The Southeast Valley is no longer for smaller industrial users

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The Southeast Valley has historically been known as a hot area for smaller industrial users ranging from 15,000 to 40,000 square feet. However, recent demand from the aerospace, defense, high-tech/advanced manufacturing, semiconductor and pharmaceutical/nutraceutical industries are calling for more space ranging from 30,000 to 60,000 square feet.

“Increases in government spending have really benefitted the key industries in the Southeast Valley,” said JLL Senior Vice President Steve Larsen. “The aerospace and defense industry in particular is expected to experience mergers and consolidations, which is resulting in these users needing more space. As a result, the speculative projects we’re seeing here are larger than they have ever been.”

As the volume and average size of user requirements ramps up, speculative developments are becoming more functional in order to attract large, single users, while still maintaining the potential to become a multi-tenant building. Increased clear heights, wider column spacing, and additional dock doors make these new developments attractive for institutional users with more sophisticated operations.

Just some of these new projects include:

  • Lotus: Four buildings totaling 463,200 square feet of planned space in Chandler.
  • Park Lucero Building D: 94,794 square feet of planned space in Gilbert.
  • Majestic Tempe Commerce Park: Three buildings totaling 173,312 square feet of existing product in Tempe.

Across metro Phoenix, industrial vacancy at the end of Q1 had fallen to 7.3 percent, just 100 basis points above its lowest point.

Learn more about the trends shaping the Phoenix investment market.
Download these reports:
Phoenix Industrial Insight
Phoenix Industrial Statistics

 

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