A recent Kidder Mathews survey reports that Phoenix continues to be a hotspot for industrial development. It has maintained a strong construction pipeline, averaging 8 million square feet in annual deliveries since 2022. This trend will continue well into 2025, with 21.8 million square feet of new projects currently underway. Year-to-date deliveries reach 37.6 million square feet, 19% higher than the total deliveries in 2023, which will continue to intensify the demand-supply imbalance as vacancy rates continue to rise. 

Vacancy increased by 440 basis points (bps) year-over-year (YOY) to 13.1%, while availability rates increased by 140 bps to 15.1%. However, compared to 3Q24, vacancy rates only grew by 140 bps and availability by 20 bps. 

Despite the continued rise in vacancy rates through 2024, driven by new developments, direct net absorption continues to remain positive as logistics and manufacturing tenants expand their footprints. Direct net absorption in 2024 totaled 17.8 million square feet, coupled with 5.7 million square feet in leasing activity. 

Rent growth in the Phoenix industrial market is slowing, with direct asking rents remaining steady quarter-over-quarter (QOQ) to $1.12 /SF NNN. 

Woodside Health has paid $20.9 million for Paradise Valley Plaza, a three-building, multi-tenant office and medical complex spanning 100,203 square feet in Scottsdale. Cloud Peak Development sold the asset. This marks the company’s 14th property in the Phoenix metropolitan area.

Commercial Edge reports the asset previously traded in September 2020, when Cloud Peak acquired it from Fenway Capital Advisors for $16.7 million—about $172.6 per square foot.

The Class B campus located at 5010, 5020 and 5040 E. Shea Blvd. came online in two phases in 1985 and 2000 and underwent cosmetic renovations in 2014. Amenities include interior and outdoor courtyards, exterior loading suites and about 388 parking spaces. The property was 95 percent leased at the time of sale, with the tenant roster including office and medical/wellness companies such as HonorHealth, Next Level Physical Therapy and Forma Plastic Surgery.

Cushman & Wakefield’s Eric Wichterman and Chris Toci, along with Mike Coover, represented the seller.

Piggybacking on the deluge of proposals hoping to capitalize on the $65 billion Taiwan Semiconductor Manufacturing plant, Dallas-based JLB Partners is considering a mixed-use development along Loop 101 in North Phoenix.

The Phoenix Business Journal reports the company recently submitted a zoning application for the 50-acre property, located at the northeast corner of Mayo Boulevard and 64th Street, to the city of Phoenix for a planned unit development.

Conceptual plans call for multiple phases, including a combination of 1,300 residential units, 300 hotel rooms, 40,000 square feet of retail, 20,000 square feet of dining or 250,000 square feet of office space across the highly visible site.

Mack Real Estate Group and McCourt Partners are teaming up to develop a $7 billion master-planned center with 30 million square feet of commercial space anchored by the Taiwan Semiconductor Manufacturing Co. project.

Nearby, construction is also underway for a new office headquarters campus for environmental services company Republic Services Inc. at the CityNorth project adjacent to Desert Ridge Marketplace.

Biscuit Flats Dev LLC, an affiliate of Mack Real Estate Group (MREG), prevailed at an auction to sell the development rights to over 2,300 acres of fully entitled land immediately adjacent to Taiwan Semiconductor Manufacturing Corporation’s (TSMC) semiconductor fabrication campus in Phoenix’s North Valley. TSMC has committed to investing $65 billion in its rapidly growing facilities, with significant further investment anticipated. 

The Arizona State Land Department (ASLD) awarded the project to Biscuit Flats Dev LLC, the winning bidder in an auction for the right to lead what is expected to be a $7+ billion mixed-use development of more than 28 million square feet surrounding one of America’s most potent new employment and innovation drivers, TSMC. McCourt Partners will also invest in the project in partnership with MREG. MREG paid $56.28 million as the winning and only bidder at the auction.

Under an agreement with ASLD, the partnership will control land sales within the site, which are to take place in stages over several years, while also overseeing the necessary infrastructure improvements.  Additionally, the joint venture will have the right to develop approximately 600 acres, across multiple uses.  MREG will decide what the best fit is on 2,300+ acres with over 28 million square feet of development capacity across mixed uses, including up to 8,960 residential units as well as industrial, retail, and office space. Infrastructure work could start in 2025.

The Phoenix City Council has approved a zoning proposal allowing a nearly 300-acre master-planned development southwest of Phoenix, called Gila Foothills. It would span a stretch of agricultural land along Loop 202 just north of South Mountain. The plan would include a 50-acre resort, a hospital and housing at Laveen Village of Phoenix.

The Phoenix Business Journal reports that the plan specifically calls for 1,200 housing units, but to exceed that amount, the developer must bring a Level 1 trauma hospital, restaurants and retail, senior housing and townhomes. These amenities and services would allow for an additional 1,000 units to be developed on-site, previously zoned to allow for nearly 3,200 residential units.

The project team includes Enterprise Capital, Gila and Salt River Development LLC, Butler Housing Co., Davis, Kimley-Horn and Berry Riddell LLC.

Milwaukee-based private commercial real estate firm Phoenix Investors has acquired a 1.4 million-square-foot industrial facility in Memphis. The sales price and seller were not disclosed.

Built in 1973 with an addition in 1981, the property is a former distribution center for Sears. The facility, which is located at 3456 Meyers Rd., features clear heights ranging from 24 feet to 31 feet, 145 dock doors and 24-foot by 36-foot column spacing. Phoenix plans to implement its capital improvement plan in the coming months, making a number of structural and cosmetic upgrades to the facility.

Atlantic Capital Bank provided senior mortgage financing to Phoenix in the transaction. Jack Wohrman and Russ Westlake of JLL brokered the sale.

“Historically, we have received more national search inquires for the Memphis market than any other MSA,” said Kurt Jensen, senior vice president of acquisitions and leasing at Phoenix. “The combination of geographic location, transportation infrastructure, and affordable market rents make it the ideal marketplace to serve tenants searching for distribution east of the Rockies.”

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