The Greater Scottsdale Airpark experienced many of the same pandemic effects faced by other Valley commercial real estate submarkets, according to a report from Colliers International. During 2020, retailers, restaurants and hotels struggled with diminished customers. Yet, the submarket grew its jet traffic, becoming home base to five or six more Falcon 7Xs, Falcon 900s and Bombadier Challenger Business Jets. Landlords in the Airpark took advantage of company employees working from home and utilized the time to renovate and modernize building public areas.
“This past year has brought paradigm shifts to every realm of life,” says Jim Keeley, SIOR, CCIM, founding partner of the Scottsdale office of Colliers Arizona. “The Greater Scottsdale Airpark has been one of the most resilient submarkets in the Valley and continues to hold that position. While the pandemic has created vacancies and sublease space, the impact has been relatively minimal and not impacted rental rates.”
Some office landlords in the Airpark have offered temporary rent relief, deferring payments to 2021-2023. However, we have not witnessed any significant, hard-hitting downturns in the submarket.
FANG companies (Facebook, Amazon, Netflix and Google) have been dominating the commercial real estate market in Greater Phoenix. While the Scottsdale Airpark has not been the site for any of these specific companies, they have nonetheless put a stimulus into the tech industry overall. The Airpark has seen many positive ripple effects of this tech expansion.
The 460,000-square-foot, first phase of Nationwide Insurance’s project was delivered at the northwest corner of Hayden Road and Loop 101. A 50,000-square-foot office building for a tech campus is also under construction. In October 2020, the Arizona State Land Department (ASLD) auctioned 57.6 net acres to Axon, which will be used for construction of the company’s new headquarters in 2021. The ASLD is currently working to auction off 50-100 acre parcels along the Loop 101.
Vacant taxiway access lots are in short supply, so a couple of buildings on the east side of the runway are being redeveloped to accommodate larger aviation hangers. The building at 15570 N. 83rd Way is under major reconstruction. A 23,000-square-foot building sold in 2020 is also being repurposed into a larger hanger with offices. These renovations of older, functionally obsolete buildings will enhance value to all of the surrounding properties.
The pandemic has also enhanced companies’ and building owners’ focus on Environmental, Social and Governance (ESG) issues. These concerns have been in the forefront for the past five years and have been more of a focus during COVID. As investors look at their portfolios, they have had more time to evaluate these factors.
In addition to these commercial real estate activities, 2020 brought more apartments to the Greater Scottsdale Airpark. The Manor Scottsdale broke ground on 286 units at 13220 N. Scottsdale Road, Wood Partners broke ground o 330 units at Alta Raintree and 140 Optima Kierland added 213 more units.
The future of pricing for commercial real estate remains elusive as we await resolution of the COVID-19 crisis. The employee base is growing in the submarket and companies continue moving here, so we anticipate a robust, healthy recovery as pandemic conditions diminish.