All of Phoenix’s Population Growth Is Translating to Industrial Demand

The growing population in Phoenix has put the Southwest market in the national spotlight. The population growth in Phoenix is among the highest in the country, and the city has even overtook Philadelphia as the fifth most populated metro in the US. While this fueled activity across asset classes, the rising population—no doubt filled with online shoppers—is translating into phenomenal industrial demand for functional, quality facilities. With strong fundamentals and rising demand, industrial developer and investor CapRock Partners is expanding its presence and activity in the market.

“We see a tremendous opportunity to invest in the Phoenix industrial market. The metropolitan statistical area has over 4.8 million residents and is expected to continue as one of the top markets in the U.S. for population growth,” Bob O’Neill, SVP of acquisitions at CapRock Partners, tells GlobeSt.com. A contributing factor is its quality of life and designation as one of the most affordable places in the Western U.S. for a median-income family to have the ability to buy a home in the area. As the Valley experiences more population growth the number of housing deliveries will increase, which will benefit businesses with warehouse and manufacturing facilities in Phoenix.”

CapRock is focusing on both redevelopment opportunities and new construction projects to bring functional industrial facilities with dock high loading, expanded truck courts, sprinkler upgrades and office refurbishment to the Phoenix metro. “We are acquiring existing industrial buildings in need of major renovations to solve challenges with functional obsolescence, which will enable us to stabilize the properties with new tenants,” says O’Neill. “In some cases, we may determine it necessary to demolish portions of the building to improve functionality. While eliminating building square footage isn’t the preferred strategy, we have found that it can be accretive to the overall investment through higher lease rates, reduced downtime, higher tenant retention percentages and higher sale values to future investors.”

For ground-up construction opportunities, CapRock is focusing on small-to-mid-box product, which is the product type in the highest demand. “Most industrial tenants in the Phoenix market are seeking spaces between 30,000 and 200,000 square feet, so we are focused on providing real estate solutions to meet that demand,” says O’Neill. “The industrial buildings in our portfolio and current pipeline can accommodate a single tenant or be redesigned to a multi-tenant configuration.”

Phoenix is a sprawling market. CapRock is honing in on specific submarkets that show a demand for this product, including Sky Harbor Airport, Tempe, Southwest, West Central, Gilbert and Chandler. “The Southeast Phoenix region is seeing more industrial development to support the new rooftops and ongoing growth in the high-tech manufacturing industry,” adds O’Neill.