By Chris Keeley
Commercial Real Estate continues to soar in the Deer Valley Airpark. New projects, sales and leasing continue at near record levels. Pricing continues to climb for both sales and leasing.
There are currently many major industrial projects either just completed or under construction in the Airpark. Palco Investments just broke ground at 19th Ave and Alameda on their new 102,960 sq. ft. industrial building. It will house Today’s Patio in 75,860 sq. ft. with 27,100 additional space available for lease. The walls are up on the approximate 100,000 sq. ft. new home for Mygrant Glass at 22640 N 21st Avenue. Parc Pinnacle has just completed 312,054 sq. ft. of distribution type buildings on Pinnacle Peak and Central Avenue.
Desert Gateway II, the multi-tenant 78,874 sq. ft. industrial building in the 700 block of W. Pinnacle Peak, is now looking for tenants. Enterprise Deer Valley is a three building multi-tenant project in the 2000 block at W. Deer Valley with +/- 78,000 sq. ft. of lease product also just completed. Discount Tire has almost completed their new shop on 23rd Ave just South of Happy Valley Road. There’s a new self-storage almost completed just Northeast of Pinnacle Peak and 19th Ave. and another ready to begin aside the Discount Tire location. Most of the projects in the Deer Valley Airpark are lease spec projects and most are already receiving plenty of lease activity.
The four Southwest Property Ventures speculative industrial buildings available for sale on 19th Avenue just south of Pinnacle Peak completed in January all went into escrow prior to completion. This type of activity was unheard of just a year ago. Building industrial spec buildings starting in 2008 to 2015 was also extremely rare. The tide has turned and demand is high. The 8 spec buildings SPV developed on the SEC of 19th Ave and Pinnacle Peak and the 8 built at Spectrum Ridge all sold or are currently in escrow. These 16 office/warehouse buildings were all built spec and were all between approximately 10,000 sq. ft. and 15,000 sq. ft. There are currently no more available in this market.
There are currently only seven properties that have available buildings/industrial condos for sale between 500 sq. ft. and 4,000 sq. ft. There are also only seven office/warehouse buildings available for purchase over 4,000 sq. ft. up to 20,000 sq. ft. None of these are new products. Those end-users seeking to purchase between 4,000 and 12,000 sq. ft. have very limited options today. We are truly in a sellers’ market. Demand is high and inventory is low.
Pricing has also seen a steady climb. New construction in the industrial office/warehouse product has increased to approximately $140 psf for purchase and $0.75 to $0.85 psf (NNN) for lease. Of course, second generation is about 10% to 15% lower and there are still a few bargains to be had but they are much harder to find today.
We should expect increased new development in the Airpark over the next few years to catch up with demand. Historically Deer Valley Airpark has been a very productive market for most developers. There has been numerous multi-tenant lease product built over the last year but very little sale product. Buyers will be hard pressed to find what they need or want and will have to pay a premium if they do or look to lease. Until development catches up with demand this will remain a sellers’ market.