By Chris Keeley
The Deer Valley Airpark industrial vacancy rate is approaching record lows. Even with multiple new industrial projects now completed and available, the absorption rate in this market has kept pace. With over 650,000 square feet of new industrial product delivered over the last 18 months, it is hard to believe demand has kept up with this abundance of new development. Well it has, and vacancy rates are now below 9 percent in Deer Valley Airpark and spaces are still filling up fast. Lease rates are some of the highest in the Phoenix area, currently averaging $0.85 psf (NNN) asking rate. Demand remains high and new development will be hard pressed to keep up.
Industrial sales have also been very active in the Airpark, with over 40 separate sales surpassing $40,000,000 since January 1st. Pricing has also jumped with new product at $139 psf plus and second generation averaging $116 psf. With a total lack of inventory available for sale product, we can expect these prices to continue to increase. There is also currently a shortage of new construction of industrial product that is for sale coming on line in the Airpark. We should expect a tangible shortage of industrial buildings for purchase in the industrial market in Deer Valley Airpark over the next 12 months. We should also expect to see a run of new construction plans into the city to meet the high demand we’re sure to see. It appears developers are behind demand today and should quickly see the opportunities available to them here in this market. Ebb & Flow or Feast or Famine; It’s beginning to look more like a feast in Deer Valley Airpark and the flow of new construction over the next two years should be substantial.
The entire Phoenix industrial market vacancy rate is at a 10-year low and we are seeing an increase in development all over the metro Phoenix market. Deer Valley Airpark has become a prime area to relocate business for these reasons:
• The Deer Valley Airport
• Great freeway access with 1-17 and Loop 101 running through the heart of Deer Valley, and the new Loop 303 and the 51 Freeway just outside its edges
• The close proximity to Scottsdale Airpark
• Deer Valley Airpark’s attractive pricing for sale and leasing product
• The type of clientele that already calls Deer Valley home
The fact that there is still ample vacant land to grow and expand in this market only makes it that much more attractive.
Land sales and pricing came back strong in Deer Valley Airpark over the last 18 months. During the recession, land prices had dropped to 10% of previous prices. Looking back at my 2020 report of 2005, one to fifteen acre lots were selling for $12 to $15 psf in that year. During the recession we had trouble selling industrial land for $2 psf. There were years the land market dried up completely with almost no buyers at all. Todays pricing is back to $7 to $12 psf for industrial land and plenty of interested buyers in our market. Land is moving again and pricing is steadily increasing.
2017 was a very good year for the real estate market in the Airpark and 2018 looks like it could be even better. The first quarter numbers are in and we are on pace to break records. Finally, we have new companies moving into this market. For years the only real estate being done was moving our existing tenants around looking for better deals. We are finally seeing an influx of new companies moving into Deer Valley Airpark. What a great time to be a part of this terrific submarket.