Why Industrial Activity's Back In The West Valley
“For the first time in the past seven years, the Phoenix market is open to spec industrial projects in the West Valley,” said Lydon (here with colleague Marc Hertzberg). That's because developers and equity partners are recognizing the strong demand for more availability in the West Valley from scalable and regional users, and are developing industrial parks with build-to-suit and spec options.
Lydon cited a few examples: Opus Goodyear Crossing, Riverside 43 and Southwest Industrial Center. "We're excited about both the absorption of speculative space and the build-to-suit activity happening in the market right now.”
Of the more than 4.86M SF of new industrial product delivered in 2016 (according to JLL data), large users have pre-leased more than 61% of available buildings. Strong leasing patterns indicate the need for even more new construction, and developers are responding — taking advantage of Phoenix’s ample land and relatively low construction costs to introduce new product.
Overall, the Phoenix industrial market is strong going into 2017. Although industrial leasing volume declined last year from previous years, due in part to increased build-to-suit activity, Phoenix’s average industrial lease size continues to increase, spurred by interest from large corporate users, Lydon said.
According to JLL’s Q4 report on the market, there are 55 industrial space requirements of at least 100k SF throughout the metro market. Phoenix has a number of large spaces that can accommodate these tenants. That space sat vacant during the economic downturn, but is now starting to dwindle in some markets due to high demand.