agreement sets out penalties and fines, including paying $5,000 per month until the employment milestones are reached.

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Creation has broken ground on Thunderbird Commerce Park, a $60 million Class A industrial project in Scottsdale, Ariz. The 243,360-square-foot building is scheduled for completion in late 2024.

Last year, Creation began the process for Thunderbird Commerce Park by acquiring an 18-acre site where the project would be constructed. The developer has since tapped LGE Design Build as general contractor, while LGE Design Group will serve as the project’s architect.

Thunderbird Commerce Center will be built with 32-foot clear heights, 130-foot truck court depth, 3,000A of power, four EV dual charging pedestals, 51 truck doors and 322 car parking spaces. Located on the southeastern corner of Scottsdale and Thunderbird Roads, the industrial facility will be within Scottsdale Airpark and adjacent to the Scottsdale Airport.

READ ALSO: The Rise of Design Aesthetics in Industrial Architecture

According to Grant Kingdon, principal of Creation’s Mountain West region, the Scottsdale area’s industrial market is supply-constrained, which leads to the highest rental rates and tightest vacancy levels in metro Phoenix. Kingdon also said in prepared remarks that Thunderbird Commerce Park would attract a variety of tenants in the pharmaceutical, aerospace, electric vehicle and semiconductor sectors, along with traditional distribution and showroom users.

Staying active in the Phoenix area

In addition to Thunderbird Commerce Park, Creation has a significant pipeline of industrial projects in metro Phoenix. Last fall, the developer has teamed up with Clarion Partners to acquire a 100-acre site for the development of Park Algodon, a 1.3 million-square-foot industrial and retail project in the market.

Creation’s projects in the metro also include the four-building Ten85 industrial park in Buckeye, Ariz., the three-building Midway Commerce Center in Chandler, Ariz., as well as Nexus Commerce Center in Tempe, Ariz.

Overall, the company’s portfolio totals $4.4 billion of ground-up developments in major markets in Arizona, Texas, California, Tennessee, New York and New Jersey. In October, Creation and CrossHarbor Capital Partners reportedly closed a record-breaking sale with the disposition of Airpark Logistics Center, a 2.7 million-square-foot industrial park in Goodyear, Ariz. Prologis acquired the property for $184 million.

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