A joint venture between Conor Commercial Real Estate and Globe Corp. has assembled three parcels in the Airport submarket for a new speculative industrial build. While the land site would have made an attractive development prospect regardless, the Airport submarket is an opportunity zone, which made the project particularly attractive to the developers.
“This is in an opportunity zone in Phoenix, which we took advantage of as a venture,” Derek Buescher, senior development analyst at Conor Commercial Real Estate, tells Globest.com. “That definitely enticed us to proceed with the project more aggressively during the acquisition stage, but this site is so well located, we would have proceeded with the project either way.”
The development site is an assemblage of three parcels totaling 18.8 acres. The main site is 16 acres, but was too oddly shaped for development without the addition of the two adjacent parcels. Two developers tried to assemble the three sites previously, but were unable to secure the adjacent parcels to make the development work. “We give a lot of credit to Cushman for bringing us this site and helping us with the assemblage,” says Buescher. “To make it usable, we have to acquire two additional parcels to square it off. Cushman worked with those owners and convinced them to sell. Acquiring those made what was not a usable site into land that could really accommodate class-A industrial.”
Named Airport 40, the project totals 320,700 square feet in two buildings. Building one is 211,000 square feet, while building two is smaller at 108,800 square feet. Both can accommodate two tenants and feature 40 dock-high doors and six drive-doors.
While the project is a speculative build, it will likely lease before delivery. Demand for quality industrial product is strong in the Airport submarket, and there is limited land for new development. This is one of the few remaining opportunities to bring new, quality product to market. “There is a lack of land, and there are not large sites for class-A industrial development,” says Buescher. “We need at least 12 acres to make a project of scale that works for us internally. Being in the airport market, there are a lot of smaller parcels and older, obsolete buildings. Finding land and assemblage opportunities to bring land together and make a site big enough is a difficult process.”
Construction has yet to begin, and the developers have already received interest from potential users. The development team is underwriting 12 to 24 months for lease-up, but Buescher expects to complete the lease-up much earlier. “The airport market has a pent up demand,” he says. “This is a project where I wouldn't be surprised if we were preleased just because of the activity that we have seen so far. That would be ahead of what we are underwriting, but it is realistic for the momentum and the velocity in the airport market.”
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Kelsi Maree Borland
