How Arizona pro-business environment creates CRE opportunities
It’s scorching hot in Arizona and this time it’s not about the weather. More than ever, companies across the U.S. are packing up their businesses and flocking to Arizona. And Arizona’s pro-business environment is creating commercial real estate opportunities
With its high-skilled talent pipeline, affordable cost of living, and lower taxes than neighboring states, Arizona – and primarily Metro Phoenix – has developed its position as an attractive business location, with no signs of slowing down.
“I’ve witnessed this trend firsthand as I’ve assisted countless clients make the move to Arizona,” said Andrea Davis, CCIM, Principal of Andrea Davis CRE.
Here’s what helped scientific equipment supplier Atonarp Inc. from Fremont, California, want to call the Valley of the Sun home at 15950 N. 76th St., in Scottsdale.
“We’re currently at an exciting growth phase as we expand development of the technology, teams, and partner ecosystems that will help bring to market an array of industry-redefining products,” said Dave Anderson, Chief Product Officer with Atonarp. “As an extension of this growth, we recently established our newest office in Phoenix.”
Atonarp works at the forefront of next-generation molecular profiling, developing instrument platforms and software applications that enable healthcare and industrial markets to more predictably and precisely identify, analyze, and act upon real-time molecular insights. It plans on hiring 20 scientists and engineers and building a state-of-the-art optics lab to support its work.
“Metro Phoenix was the perfect fit for us as a fast-growing community offering a deep talent pool to draw from as we look to rapidly expand our local team. In particular, its proximity of pre-eminent university research programs aligned well with our needs for highly-specialized areas of technical expertise,” Anderson added.
While Arizona has witnessed companies from all industries relocate to Arizona, some commercial real estate sectors are experiencing more growth than others. With the increased data demand from increased home offices, online schooling and more, industrial property construction has intensified over the last year, with a buildout of more than 270 MSF across nearly 1,000 properties.
Warehouse construction has also increased to support the demand for manufacturing and production. Companies like Intel, Samsung and Amazon are just a few of the companies that have opened or plan to open warehouses in Arizona. Metro Phoenix ranks No. 3 in the Sun Belt for new construction, behind only the Texas markets of No. 1 Dallas-Fort Worth and No. 2 Houston.
“Although office rental rates are holding strong and positive net absorption, the office sector remains a question mark as many large corporations have just started transitioning back to the office,” Davis said.
The interest in medical office buildings has increased as Metro Phoenix continues to expand its economic and healthcare footprint. Net absorption for medical office space in 4Q 2020 reached 111,974 SF. 2020 ended with a positive net absorption in all four quarters. Demand is this sector is expected to remain high the remainder of 2021.
Out-of-state companies aren’t the only ones capitalizing on the market opportunities in Phoenix. Ouro Bubble Tea Co. is a new business that will serve the Valley soon. The boba shop will focus on providing exceptional quality teas paired with hand crafted boba and premium quality ingredients.
With the recent spike of activity in Phoenix, the company’s business owner, Tyler Doty, said he looks forward to growing his business here.
“Arizona is my home state and with our recent growth spurt and expanding food market diversity, I feel like it is the perfect place to open a blended cultural shop,” Doty said.
Brooke and Reanol Hackworth are a husband-and-wife team with an extensive background in health and fitness. They recently opened Sculpt & Sweat, a Scottsdale-based boutique wellness center that offers a unique approach to health and wellness by combining personal training, EMS (electro-muscular stimulation) smart suits, body sculpting, infrared sauna, and nutrition programs.
“We decided on opening our first store here because of various reasons,” Brooke Hackworth said. “We wanted to be close to family. We did it for economic reasons, affordability, and the quality of life here. We anticipate on hiring about 20 people soon. We are so grateful to have our business here in Arizona.”
“While a lot can still change before the end of the year, it’s evident that Phoenix is moving up to become a top tier market and compete with cities such as New York, Los Angeles and Chicago,” Davis said.