The delivery of more than 2.8 million square feet of new industrial construction in Phoenix during the first half of 2016 has made an impact on the Valley, says the Phoenix office of JLL – in some cases pushing industrial rental rates by as much as 36 percent higher than their existing average. Customers looking for increased efficiencies are flocking to this new Class A space, which features amenities such as wide column spacing and clear heights of up to 36 feet.
This trend is actively playing out at Airport I-10, in the airport submarket, and Park Lucero, in the Southeast Valley, where JLL has completed a total of 18 new leases over the last 24 months. All together, these leases represent a total tenant commitment of more than 579,000 square feet.
At Airport I-10, the newest deals include:
- Western Windows, leasing 169,685 square feet for design/manufacturing of custom windows and doors.
- Mainfreight, leasing 21,054 square feet for freight forwarding services and global logistics management.
- Barlow Distribution, leasing 78,843 square feet for general distribution operations.
Other tenants at Airport I-10 include Anixter Inc., DHL Express, Mach 1, Pilot Air Freight and Scientific Games.
At Park Lucero, new leases include:
- Thermo Fisher, leasing 10,148 square feet for equipment testing and service activities.
- Mastec, leasing 20,582 square feet serving key warehouse and equipment storage requirements.
Other tenants at Park Lucero include Adept, Cyclone Cup, Divind Tech, HOA Playground, Kaman/Extex Engineered Product Inc., Norwood Furniture, Shawshank Ledz, Trane, Wudel, Inc.
JLL Executive Vice Presidents Pat Harlan and Steve Sayre, and Associate Kyle Westfall are the exclusive leasing brokers for Airport I-10. Harlan, Sayre and JLL Vice President Steve Larsen represent Park Lucero.
“Phoenix has enjoyed a strong and steady demand this year from tenants seeking modern and efficient industrial space,” said Harlan. “They are hungry for new inventory, and as soon as new product is introduced, it is being actively pre-leased or leased. This is particularly true for space in the Airport and Southeast Valley submarkets.”
According to JLL, the warehouse and distribution space delivered, or set to be delivered, in Phoenix in 2016 averages $0.55 per-square-foot on a NNN basis, representing a 12 percent increase over the existing market average of $0.49. New manufacturing space is even more expensive, averaging $0.68 per-square-foot, up 36 percent from the existing average of $0.50.
Because of their new construction and prime locations, the average asking rents for Airport I-10 and Park Lucero sit above the market average at $0.65 per-square-foot and $0.58 per-square-foot, respectively.
Located at the northwest corner of 24th Street and Riverview Road in Phoenix, Airport I-10 totals 923,728 square feet of Class A space on 58 acres, just minutes from Sky Harbor International Airport. Park Lucero is located along the South Loop 202 Freeway in Gilbert, Arizona. It totals 631,000 square feet in six Class A buildings.
“These projects offer the design and location amenities that every tenant today wants, and those tenants are willing to pay for the advantages of this new product,” said Sayre.