By Chris Keeley
Phoenix Commercial Brokers

Congratulations! Your business is expanding during this economic boom. You’ve increased your workload, your number of employees and it seems as if there is no end in sight. Orders continue to multiply, and you’ve utilized every nook, every cranny and now… you are absolutely out of space.

Now that the decision to move has been made and a purchase is not on the table, what is the best lease situation for your business? The Deer Valley Airpark is a favorite location. It’s right around the corner from Scottsdale Airpark and whole lot less expensive. It also has an airport and three freeways just down the street; I-17, Loop 101 and Highway 51. The employment base is increasing with the population moving north. The Deer Valley Airpark is perfect for you, so now, what’s available?

First, let me explain what kind of leases there are in the industrial sector. Ultimately there are two kinds of leases that may have some slight variations to each. The first kind of lease is a Gross Lease and the second is a Triple Net (NNN) lease. A gross lease includes all the expenses, except utilities, in the base rent.

For example:
• With a Gross Lease, the landlord quotes you $0.80 per square foot (gross) on a 10,000-sf building. You will pay $8,000 per month rent (and utilities on top of that) total.
• With a Triple Net lease, that same 10,000-sf building, at $0.80 psf (NNN), you will pay $8,000 per month base rent plus a share of the property taxes, common area maintenance and property insurance, which could be an additional $2,000 to $2,500 NNN expenses per month in Deer Valley.

I am not implying that a landlord would ask the same rent for a similar space regardless of gross or NNN lease. Usually the ultimate end dollars would come out the same. For example, a landlord might ask $0.80 NNN or $1.00 psf (gross) for the same space. However, it is imperative for you as the tenant to understand what you are agreeing to prior to signing any lease.

So, what’s available to lease in DV Airpark? There are currently about 40 properties available between 1,000 and 5,000 square feet, with an average asking rent of $0.81 psf (NNN). Almost all are in multi-tenant projects and almost none have yards. The historical mainstay in the Airpark of free-standing industrial buildings with contractors yards are almost non-existent in todays market. Typically the buildout is 15 percent air-conditioned office with 85 percent evaporative cooled warehouse and one or two roll up doors. You can still find some with truck wells as well.

There are about 20 industrial spaces for lease with greater than 20,000 sf available. The average rents for these spaces are $0.68 psf (NNN). Many are between 50,000 to 65,000 square feet and only three spaces available greater than 100,000 square feet. With over 20 percent vacancy rate currently in this market, now may be a good time to negotiate a great deal in Deer Valley Airpark.