'This Year Has Really Taken Off': Discussing The Bullish Phoenix Construction Market

After a period of caution, construction in Phoenix is enjoying a burst of activity and optimism, said Josh Rogers, design-build executive at construction firm LGE Design Build.

With construction materials and labor costs no longer on the rise, and a broader economy demonstrating resilience in the face of still-elevated interest rates and tariffs and supply chain challenges, both developers and occupiers are seizing the moment and focusing on expansions.

Further fueling Phoenix’s commercial real estate market and broader economic growth is the positive net migration Arizona has enjoyed in recent years.

Just last month, Trammell Crow Residential said it would open a Phoenix office and described the city as one of the nation’s “fastest-growing and most dynamic multifamily markets.”

Rogers said his own firm, LGE Design Build, is keeping busy with a slew of both build-to-suit and speculative projects in asset classes ranging from office and industrial to more niche categories such as car storage and luxury airplane hangars.

Rogers will be moderating a panel at Bisnow’s Phoenix Construction, Development and Design Summit on March 12. Bisnow caught up with him to discuss how the mood in the market has changed in recent months and what’s next in terms of construction for the Greater Phoenix area.   

Register here to attend the event.

Bisnow: How would you describe the state of the development pipeline in Phoenix right now?

Rogers: It’s been very strong. This year has really taken off, both in terms of build-to-suit projects for business owners that want to develop their own buildings as well as developers back in the market with speculative builds.

Bisnow: What’s underpinning this strength?

Rogers: We have no less than 10 clients right now who wanted to get out from under a lease, purchase their own land and build their own building. It’s cheaper for them to go build their own building than jump back into another 10-year lease commitment. And for developers, the economic outlook is bullish and companies continue to flood to our market, so the demand is there across most product types, not just industrial. It helps that construction cost pricing has stabilized and unnecessary tariff fears turned out to be exactly that. From what we’ve seen at LGE Design Build over the past 12-18 months, it’s going to be a very active few years ahead of us.

Bisnow: You are moderating a panel on Shaping Spaces Users Love. From your experience working with clients, what are tenants looking for in their space?

Rogers: They want not only functionality and a good, low price point but a workspace that is fun. They want their employees to have access to extra amenities at work. This trend isn’t specific to Arizona; I think it’s part of the push all over the country to get people back to the office.

To achieve that goal, business owners are moving forward with building their own buildings. They want to be able to tailor these spaces to the needs and wants of their employees, to keep them engaged at work.

We’re seeing golf simulators, game rooms but also massive, state-of-the-art gyms with cold plunges and locker rooms. This is not something that we saw five years ago. Now, we are seeing these kinds of amenities incorporated not just in office buildings but in industrial buildings as well.

Developers are also loading on amenities to their speculative projects because that’s how you lease up quicker: by staying one step ahead of the project down the road.

Bisnow: What projects does LGE have in the pipeline?

Rogers: We’re currently constructing a 50K SF build-to-suit in Queen Creek for full-service audio-visual provider AV Dimensions. Two other build-to-suit projects, of 80K SF and 85K SF, respectively, are for International Furniture Direct in Glendale and Muscular Moving Men and their sister company M3 Commercial in Phoenix, just off Cave Creek Road. Down in Mesa, we are expanding a building for Metso, an industrial machinery manufacturing company. We’re also doing a cold storage project for another homegrown Phoenix company.

In the niche realm, we also have an interesting pipeline of projects for private jet owners and car collectors. We’re building a 60K SF luxury airplane hangar at the Scottsdale Airpark. We’re also designing and building a high-end facility for a user based in Orange County, which will be over 140K SF. We’re also currently designing and building for a user in an area that was just rezoned for more high-end personal garages near WestWorld.

We are also under construction, or working towards permits, on over 3M SF of developer-led spec projects. And this doesn’t include the additional 5M SF of developments currently in the design phase.

As a company, we currently have over $2B in backlog, and it’s growing at a rapid pace, so there is a lot to look forward to over the next five years.

Bisnow: What do you predict will be the hot topic of discussion at the event? 

Rogers: It’s going to boil down to pricing. At past Bisnow events over the last two years, it’s been all tariff talk and high interest rates. I think there will still be a bit of that. But this time around, I expect the talk to be more optimistic because of the way the economy has been trending, and much of our tariff fears have been eliminated. There are just so many new businesses and concepts that continue to enter our market that a lot of folks in our industry have a very bright outlook.

It’s not just us. Everyone else out there is seeing the pace picking up. It will be a glass-half-full kind of day. I’m looking forward to hearing from others about all the great and interesting projects they’re working on.

Register here for Bisnow’s March 12 event.

This article was produced in collaboration between LGE Design Build and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.