West Valley Update

EMERGING EMPIRE

The Loop 303 corridor in the West Valley is becoming a global center for development

By STEVE BURKS

The drive along the 36-mile length of the Loop 303 freeway in the West Valley takes well under an hour. The trip goes fast, but not quite as fast as the land along the 303 is being gobbled up by developers and filled with massive manufacturing and logistics facilities.

“Developers from all parts of the country have been planting flags in that area. For the most part, that corridor is spoken for,” said John Lydon, vice president at JLL, who represented one of those newcomers to Arizona, CRG, which purchased land near Reems Road and Northern Avenue in Glendale, near the intersection of the 303 and Northern Parkway. CRG, which is based in Chicago, is teaming up with Phoenix developer Bird Dog industrial to build a 5.5 million square foot industrial park called The Cubes at Glendale.

From the freeway’s southern origin at the I-10 north to Olive Ave., major developments are underway. The 1,600-acre PV | 303 was the first development along the freeway and has since gotten company with other major developments like Park303, Camelback 303, Woolf Logistics, West 303 Logistics and Sarival Logistics all planning to bring many millions of square feet of development.

“You could start calling that area the West Valley Empire, similar to the Inland Empire over in California,” added Lydon. “Its a fair comparison with the amount of growth and the amount of corporate activity that seems to just keep going.”

Currently, all of the activity along the 303 is industrial and logistics, but a recent announcement could shift that trend. At the other end of the 303, where the freeway meets up with I-17 in north Phoenix, global giant Taiwan Semiconductor Manufacturing Company (TSM) purchased 1,129 acres of former State Trust Land just north of the 303 and south of Hwy 74 and revealed plans to build a $12 billion factory.

“We zoned 3,500 acres over the summer, so we zoned the land that’s boundaried by the 74 and the 303 and the 17 and Dead Man’s wash,” said City of Phoenix Economic Development Director Christine Mackay. “That we zoned for economic development purposes. TSM was the successful bidder at the auction most recently, so they got close to 1,200 acres. That is of course our anchor tenant and it’s exactly the anchor tenant that you would want. Someone that is globally recognized in advanced industries. It unlocks the potential of the balance of that 2,300 remaining acres as a science and technology park, as high-end office, as flex tech and manufacturing that is along that technology front.”

With the arrival of TSM, the story of the 303 adds a new chapter, one of huge economic impact that stretches the full length of the freeway.

THE BEGINNING

The 303’s origins date back to the 1985 Maricopa County Regional Transportation Plan that was approved by voters. The freeway was originally scheduled to be completed in 2005, but a variety of setbacks pushed the completion all the way to 2017.

The freeway cut through farm land and state trust land for the majority of its route, but there was already residential development along some stretches, notably Surprise and Sun City.

Well before the freeway was completed, SunCor was at work making plans to develop 1,600 acres on both sides of the 303, started on the west side

BREAKING NEW GROUND: Kicking off construction of Park303 are Glendale Vice Mayor Ray Malnar; Councilmember Joyce Clark, City of Glendale; Sintra Hoffman, president and CEO, WESTMARC; Glendale Mayor Jerry Weiers; Paul Hughes, executive vice president of business development, Arizona Commerce Authority; David Krumwiede, executive vice president, Lincoln Property Company; and Councilmember Bart Turner, City of Glendale.

of the 303 at Thomas and stretching north to Camelback. In 2009, SunCor sold the land to John Graham and Sunbelt Holdings, who formed a partnership with Merit Partners to develop what they called PV|303.

“For those who don’t know what “PV” stands for – it’s Palm Valley which is a development in Goodyear,” said Kevin Czerwinski, president of Merit Partners, which is also developing the 615 acre Camelback 303 industrial park. “The purchase of what is now PV|303 occurred in July 2010 when there wasn’t the Loop 303 freeway, there was negative absorption of industrial real estate, and it was very difficult to find a financial partner for such a large purchase of land. John Graham had the vision and guts to move forward in what was a dicey time in our market.”

The PV|303 development began to attract some marquee tenants, including REI, Dick’s Sporting Goods and Ball Corporation. So far, Merit Partners has developed ten buildings at PV|303, totaling 4.6 million square feet. Czerwinski said that Merit is also currently under construction on two more buildings that will add 1.3 million more square feet of product to the market.

“We also have five other buildings in the site plan approval process totaling approximately 1.8 million square feet with construction commencing in the third quarter of 2021 which will consist of buildings from 120,000 square feet to 650,000 square feet that will be expandable,” said Czerwinski.

Czerwinski said that there are currently seven developments currently in the works along the 303. In the next six months, Czerwinski said there will be nearly five million square feet of product breaking ground in that area.

“There are several developers/ investors that have placed their bets on many of the remaining sites along both sides of the Loop 303,” Czerwinski said.

PLACE YOUR BETS

The rush of activity along the 303 was triggered by a number of factors, chief among them being the rising costs of development in California. Slowly, companies were starting to realize they could build a distribution center or manufacturing plant in the West Valley of Phoenix for much less than a facility would cost in the major cities in California. And, the ports of Long Beach and the border with Mexico were within a few hours’ drive by truck.

“The Southwest Valley of Phoenix has always been the industrial and manufacturing corridor,” said John Orsak, vice president for Lincoln Property Company, which is developing the Park303. “You can get to the ports in six hours, drop your shipment and get back home, all within allowable times. And the further west you are, the closer you are to those ports. It makes sense that industrial is going to locate closer to the ports.”

Orsak said LPC was fortunate in their timing to acquire the 265 acres that make up Park303, which is along the east side of the 303 at Glendale Ave. Orsak said a land partner had brought the property to LPC well before

LAYTONCONSTRUCTION.COM

Kevin Czerwinski Jeanine Jerkovic

any other developers had expanded that far north along the freeway.

“We went out there and I remember taking our partners out there and they said, ‘Wow, this PV|303 stuff looks great. Why are you still driving North? Where are you going?” Orsak said. “We went two exits up and it’s good, flat, big parcels and you can put big buildings on it. It was pretty easy to see.

“We were validated whenever Covid came along and set the e-commerce world on fire. Now all of these big boxes and the demand for e-commerce and distribution is like nothing we’ve ever seen before.”

That demand is what is leading companies like CRG to make their first foray into Arizona. Lydon said that he started working with Mark Sonnenburg from Bird Dog Industrial and his partners at CRG to identify land in the corridor that CRG could purchase. Initially, Lydon found 100 acres, but soon CRG realized that there was more potential in that market that they wanted to seize upon.

“As the search progressed, they really became bullish on Phoenix’s future and decided to take a much bigger stake out of the 260 acres that they just closed on and we’ll be closing on an additional 80 acres here in March to bring the grand total of the park to 335 acres, so three times the size that they had originally planned for.”

Lydon said The Cubes will complement the other developments along the corridor quite well. He said The Cubes is unique in that it is highly flexible, well suited for any customer needing 150,000 square feet of space or more.

“These buildings offer capability and flexibility,” said Lydon, who also noted that his information puts the amount of acres still in play for developers along the 303 at just 1,400. “We’ll be coming out with a 1.2 million square foot spec building, breaking ground in March, as well as we have the capability to offer build to suit options for lease or sale.”

Nearly all of the buildings along the 303 are speculative, as developers want to get product to the market as quickly as possible.

“You’ve got to move fast,” said Orsak. “That’s why we’ve been building our buildings spec, because people aren’t willing to wait a year, year and a half to get into something. They need to go now and the West Valley municipalities have figured that out and have not stood in the way.”

John Lydon Christine Mackay

THE NEXT FRONTIER

The majority of initial development along the 303 was happening in Goodyear, but in the past year, Glendale has been the center of most of the new activity. Other municipalities along the 303 are working to take advantage of the freeway access.

In Surprise, the 303 transitions into a lifestyle, amenity-anchored corridor with retail and residential opportunities. In 2020, Costco opened a new location in Surprise along the 303 on Waddell Rd., and City of Surprise Economic Development Director Jeanine Jerkovic said that triggered more development in the area.

“Simon CRE has submitted a Prasada Village Master Plan proposal that offers more than 890,000 square feet of retail, restaurants and entertainment uses in that corridor,” Jerkovic noted. “There are opportunities for future office and manufacturing campus development, as well.”

As the freeway travels north and east, there’s very little activity when it hits the Phoenix borders, but that will not be the case for much longer. Mackay said that the amount of land along the freeway that resides in the City of Phoenix totals 12,000 acres, much of which is still State Trust Land. The arrival of the TSM facility will likely set off a chain reaction in that area.

“If the potential of that facility can be fully realized, could it be analogous to the role that Intel plays down in Chandler?” asked Larry Pobuda, executive vice president at The Opus Group. “Intel has spawned not only this very large anchor of a company down in Chandler, but a key residential market, a number of companies want to be down in Chandler because of Intel and its adjacencies and strong retail, strong demographics, well educated workforce. That’s the closest analogy that I could make as to the possibilities and that’s tremendously exciting.”

“It will have a positive impact for all product types in the West and Northwest Valley,” added Czerwinski. “The number of jobs that will be created by TSM and their tier 2 suppliers and additional tiers of the supply chain will be a fantastic opportunity for all aspects of real estate — industrial, retail, flex/office, residential, multifamily, etc.”

Mackay, who served as economic development director for the City of Chandler from 1998 to 2014, is very familiar with what impact a company like TSM can make for a region.

“To us, we’ve got this incredible opportunity that was, quite frankly, not in any economic development short term radar until about a year ago,” Mackay said. “It’s even surprising me how quickly that the 303 is drawing business into the area.”

John Orsak Larry Pobuda

UNDER

CONSTRUCTION

By MICHAEL GOSSIE

Here are some of the projects that are reshaping the landscape of the West Valley

If it seems like there is a constant stream of construction news coming out of the West Valley, you’re not mistaken. The West Valley has been a hot spot for mega-projects. From housing to industrial to hospitality, the West Valley is bustling with current construction projects. Here are some of the projects, in alphabetical order, that are currently under construction.

BROOKLYN BEDDING

The project: Brooklyn Bedding is building a state-of-the art manufacturing facility and corporate headquarters in Glendale. The 648,165-square-foot building will be located on 42.8 acres at the crossroads of West Bethany Home and 52nd Avenue.

Developer: Brydant Real Estate Architect: Ware Malcomb General contractor: Alston Construction

BUCKEYE85

The project: Recognizing the growing demands of Phoenix’s supply chain infrastructure, LPC Desert West bought nearly 20 acres in the I-10 corridor for Buckeye85. The new 321,873-squarefoot, Class A industrial project will deliver the location, flexibility and creative industrial amenities desired by mid-size users in today’s modern omnichannel marketplace.

Developer: LPC Desert West Architect: Butler Design Group Civil engineer: Hunter Engineering

CABANA ENCANTO AND CABANA BULLARD

The projects: Greenlight Communities is the first company to innovatively focus solely on building “attainable” housing to fill the void between affordable and luxury apartments, using a leading-edge business and development model to create a one-of-a-kind housing alternative for its residents.

Developers: Greenlight Communities and Holualoa Companies

COWDEN LOGISTICS CENTER

The project: Located in Tolleson, the facility includes 36’ clear height, 237 car parking stalls, 41 trailer parking stalls, five points of ingress and egress, R-38 insulation, and an ESFR sprinkler system.

Developer: Trammell Crow Company Architect: Butler Design Group General contractor: Wespac Construction Broker: Cushman and Wakefield

FAIRWAY 10

The project: Fairway 10 in Avondale will include two single-loaded buildings of 162,000 and 170,000 square feet, well suited for two to four tenants, as well as one 390,000-squarefoot cross-dock building appropriate for one to two tenants.

Developers: Westcore and The Opus Group Broker: JLL

GATEWAY 303

The project: Located at the northwest corner of Loop 303 and Thomas Road, Gateway 303 will be part of PV|303, a 1,600-acre master-planned business park approximately 25 miles west of Downtown Phoenix and Phoenix Sky Harbor International Airport.

Developer: MDH Partners Architect: Butler Design Group Civil engineer: Hunter Engineering General contractor: ARCO Construction

BUCKEYE, AZ FACTS:

ONE OF THE FASTEST GROWING CITIES IN U.S.

3,343 2020 SFR PERMITS

100,000 POPULATION

(CITY 2021 ESTIMATE)

People have taken notice of everything Buckeye has to offer, from a business-friendly environment to open spaces, residential growth and access to a skilled and educated workforce. Buckeye is Arizona’s largest city (640 sq. miles), and offers unique development opportunities ready to meet your investment needs. • Perfect Location for Advanced Manufacturing & Distribution and Logistics • Rail-Served Megasites • Foreign Trade Zone no. 277 • Opportunity Zone Sites • State & Local Incentives • Commercial Districts

1.45 MILLION LABOR FORCE LESS THAN ONE DAY TURNAROUND

GRAND CANYON UNIVERSITY RESIDENCE HALLS

The project: GCU is adding three, six-story, 242,000-square-feet residence halls with approximately 600 single-occupancy sleeping units for Fall of 2021 — just in time for what the university anticipates to be its biggest year ever in enrollment.

General contractor: Pono Construction Architect: Suoll Architects

JOHN S. MCCAIN III ELEMENTARY SCHOOL

The project: This state-of-the-art school will be located on land donated by the Walton Group, near Miller and Lower Buckeye Roads in Buckeye.

Architect: Orcutt Winslow Architecture Firm General contractor: Chasse Building Team

LOGISTICS COMPANY BUILD-TO-SUIT IN GOODYEAR

The project: Westcore is building the distribution center within the PV|303 industrial park. With 36foot clear height, ESFR and secure site trailer storage capacity, the cross-dock facility will offer features in high demand within the industrial market.

Developers: Westcore and Merit Partners Architect: Butler Design Group Civil engineer: Hunter Engineering General contractor: Stevens-Leinweber Construction

PARK303

The project: Park303 is a major industrial masterplanned development that at build-out will accommodate up to 4.5 million square feet of ultra-modern, freewayfronting Class A industrial space in Glendale.

Developers: Lincoln Property Company and Roth Development Corporation Architect: Butler Design Group Civil engineer: Hunter Engineering General contractor: Willmeng Construction

THE CUBES

The project: CRG is developing The Cubes at Glendale, a 335-acre industrial park featuring 5.5 million square feet at the intersection of Reems Road and Northern Avenue in Glendale.

Developers: CRG and Bird Dog Industrial Broker: JLL General contractor: Clayco Architect: Lamar Johnson Collaborative.

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