Commercial Real Estate Champions
January 24, 2017 |
Joyce C. Grossman, AZED Pro
Executive Director, Arizona Association for Economic Development
With Sara Wheatcroft
Sr. Marketing & Proposal Specialist, Logan Simpson
Demand for commercial and office space spiked valley wide, with office absorption surpassing 3 million square feet, the highest demand since 2005. A majority of that absorption continued to be in the southeast valley. For the past decade, two thirds of all Phoenix metro office absorption has taken place in the southeast valley, despite having less than one third of the total office inventory.
Chandler is focused on bringing new offices to their growing downtown. The city has worked on developing the kind of urban environment and community amenities that attract high-tech, high-wage employers and their staff. Beyond downtown, Chandler’s Innovations Incubator continues to foster new businesses while promoting the area’s innovating and technologically-progressive workers to companies like General Motors, who opened one of only four IT Innovation Centers in the US there. The 170K square foot houses 1,000 employees.
Gilbert is a particular standout in the market, with an incredibly strong commercial real estate market. As of 2nd Quarter 2016, the vacancy rate for existing space across all commercial property types was just 9 percent, the lowest it has been in 5 years. In total, Gilbert has over 26.6 million-square-feet of commercial space with another 3.9 million square feet under construction, planned or proposed. Large Spec and BTS developments like Rivulon, Park Lucero, Gilbert Spectrum, Reserve @ SanTan and AZ60 are major contributors to this growth. The Gilbert Heritage District has also experienced a boom in the last three years, adding over 45,000 square feet of new retail and office space supported by a 350-space parking garage.
Corporations are noticing and are moving to the area: in 2016, Gilbert welcomed the new World Headquarters of Isagenix to Rivulon, and announced major expansions from Orbital ATK Space Systems Group and Silent-Aire USA’s headquarters.
Mesa is also expanding their commercial real estate strength through their newly renovated and rebranded Fiesta District. In addition to increasing the areas curb appeal through signage, landscaping, and branding, the $10 million dollar project included infrastructure support ranging from street renovations to a high-speed internet fiber conduit with connections to individual properties.
The district caught the eye of National General Lender Services, a mortgage and auto lender services provider. They relocated into 70,000 square feet in the newly renovated District. Santander Consumer USA Holdings Inc. leased the entire 117,000-square-foot Centrica technology center. The space, a former big box retail store, is now home to 970 new jobs in Mesa. In addition to their expanding office spaces, Mesa continues to promote their data centers, cleanrooms, and high-tech industrial centers, particularly those involving life science and the healthcare industry.
What is on the horizon for commercial real estate in the Phoenix metro east valley in 2017? If there is any indication from the hectic pace economic developer practitioners are experiencing, we can only reflect that the east valley will continue to be commercial real estate champions.