Tag Archives: foreign-trade zone

Dick's Sporting Goods distribution warehouse, Goodyear

Industrial Evolution: West Valley poised for land grab

Dick’s Sporting Goods built a 720KSF distribution center in Goodyear to service its West Coast stores.

A California-based investor erected a 400KSF spec shell in Surprise’s Southwest Railplex business park.

Corporate giants, Macy’s, Amazon, Sub-Zero, Marshall’s/TJ Maxx, Southwest Products and WinCo have landed or expanded their vast West Valley industrial operations within the last two years.

Even more companies are eyeing potential stakes in the burgeoning industrial parks springing up in once sleepy bedroom communities west of Phoenix.

With the recession in their rear-view mirrors, local, national and international companies are revving up manufacturing and distribution operations, and the West Valley is poised to be a big beneficiary of their expansion plans.

Justin LeMaster, Cushman & Wakefield

Justin LeMaster, Cushman & Wakefield

Available and affordable land, a deep labor pool, business-friendly state and local governments and top-notch transportation corridors contribute to the West Valley’s desirability, said Justin LeMaster, Cushman & Wakefield’s director for industrial properties.

Farsighted developers are already master-planning vast spreads of land, setting up infrastructure and even building large-scale spec structures that can accommodate another industrial giant or get sliced and diced to accommodate several smaller operations.

The developers — along with city and state economic development specialists — want their properties primed to snag the business when the lookers become movers, LeMaster said.

“Smart, creative developers will make the West Valley a successful high-growth market for years to come,” he said.

The numbers confirm the trend.

An impressive 4.5 MSF — nearly 94 percent of the metro area industrial construction started or completed in 2013 — is in the West Valley, according to Jones Lang LaSalle’s Q4 Industrial Report.

Q4 absorption was 1.96 MSF, and only 15.3 MSF of the West Valley’s 90.7 MSF total industrial inventory was still available at year’s end.

Nevertheless, 4.5 MSF is a significant amount of new inventory for a post-recession market, and, in fact, it boosted Valleywide industrial vacancy rates above 12 percent.

Anthony Lydon, Jones Lang LaSalle

Anthony Lydon, Jones Lang LaSalle

Industry experts aren’t worried.

“The new, grown-up, industrial tenants coming to market right now are looking for 300KSF, 400KSF and above,” said Anthony Lydon, Jones Lang LaSalle managing director for Supply Chain & Logistics Solutions.

Less than half of the West Valley’s available space meets that criteria, and a few big employers could snatch that up in a flash, he said.

Like LeMaster, Lydon expects that to happen sooner rather than later.

“Over the next 24 to 36 months, the Valley, and the West Valley in particular, will see significant new job creation,” he said.

So what makes the West Valley suddenly so attractive to the industrial users?

“Economics and location,” said Pat Feeney, CBRE senior vice president for industrial services.

Cost is key
Of the metro area’s three major industrial hubs ­— the airport area, the Tempe/Chandler corridor and the West Valley — the first two are nearly out of developable land, Feeney said. And scarcity makes that land pricey, especially for a large user.

Pat Feeney, CBRE

Pat Feeney, CBRE

A skilled and diverse labor force that moved west when the home builders did is another major factor, he said.

“Nearly 70,000 people live in Goodyear, but only 14,000 or 15,000 work in Goodyear,” Feeney said.

When big employers like Sub-Zero, Amazon and Macy’s held job fairs for their new West Valley digs, they typically attracted eight to 10 qualified applicants for every position, he said.

“They all shared that they were so happy they could pick the cream of the crop,” Feeney said. “It’s a really big draw.”

David Krumwiede, Lincoln Property Company

David Krumwiede, Lincoln Property Company

Staffing a large warehouse is a major economic concern, especially for companies with labor-intensive, e-commerce picking systems, said David Krumwiede, executive vice president for Lincoln Property Company, which owns 6 MSF in its four-state Desert West Region, 2.4 MSF of that in the West Valley, including Goodyear AirPark and 10 Lincoln.

Arizona’s main competition for the big industrial users looking to establish or expand operations in the West is California’s Inland Empire, Krumwiede said.

While the Inland Empire’s construction costs are comparable to Arizona’s, labor costs in Arizona, a right-to-work state, are much lower, he said.

“We are extremely competitive with California’s Inland Empire if a user has more people than trucks,” Krumwiede said.

And big energy consumers, such as companies employing sophisticated e-commerce logistics technology, can save as much as 30 percent to 40 percent in operating costs by locating in Arizona instead of California, Lydon said.

But possibly the biggest economic incentive for many industrial users is Arizona’s much more favorable tax basis, Krumwiede said.

All of the West Valley’s large planned business hubs have designated areas that are Foreign Trade Zone capable, and that’s a big selling point for companies that do significant international business in parts or products, Krumwiede said.

“If a company qualifies, it can see a 72 percent reduction in property taxes,” Feeney said. “It’s a tremendous benefit.”

And a benefit none of the nearby states can offer, he said.

Such issues make Arizona, especially the West Valley, where land is available and affordable, a clear economic winner over California.

Location, location, location
Second only to the West Valley’s attractive economics, is its advantageous location, less than half-a-day’s drive from the southern California ports — a major consideration for retailers and e-commerce leaders like Amazon, as well as manufacturers like Sub-Zero, according to the experts.

Rob Martensen, Colliers International

Rob Martensen, Colliers International

“If you can get out of traffic and get closer to the ports in Los Angeles and Long Beach, you can make that in six hours,” said Rob Martensen, Colliers International vice president.

That means truck drivers can log a round trip and still stay within federal guidelines regarding length of time on the road, a feat not so easy to accomplish from the East Valley.

And for companies distributing products regionally — Macy’s or Dick’s Sporting Goods, for example — the completion of the Loop 303 will forge the final freeway link that can speed trucks to and around cities and states north and west of Phoenix.

“It will open the gateway,” LeMaster said. “Companies want to be in Phoenix, and the West Valley will be the industrial hub of Phoenix with the (Loop 303/I-10) interchange.”

Overall, the combo of favorable attributes will ensure the West Valley lands on the short list for large and small industrial users for the next decade or so, Krumwiede said.

“The companies that are already out there — Amazon, Target, Costco, PetSmart, Staples, Macy’s — are all household names. It’s a great start. We’ll see more of those,” he said.

“My vision is that a lot of that vacant land will be put into production in the next five to 10 years.”

rsz_bmoser_-_ellsworth_rd__pecos_rd_landassmblagesale

Investor Completes $25M Purchase of Land in Former Williams Trade Zone in Mesa

 

Private investor Buckeye Casa Grande LP assembled and purchased ±610 acres in Mesa along Ellsworth and Pecos roads, in the former Williams Trade Zone.

Brent Moser, Mike Sutton and Brooks Griffith with Cassidy Turley Arizona’s Land Group represented the buyer during the transaction.

The $25M sale included three parcels that were part of an original assemblage of four properties totaling more than 900 acres put together between 2005 and 2007 by Paragon. A majority of the land eventually went back to lenders.

The ±610-acre purchase by Buckeye Casa Grande LP included ±310-acres on the SEC of Pecos and Ellsworth that was sold by Enterprise Bank, ±229-acres on the NWC of Pecos and Ellsworth that was sold by GKK Williams Gateway and ±72-acres on the SWC of Pecos and Ellsworth that closed December 31, 2012. The seller on the final parcel is a private land owner.

Buckeye Casa Grande LP will develop the site with build-to-suit projects that will continue to expand on the growing employment base in the Gateway submarket. The City of Mesa and its Economic Development Director, William Jabjiniak, have been instrumental in the continued development of businesses and employment in the area.

Zoned M-1 and C-2, City of Mesa, the property has Foreign Trade Zone (FTZ) designation offering tariff and tax relief to companies that operate within the zone. Buckeye Casa Grande LP has retained Cassidy Turley as the marketing agent for the properties, with Mike Haenel and Andy Markham, SIOR, with Cassidy Turley’s Industrial Group working in conjunction with Moser, Sutton and Griffith.

The growth and success of the Phoenix-Mesa Gateway Airport, located on the western edge of the assemblage, was a key factor in the buyers’ decision process for selecting the property. More than 40 companies call the airport home as well as three airlines, Allegiant, Frontier and Spirit Airlines offering non-stop service to more than 38 cities.

The Master Plan forecast for Phoenix-Mesa Gateway Airport forecasts enplanements to reach 850,000 by 2017 and more than 2.2M by 2027.

Prologis Riverside Park

Prologis Begins Development On 486,200 SF Spec Warehouse In Phoenix

Prologis, a global owner, operator and developer of industrial real estate, today announced that it has begun construction on a 486,241 SF cross-dock facility in Prologis Park Riverside with a target completion date of April 2013.

The building – situated on a 27-acre parcel – represents the first speculative development in Phoenix since 2008.

It is part of a larger 153-acre master planned industrial park where Prologis sold 100 acres to a Fortune 500 retailer that plans to build a 1.2 MSF distribution and fulfillment warehouse on the site.

Prologis is pursuing magnet foreign-trade zone (FTZ) designation for the Park and in support of this has entered into a development agreement with the City of Phoenix.

Customers qualifying for FTZ status enjoy several benefits including duty deferral, reduced customs reporting requirements, and a 75 percent reduction in real property tax and on qualifying personal property and equipment.

Prologis has selected Don MacWilliam at Colliers International in Phoenix as its listing broker.