Industrial investment sites carrying premium price tags
Valley industrial space is in such demand that commercial brokers are negotiating deals for what they say are premium prices.
CB Richard Ellis recently got what it considers a premium in the $16.35 million sale of Foothills Vista Tech Center in Phoenix.
The property, 15210 and 15220 S. 50th St., contains 96,951 square feet and boasted a93 percent occupancy at the time of the sale.
International Capital Partners LLC of Scottsdale was the seller and Foothills Vista LLC of Seattle was the buyer.
"It's truly a case of supply and demand," said Katherine A. Haug, marketing manager with CB Richard Ellis.
That deal was announced Aug. 11, the same day Phoenix Mayor Phil Gordon met who signed a contract for her 50-employee business to move to the "Opportunity Corridor."
That district sits between Van Buren Street on the north and the Salt River on the south and from the state Capitol complex east through Phoenix to the Tempe border. The area is known for its industrial properties, distribution buildings, rental car businesses, vacant lots and aging motels.
Both of these recent developments point to a surge of interest by investors and business owners in Phoenix industrial property, especially with demand outpacing supply.
Recent Cushman & Wakefield commercial brokerage data shows the Phoenix industrial market continuing to expand, although not nearly as robustly as last year. The region has seen nearly 2.3 million square feet directly absorbed as of mid-year 2006, compared with the 4.8 million square feet absorbed during the same period in 2005.
Cushman & Wakefield reports that manufacturing space continues to be the dominant product type in terms of leasing activity, followed by the high-tech sector. The overall vacancy rate remains low at 5.9 percent, down from 6.8 percent at mid-year 2005, Cushman reports.
Steve Bodeman, executive vice president and principal with GVA Daum, a commercial real estate firm in Phoenix, said there was a recent bidding war over Southern Gardens Industrial Park at 26th Street, just south of Broadway Road. Bobier Sales Co. was the buyer.
"The market continues to be real tight, and there's not a big inventory," Bodeman said.
Because land is being snatched up so quickly "you almost have to hear privately about a place," he said.
Calling industrial space a "good investment," Bodeman said he's seeing interest from local businesses who have outgrown their space and need to expand and out-of-staters coming in to lease.
In terms of the Opportunity Corridor, many in the industry believe there are deals to be found in the area that's historically been economically depressed. There's also a good amount of prime real estate near the Salt River that could be developed into office parks and manufacturing facilities.
The 15-square-mile corridor is one of Gordon's pet projects. He envisions it full of businesses of every shape and size, but with a focus on the Valley's developing biotech sector. Understanding the economic development opportunity, Gordon wants to lure high-tech industry, distribution, assembly and light manufacturing.
The architects at Phoenix-based CCBGArchitects Inc. take an up close and personal view of industrial space.
Not only did they design and build their office on a small parcel of land in the industrial part of the Opportunity Corridor, they've designed, as they call it, "adaptive reuse" of several warehouse buildings. "The city is very much interested in the small project adding texture to the neighborhood," said Josepy Groff, a CCBG principal.
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