Here’s how the West Valley is benefiting from the development boom

IIt’s no surprise to know that industries in the West Valley are booming. Major companies such as Taiwan Semiconductor Manufacturing Company, KORE Energy, and countless logistics companies are all investing as people continue to move rapidly through the region. What will the new West Valley look like with all this development?

The Greater Phoenix has attracted labor due to the historically low cost of living, a cheap labor market, and eternal sunshine. Development goes beyond a workplace. It is to create a place of work and life.

In Maricopa County, 40% of residents live in the West Valley, and it is expected to be home to 2.1 million people by 2030.

READ ALSO: The 303 Loop Corridor Becomes a Global Center of Development

The median household income is $75,556 in the West Valley, which is $10,000 higher than the national average. The median home price sits about $10,000 below the national average at $229,579. It also has a strong labor force, with 63% of West Valley residents being part of the labor force.

According to Thomas LaSalvia, senior economist at Moody Analytics, rental growth in the metro area saw 22.5% rental growth well ahead of the rest of the country. LaSalvia explains that Phoenix is ​​one of 14 of the 82 major metropolises whose employment rates have fully recovered after the initial decline in March 2020.

Companies in all sectors of commercial real estate development – ​​industrial, office and retail – see the advantage the West Valley has not only to the state but to the nation.

The construction of the 303 loop has certainly opened up new potential to the west by creating easy access to land that was previously cut off from the Phoenix metro. It served as the basis for the development of a new section of Metro Phoenix.

WESTMARC Chairman and CEO Sintra Hoffman said, “In the West Valley we have the talent that lives here locally and no one wants to drive anymore, especially after the last year and a half.”

Work is underway on a three-building industrial development that sits along Interstate 10 in the city of Phoenix. ViaWest Group and its construction partners Willmeng Construction, Butler Design Group and Kimley-Horn officially opened the 512,710 square foot Converge Logistics Center on Friday, January 28.

West Valley Industrial Development

The industrial sector is booming, with more than 25 million square feet currently under construction.

“It has been a phenomenal year and the markets have moved extremely quickly in terms of land prices, rental rates and construction costs. Material availability is an issue. 2022 is looking good, but it’s moving really, really fast,” says Steven Schwarz, founding partner of ViaWest Group.

Significant delays still plague many markets, with development being no exception. This impacts project delivery dates for current and future complexes.

“I would say that users these days need the building as soon as possible. And we are now unhappy to have a later than earlier delivery due to hardware delays,” says Jeff Foster, vice president and market manager at Prologis. “The silver lining is that having this hardware delay puts us in a bit of a headwind and could be a good thing. So we’re not delivering too many things at once, but users need it now. They can’t wait .

While Metro Phoenix is ​​supposed to have endless space to expand, it doesn’t. Pat Feeney, executive vice president of CBRE, explains that they work with two site selection companies and both classify Phoenix as a constrained market.

“When you talk to people from out of town, they look at an aerial photo of Phoenix and see there’s land from here to Blythe. But there has to be water, sewers and electricity,” says Feeney.

The available and developable land in the West Valley is quickly monopolized.

“We didn’t all know how spoiled we were when we were going down the 303 and blocking off all the sites that had water and sewers. All of a sudden, it’s almost impossible to find a site in this corridor. Now at Ryan Companies, we’re scouring the valley to see where we can go, and many options have infrastructure issues,” says Josh Tracy, assistant director of real estate development at Ryan Companies. “It will potentially be years before we can go somewhere and do that much expansion.”

Tony Lydon, JLL’s chief executive, explains that the Phoenix metropolitan area is about 400 million square feet, which is small compared to a city like Dallas, which is about 1.3 billion square feet.

“We’re not going there. But we’re going to go from 400 million feet to 600 million feet here in the not too distant future, and that’s just our food group,” Lydon notes. “It’s a market where people want to come and live for many reasons.”

With large industrial complexes come job vacancies.

James Murphy, President and CEO of Willmeng, explains: “The Greater Phoenix is ​​going to attract people (from other areas), which is how it historically solves the problems of labor supply and demand. We don’t usually train them to come here. We suck them in with the price point.

According to the Bureau of Labor Statistics, in Arizona, transportation and material moving occupations account for 241,750 jobs and construction and quarrying occupations 137,490. This shows that employment at these manufacturing sites represents a much of Arizona’s workforce. This does not include other roles associated with these facilities.

Another big West Valley industry along I-10 is healthcare. According to Hoffman, 36% of all healthcare workers in Maricopa County live in the West Valley, with 48% living and working on the West Side.

The independent $135 million Phoenix’s Children’s Hospital being built on the Arrowhead campus in Glendale is an example of the strengthening of this industry in the West Valley.

There is development beyond the industrial complexes.

Integrate life and business within West Valley Development

When it comes to integrating live, work, play, GEN 1, part of the GSQ project in Goodyear, is a prime example. Located at McDowell Road and 150th Drive, the site, the first stage of which is expected to be completed in June, will include the 125,000 square foot Goodyear City Hall building, a library, a three-storey Class A office building floors, with a two-acre lot to park in the center.

The development also makes history, bringing the first-ever parking garage to Goodyear.

Looking ahead, the project team from Globe Corporation and CBRE is talking to a multi-family developer to combine a residential aspect to the site. In addition to the multi-family, retail will be added in the future, as well as potentially another office building to frame the park.

Just west of the site is the Estrella Falls Market, providing access to retail and restaurants, and just across 150th Drive to the east is a Harkins Theatre, making the site an ideal location for a city center.

“It’s going to be really exciting and it’s going to really help energize the workforce that’s going to be here,” said George Getz, president and co-CEO of Globe Corporation.

The GSQ site also supports the Bullard Wash linear park, which not only provides the aesthetics of a large open green space, but a pedestrian entrance to amenities.

The COVID-19 pandemic has undoubtedly changed the way we work and the needs for office space. In the West Valley, there are only two million square feet of office space. Of this area, there is only 12% vacancy, most of which is Class B and C office space.

“I think the hybrid model [work from home and office] is here to stay, but I think people need an office,” Getz says.

The office building, part of GSQ, currently offers office space in the west. He explains that with today’s material constraints and rising costs, it may be some time before more offices are built.

In addition to offices, more retail businesses are added to support new residents and their needs.

West Valley rretail development

Retail development has changed in the recent past. Josh Simon, Founder and CEO of Simon CRE, says “indoor malls are dead”. His company is doing projects across the country, and he and his team are seeing how successful the Metro Phoenix market is.

Village at Prasada, located on the southeast corner of Waddell Road and Loop 303 in Surprise, is a mixed-use development whose first phase, 300,000 square feet, will be delivered in the third quarter of 2022. Simon says they are currently 100% lease or letter of intent for development.

“The West Valley is hot, and people see there are people living there and income to support it. Also, there really isn’t another destination like this centre,” says Simon.

These developments will bring large retailers, small boutiques, restaurants and entertainment to the West Valley.

“People look at the growth of West Valley and think of the 303 loop. I think one thing that’s really starting to happen is infill. There are some areas east of the stadium around 75th Avenue in Glendale where we see a homebuilder rezoning quite a few acres from industrial to single family. You see townhouses being built and more apartments,” says Simon. “A lot of these areas inside the 101 loop will get a lot more attention, and we’re going to see a lot more growth and redevelopment in that area.”

Another place in the valley that may catch the eye in the years to come is the expansion of the 202 loop.

The area has constraints, Lydon explains, zoning being one. Schwarz adds that much of the growth begins within five miles of the respective connections to other highways.

Foster concludes, “I think Phoenix is ​​extremely well positioned for the future.”

Sara H. Byrd