Flurry of construction projects is good news for Valley
The Republic | azcentral.com
More than 4 million square feet of industrial-building space and at least 5,000 apartment units are under construction or in the planning stages in the Phoenix area, real-estate analysts said.
There are even a handful of office-building projects under construction or scheduled to be built in the East Valley.
That’s positive news for the construction industry, which until recently had been limited almost entirely to government-funded projects and smaller, tenant-improvement jobs.
It also is good news for the Phoenix area’s unemployed, given that many of the projects, when completed, will add hundreds of jobs to the area.
As businesses continue to sign leases on the remaining, large warehouse and distribution-center space in the Phoenix area, a growing number have chosen to have facilities built specifically for them, said Craig Henig, senior managing director of CBRE, a commercial real-estate firm in Phoenix.
Industrial-leasing activity in the fourth quarter included 400,000 square feet of distribution-center space at 6835 W. Buckeye Road in Phoenix, leased by Seattle-based online retailer Amazon.com, and about 340,000 square feet of similar space at 7210 W. Van Buren St. in Phoenix, leased by catalog retailer Cornerstone Brands Inc. of West Chester, Ohio.
Retailer T.J. Maxx, a division of Framingham, Mass.-based TJX Companies Inc., also signed a lease for about 300,000 square feet of distribution-center space at 9704 W. Roosevelt St. in Tolleson, according to CBRE.
Major industrial-construction projects under way include specialized facilities such as Santa Clara, Calif.-based Intel Corp.’s 1.2 million-square-foot Fab 42 semiconductor plant in Chandler and Tempe-based First Solar’s 1.2 million-square-foot solar-panel manufacturing plant on the former GM Proving Grounds site in Mesa.
More generalized industrial facilities under construction include a 260,000-square-foot building at 7980 W. Lincoln St. in Tolleson for MiTek, a subsidiary of Berkshire Hathaway Inc., a supplier of engineered products and services for the building-components industry, according to Colliers International in Phoenix, which brokered the deal.
Other projects under way include Pittsburgh-based retailer Dick’s Sporting Goods Inc.’s 600,000-square-foot fulfillment and distribution center in Goodyear and Phoenix-based beer distributor Crescent Crown Distributing LLC’s 260,000-square-foot warehouse project in Mesa.
Crescent Crown also is building a 70,000-square-foot corporate headquarters on the same site, according to Colliers, which negotiated the company’s $6.4 million purchase of about 23 acres at the northwestern corner of Broadway and Brooks roads.
Another office building under construction is the second phase of Allred Park Place, a 92,000-square-foot, two-story office building, northeast of Price and Willis roads in Chandler, developed by San Diego-based Douglas Allred Co.
Apartment projects under way include Phoenix-based Alliance Residential Co.’s 270-unit community at the southeastern corner of Camelback Road and Esplanade Lane in Phoenix and a 264-unit community at the northwestern corner of Scottsdale Road and Lincoln Drive in Scottsdale.
Meanwhile, co-developers Optima Inc. of Glencoe, Ill., and DeBartolo Development LLC of Tampa have broken ground on the first, 210-unit phase of their Optima Sonoran Village apartment complex at Camelback and Goldwater Boulevard in Scottsdale.
There are seven multifamily-housing projects currently under construction, primarily in Phoenix and Scottsdale, Henig said.
An additional 13 sites have been purchased by developers for apartment projects scheduled to break ground this year, and there are 10 planned apartment-community sites in escrow, he said.
Sixteen additional sites have been purchased or are in escrow for proposed apartment communities with unscheduled completion dates, Henig said.
The flurry of new-construction activity represents a complete turnaround from a year ago, when virtually no new apartments were being built.
Henig said that the vast majority of apartment-building activity is happening inside Loop 101 and that multifamily-housing developers are far less interested in the Valley’s outlying areas.
In order to secure an appropriately large infill site, many apartment developers are buying former office, retail or restaurant sites and demolishing the existing buildings, he said.
Those redevelopment efforts already are clearing away some of the Phoenix area’s vacant-property eyesores.
Facts on the industrial market
More than 6.2 million net square feet of leaseable industrial space was absorbed in 2011, the most since 2005.
Distributors and e-commerce providers representing 8 million to 10 million square feet of additional demand currently are looking at the Phoenix area.
So few large industrial spaces remain in the West Valley that some developers are considering a return to speculative development.
Despite all the rental and construction activity, industrial-lease rates have been flat and are expected to stay that way in 2012.