By Rob Martensen, Executive Vice President, Colliers
As a racing driver, it is important that my vehicles fire on all cylinders to run their best. In the Phoenix metro area, the engine cylinders of the industrial market are the different industries, as well as the geographic locations around the Valley where these industries conduct business.
First, let’s look at advanced manufacturing. Intel, which already has a large presence in the Southeast Valley, just announced a $20 billion expansion of its Price Road facility. This will create hundreds of construction jobs and demand for these contractors to find space, not to mention all the equipment suppliers, etc., that will require space for the long-term.
Rob Martensen, Executive Vice President, Colliers
With the huge demand for semiconductors and the supply of land and labor, Taiwan Semiconductor Manufacturing Company (TSMC) has chosen Phoenix to build its next fabrication plant. TSMC will spend $12 billion to build the new factory, which is already under construction in North Phoenix. This will create a huge demand for industrial space in the Deer Valley submarket to support TSMC.
Other manufacturing companies like Apel Extrusions, MLILY and Ball Container have either recently completed projects or are under construction on new manufacturing facilities.
Food and beverage manufacturing is quite active as well. Red Bull, Mark Anthony Brewing (White Claw) and Bang Energy are also opening new facilities in the Phoenix area. Other food-related companies are also growing their footprint. Organic grocery distributor KeHE’s new 480,000-square-foot dry and cold storage distribution facility in Phoenix will be complete in September.
Thanks to a girth of tenant demand, all submarkets are active in Metro Phoenix. As previously mentioned, the Southeast Valley is seeing tremendous growth not just from Intel’s expansion, but several other companies growing in the area. Dexcom recently leased 280,000 square feet in the Mesa Gateway from Marwest. This success has led Marwest to take a chance on two of the largest spec buildings ever built in the Southeast Valley. Elliot 202 is under construction on 460,000- and 640,000-square-foot buildings on the Loop 202 and Elliot Road.
Other active Southeast Valley developers include EastGroup Properties, Orsett, Ryan Companies, Bird Dog Industrial, Conor Commercial and Trammell Crow.
The Deer Valley submarket is also poised for tremendous growth due to the TSMC factory. The challenge of this submarket is a lack of available land, but the City of Phoenix and the Arizona State Land Department are working hard to establish new areas for these businesses to locate.
Meanwhile, the big box sector is thriving in the Glendale submarket and 303 corridor. Recent large lease transactions include Walmart at Park 303, a Lincoln Property Company Development, and mattress manufacturing company MLILY at G303, a Hines development. Both tenants leased just over 1.2 million square feet each.
There are several other 1-million-plus-square-foot tenants eyeing the market for spec buildings or build-to-suit options.
To say the Phoenix industrial market is firing on all cylinders is an understatement. With available buildings, land and labor, Phoenix has a very bright future ahead for those in the industrial real estate business.