Developers Race To Grab Spots Near TSMC's Chipmaking Factories

Taiwan Semiconductor Manufacturing Co. is investing $165B to build new chipmaking plants in Phoenix as part of its multiyear plan to become the most advanced semiconductor facility in the U.S.  

Ever since TSMC announced the project in 2020, developers have been grabbing industrial sites and nearby land plots in hopes of capitalizing on the planned expansion. That activity is now accelerating.

“The development community in Phoenix is witnessing firsthand the massive uptick in activity across the market,” Josh Tracy, senior vice president of real estate development at Ryan Cos., told Bisnow. “Simply put, TSMC is a colossal economic magnet.”

Some developers are acquiring and demolishing office buildings just to get to the property underneath, while others are spearheading multifamily developments and mixed-use projects, all to make way for the expected influx of people and the real estate demands that come with one of the biggest manufacturing projects in U.S. history.  

April saw several industrial acquisitions in the Deer Valley submarket, which is south of the TSMC campus and home to Mack Innovation Park. The deals, brokered by California-based DAUM, included the sale of a 25,880 SF manufacturing facility to a TSMC supplier and an industrial outdoor storage property to a private family office real estate investor.

Those transactions were “largely driven by the scale and resounding impact of TSMC’s presence and continued investment,” Trevor McKendry, executive vice president at DAUM, said in a press release. “We’re seeing sustained demand not just from direct suppliers to their business, but also from a broader ecosystem of users that need space and proximity to support that growth.”

Earlier this month, Miami-based homebuilder Lennar Corp. submitted an application for 325 acres near TSMC’s fabrication plant, the Phoenix Business Journal reported. It wrote in its application that the area is “in much need of additional housing due to local investments by TSMC and their suppliers strengthening manufacturing job growth.”

A Marcus & Millichap industrial outlook report noted that in March, demand caught up to new supply as Phoenix continues undergoing “one of the nation’s most aggressive industrial build-outs” with the TSMC project. In the past year, the city reported the third-largest decline in industrial vacancy among major markets, according to the report. For properties over 250K SF, vacancy dipped more than 500 basis points to below 12%.

'Gateway To The TSMC' 

The TSMC project is expected to make Phoenix home to the most cutting-edge chipmaking facilities in the country. It is slated to include a total of six fabrication plants, two advanced packaging facilities, and a research and development center. 

Construction of one of the first fabs is complete and chip production is in progress, TSMC told Bisnow. The company aims to open its second Phoenix fab in 2027.

TSMC has been speeding up its development timeline, and that’s helped increase demand across the gamut of asset classes.

“The scale of it sort of creates its own universe: TSMC as the sun and all of these supplies, contractors, consultants, etc., in their orbit,” said John Orsak, executive vice president for Lincoln Property Co., one of the largest developers in the Phoenix area. 

“They all get attracted to the area, which creates office demand, which creates industrial demand, which creates subcontractor and labor demand, which will attract more people to the area, which creates housing demand,” he said.

Last year, Ryan Cos. broke ground on Phase 2 of an industrial project at 17 N. Corporate Center, which will comprise two Class-A buildings spanning more than 186K SF. Tracy said the center is accessible to freeways and nearby residential offerings and, most notably, “is located within 10 minutes of TSMC, which is a major strategic benefit for prospective tenants.” 

The site is the closest existing industrial project to TSMC, Tracy said. The first phase was reportedly sold to The Meritex Co. and fully leased to Fox Factory Inc., which makes performance products for vehicles. A CBRE team is working on leasing Phase 2.

Other nearby industrial projects include the ReDiscover Logistics Park, which broke ground in December and will encompass 800K SF once it delivers early next year. 

“It’ll be the gateway to the TSMC, where companies can make a presence, have interstate frontage, and have marketing ability, without having to be so far north,” said Alex Boles, managing director at ViaWest Group, a Phoenix-based real estate firm that is co-developing the project.

TSMC’s build-out has also sparked leasing demand from industrial users such as manufacturers, suppliers and logistics operators.

This demand pushed net absorption in the Phoenix industrial market to 4.9M SF in the first quarter, a 200% increase from Q1 2025, according to a recent CBRE report. Overall vacancy declined to 9.2% in the first quarter of this year, as absorption exceeds new supply, a Colliers report found.

Race For Land

Many developers have been eyeing land in Phoenix since the TSMC construction began. 

“Land is continuing to be a focus for developers — it's just finding the land that has the proper zoning and infrastructure,” said Hagen Hyatt, executive vice president of industrial logistics at JLL. “A lot of developers are hungry for the bigger sites, 100 to 200 acres, because that's where most of the demand's going.” 

Colliers reported that semiconductor-adjacent land in North Phoenix was commanding “unprecedented premiums” because of TSMC-related demand. In February, HVAC company Mornstair acquired 51.9 acres of vacant land at Mack Innovation Park II in Deer Valley near the TSMC campus for $59.9M. Mornstair didn’t respond to a request for comment on its plans for the land.

And in March, TSMC supplier United Integrated Services Corp. bought 28 acres of land at the same park for $41.1M.

Now, there is hardly any available land close to the campus. 

“There are so few pieces of dirt left,” Boles said. “More probably needs to be built, and be built faster, because the existing space is going quickly.” 

As Tracy put it, “the secret’s out,” so opportunities are now limited. The race for land, he said, is not only about acquiring a plot “but also the entitlements and securing the infrastructure and power to deliver these projects to the market faster than the competition.”

Some developers’ strategies have been to acquire office buildings and tear them down.

“I had to rip down a 350K SF office building to get to the dirt to build the industrial,” Boles said.

In 2022, ViaWest began demolition of an office building it purchased in 2021 to make way for two industrial buildings. 

TSMC Spurring Population Surge  

Multifamily is expected to be the “next wave of development,” given the expected surge in population, Orsak said. The Phoenix metropolitan area is forecast to reach about 4.9 million residents this year. 

A recent Plaza Cos. report noted that homebuilder activity in the area spiked late last year, “as thousands of engineers, technicians, and service workers” began relocating to Phoenix for TSMC jobs. 

“It's hard to imagine how big that could be, but hundreds of thousands of people, even in a city that's currently between 7 and 8 million people, that's a big addition,” Boles said. 

The TSMC expansion is expected to support 40,000 construction jobs alone over the next four years, the company said in a 2025 release, and is also creating tens of thousands of high-tech jobs. According to Axios, the first fab already employs about 3,000 workers, with employment expected to grow to about 6,000 direct employees as additional fabs open.  

More jobs means more people flocking to the area, which means a demand for more housing as well as retail, hotel, entertainment and service offerings. 

In March, co-developers Mack Real Estate Group and McCourt Partners broke ground on the $7B Halo Vista development, a mixed-use project that will help serve the needs of the thousands of workers coming to the region for the TSMC campus. The development will span 30M SF on 2,300 acres, with its first tenants slated to be a Costco, an auto mall and a five-story Marriott hotel. 

TSMC’s build-out has also spurred seven nonstop flights each week between Phoenix and Taiwan via Starlux and China airlines, making the Valley of the Sun more accessible to the world.

“It amplifies Phoenix and the state of Arizona on a global scale,” Tracy said.

As TSMC continues its expansion, developers expect an ongoing impact across all sectors. Orsak said it cannot be overstated “how important, how massive, and how much fuel to the economic fire” the project brings at a regional level. 

“It has been an absolute financial powerhouse for the market, and it doesn’t look like there’s any sign of it slowing down,” he said.