Jim Keeley, SIOR, CCIM, founding partner of Colliers International’s Scottsdale office, released his annual Greater Scottsdale Airpark 2030 Report, which provides a current and historical perspective on economic activity, growth, and trends for the Scottsdale Airpark submarket.
Keeley has tracked and reported on the Airpark since 1981, and he has published the 2010 Report (now renamed the 2030 Report) since 1989.
“The trend we are seeing in the commercial, office and industrial sectors in the Greater Scottsdale Airpark submarket is continued improvement as the corridor is on the mend from the recession,” Keeley said. “In 2012 there were more sales transactions than in the previous two years when the market seemed to be bouncing along the bottom.”
A combination of high tech and residential-related vendors and suppliers are slowly coming back into business due to residential construction increasing.
According to the report, there were very few high priced building or land sales over the last two years, with a majority of building sales in the range of $55 to $75 PSF. Keeley notes that the largest segment of properties was of those sitting idly and attracting little interest, what he coins the “stuff in the middle.”
This segment pushed rental rates down and subsequently decreased the vacancy rate from 29% in 2009 to 18.5% today. Over the past few years this segment has shrunk considerably and rental rates are gradually on the rise.
“The supply of buildings for sale continues to diminish since 2011 and margins are getting skinnier,” Keeley says. “With the economy in the Airpark improving and the market closing rapidly, now is a great time to buy what is still left while it has good value.” It is still a good time to lease Class A office space as rents are finally firming up and vacancies are declining.
Although there is very limited land available in the region for new construction, we have seen some redevelopment and construction starts in 2012. These were led by 240 new apartment units being constructed on the former Barcelona restaurant and nightclub site at 73rd St. and Greenway-Hayden Loop.
In retail, Starbucks and Potbelly Sandwich Shop are under construction on the former Paddy O’ Furniture store site and Restoration Hardware moved into a new 24,000 SF store where the former 6,000 SF Oakville Grocery originally opened.
“Scottsdale Airpark’s long-term future will be robust due to a number of factors, including its prime location, transportation, a cornucopia of 100 plus industries, 34 MSF of core space, quality of life and the Airpark’s safe environment with a lack of crime,” Keeley said. “Most of the downturn is now in the rearview mirror.”
Statistical highlights and a historical comparison from the 2030 Greater Scottsdale Airpark Report:
>> At year-end 2012, the Airpark had ±52,000 employees, ±34 MSF of buildings and ±2,848 businesses.
>> In 1981, there were 3,000 employees, 1.5 MSF of buildings and 268 companies.
>> At year-end 2012, overall vacancy was approximately 18.5%.
>> In 2011, overall vacancy was approximately 23%.
>> In 2012, there were 76 building sales (41 office, 28 industrial and 7 retail buildings) with a total sales volume of approximately $350M.
>> In 2011, there were 78 building sales (29 office, 38 industrial and 11 retail buildings), with a total sales volume of approximately $181M.
>> In 2012, there were four land sales consisting of ±15.36 acres with a total sales volume of approximately $10.8M for an average of ±$16.25 PSF.
>> In 2011, there were three land sales consisting of ±8.21 acres for with a total sales volume of approximately $4.8M for an average of ±$13.43 PSF.