Interview: Riding Phoenix’s Unparalleled Industrial Wave

by Adriana Marinescu

“Higher and higher” seems to be Phoenix industrial sector’s motto, as the metro’s pipeline grows with each passing month. According to a recent CommercialEdge report, the Valley had nearly 25.6 million square feet of industrial space underway as of August. Phoenix is also the nation’s absolute champion when it comes to planned and under construction industrial developments, as its total pipeline reached a soaring 24.3 percent of stock.

Scannell Properties holds a portfolio of more than 84 million square feet of developed industrial space across the U.S. and Canada, and has recently established a Phoenix footprint.

The company’s largest project in the Valley as of yet will be known as Dove Ranch 202 Business Center. The first phase is projected to include 1.2 million square feet of industrial space across five buildings in Laveen, while Phase 2 could include six to 10 buildings, totaling up to 1.9 million square feet.

In this interview, Scannell’s Director of Development Scott Moe unveils the latest on the company’s expansion in Greater Phoenix, as well as his views on the future of the local industrial sector.

What attracted you to Phoenix?Moe: Phoenix has one the fastest-growing populations and one of the most dynamic commercial markets in the country. There is a strong corporate and employment base, university system, good infrastructure and aggressive community governments. In addition, the shrinking supply of quality industrial land at affordable prices in California is driving industrial users to seriously consider Phoenix.

When did you enter the Valley? What was your first project in the metro?

Moe: Scannell’s’ first project was a 750,000-square-foot distribution facility in Buckeye for national retailer Five Below. We broke ground on that project in July 2020, with a completion date of July 2021.

Also in 2020, we purchased a 90,000-square-foot freezer/cooler building in Tempe, made a fair amount of capital improvements and then sold it to an investor buyer earlier this year.

Tell us more about your current portfolio in the metro.

Moe: We have a 45-acre site in Glendale at the intersection of Bethany Home Road and Loop 303 where we are currently constructing Phase 1 of 303 Commerce Center, a 388,260-square-foot speculative distribution facility. The project will be completed this October. We’ll break ground on Phase 2, also of 388,260 square feet, sometime in 2022.

We recently purchased 166 acres of land at the intersection of Highway 202 and Warner Road in Mesa. Gateway 202 is a master-planned business park where we’ll build approximately 1.7 million square feet of industrial and tech space. We’re planning to break ground on three speculative buildings totaling approximately 700,000 square feet in the fourth quarter of 2021. The business park offers great visibility to Loop 202, and we’ve set aside significant acreage fronting 202 for build-to-suit projects.

We also have under contract 240 acres of land in Laveen at the intersection of Dobbins Road and Loop 202. We are currently in the PUD approval process with the city of Phoenix and expect to be shovel ready in early 2022. We anticipate construction of approximately 3.5 million of industrial and tech buildings in the Dove Ranch 202 Business Center. We’ll break ground on a speculative component in 2022.

We are anticipating attracting tech companies to both Dove Ranch 202 and Gateway 202 parks because of a strong labor pool, great access, attractive park environments, good amenities and welcoming communities.

Rendering of 303 Commerce Center. Image courtesy of Scannell Properties

Are you eyeing more development sites in the area?

Moe: We’re constantly shopping for more land sites to fill in the submarkets where we do not yet have a strong presence. As an example, we’ve pursued redevelopment sites west of the airport and in north Phoenix, and will continue to look at other options as well. We’re always looking for value-add opportunities wherever they may be located.

How do you see the future of the South Mountain technology corridor?

Moe: With the expansion/completion of Loop 202, the foundation for a successful South Mountain tech corridor is in place. There is good transportation access, a substantial educated employment pool, quality, affordable land options and a willing and aggressive community waiting to woo potential companies.

How does Phoenix fare against other Western markets that you’re currently active in?

Moe: Phoenix fares very well against all southwestern markets. The labor pool is exceptional, the transportation arteries are good and, in addition, Phoenix is aggressive in attracting companies, which equals favorable economics. The metro is seeing a lot of distribution center activity from Southern California, specifically the Inland Empire, because land prices are becoming prohibitive there.

Rendering of 303 Commerce Center. Image courtesy of Scannell Properties

The COVID-19 pandemic has escalated e-commerce by 5 to 10 years and our 303 project is capitalizing on this market. Consumers are ordering more and more from home, and expect to receive their goods quickly. So, facilities are being constructed close to where customers live. Across the country, Scannell has more than 60 distribution center projects under construction.

How long do you expect the Phoenix industrial boom to last?

Moe: How long the industrial boom will last is anybody’s guess. If you put 10 economists in a room you’ll get 10 different opinions on that issue. We certainly don’t see things slowing down in 2022 and 2023. Beyond that, who knows?

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