Millions of square feet of industrial space breaks ground near … – The Business Journals

Eight projects have started construction so far this month in one of the hottest areas for new industrial developments in the Valley.
Between Aug. 1 and Aug. 12, eight different developers broke ground on 4.5 million square feet in the southeast Valley near the Chandler Municipal Airport and Phoenix-Mesa Gateway Airport, according to Lee & Associates, a commercial real estate brokerage. The firm didn’t know how much if any of the space has been leased to date.
Those projects are well-positioned to attract tenants to be vendors for nearby Apple Inc. and Facebook (now Meta Platforms Inc.) data centers as well as accommodating the electric vehicle and semiconductor industries, said Chris McClurg, principal at Lee & Associates.
Here are the eight industrial projects:
McClurg said the Mesa Gateway and Chandler Airport were sought-after areas by developers and employers because of the availability of land and skilled labor living nearby.
“In my opinion, the eight groundbreakings are going to meet the demands for what the tenants are looking for today. … Based on the number of tenants and demand in the market, these eight projects should see instant activity during the construction phase,” he said. “Moving forward, there are a few additional projects to break ground in late 2022 and early 2023 in Chandler Airpark with numerous projects to break ground in Mesa Gateway [during that time].”
McClurg and fellow Lee & Associates principal Ken McQueen are the listing brokers for the Midway Commerce Center and Hub@202. Both projects are expected to complete construction by Q1 2023 and have experienced early leasing interest with request for proposals, McClurg said.
The master plan for Hub@202 called for 11 buildings, totaling 1.5 million square feet of class A industrial space. The buildings will range in size from 65,000 square feet to 270,000 square feet. New York-based developer Wharton Industrial closed on a 101-acre parcel of land for the park in January. Wharton and its development partner Madison Ventures Plus procured an acquisition and construction loan of $224,070,000 from MSD Partners LP, which was formed in 2009 by partners of MSD Capital – the family investment firm of billionaire Michael Dell, the founder, chairman and CEO of Dell Technologies Inc. (NYSE: DELL).
Southeast Mesa is one of the hottest industrial markets in the country, with investors spending hundreds of millions of dollars buying land to start new projects in the area. Several large companies including Amazon and Lowes have recently announced plans for large distribution facilities near Phoenix-Mesa Gateway Airport.
“We’re excited to see the product come out of the ground because there’s a lot of pent-up demand out there,” said Jackie Orcutt, a senior vice president at CBRE Group Inc.
Orcutt said she and her CBRE colleagues are listing the Gateway Grand, Power Industrial and Advanced Industrial Center. At each of those sites, no leases have been signed but there’s been good activity, she said. Typically, the larger the tenant, the earlier in the process that tenant will sign a lease. When the exterior walls are tilted and in place, that’s usually when some of the smaller users — around 20,000 square feet — tend to hop on board, Orcutt said. She added that with industrial vacancy being as low as it is, that process might move a bit quicker.
Orcutt added that a few more industrial groundbreakings will come online later this year, in which CBRE will have the listing.
According to a Q2 2022 report from Lee & Associates, the Phoenix metro’s industrial dropped to a record 4% vacancy. During that period, more than 33 million square feet of industrial projects were under construction and the average asking lease rate rose to $9.48 per square foot — up 6.8% from the Q1 2022 mark and 21.5% year-over-year.
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