BUSINESS

from MESA TRIBUNE SOUTHEAST, JULY 3, 2022

by Times Media Group

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For Gateway Grand industrial park, size matters

BY SCOTT SHUMAKER Tribune Staff Writer

Officials celebrated the groundbreaking on a 2.1-million-square-foot industrial park on the northwest corner of Pecos and Sossaman Road that may add to Mesa’s stock of 1 million-plus square foot industrial buildings. These large footprint buildings are increasingly in demand from manufacturers looking to set up shop in the East Valley, and the project may help the city maintain its economic momentum as the possibility of an economic slowdown in the wider economy looms. Mesa City Council gave the green light for the Gateway Grand project on March 21, and contractors are not wasting time getting started. At the June 28 groundbreaking, work was well underway as dignitaries spoke over the rumble of heavy machinery leveling the land in preparation for the project’s three titanic buildings. Gateway Grand, originally called Unbound Gateway, was re-christened after real estate giant Greystar purchased the property from Phoenix-based Unbound Development earlier this year. The price tag for the 155-acre property was $43.7 million, according to the Valley real-estate tracker vizzda.com. It’s a sizable bet by Greystar that the market is strong for these behemoths, as the project is being built “on spec,” meaning there isn’t a tenant already lined up. Greystar started in 1993 as a blue-chip developer and owner of rental housing developments, and recently it has aggressively entered the industrial real estate sector. The company currently manages 733,377 rental units in 290 projects across North America, including several in Mesa, such as The Grove on Main. Gateway Grand will be the company’s first Class A industrial project in Arizona. “We wanted to plant a flag in an area where we knew we would have success,” Greystar Managing Director Billy Cundiff said of the company’s decision to invest in the East Valley. City officials at the groundbreaking touted Gateway Grand as a step in the growth of Mesa’s Pecos Advanced Manufacturing Zone, an area Mesa has targeted for job centers with investments in infrastructure and incentives. In his remarks, Mesa Mayor John Giles noted the success of other large industrial projects in recent years. “I think this is what’s called a safe bet, right?” Giles said of industrial development in this area. “I mean, how many empty big buildings do you see around here? That will be zero. So it’s going to be fun to see how quickly these buildings go out and what additional really cool logos we add to the city of Mesa moniker.” The Gateway Grand buildings will offer prospective tenants big spaces suitable for manufacturing products like electric vehicles, medical devices and batteries – industries that have found their way to the East Valley. In the first phase, contractors will build two 500,000-square foot buildings, planned for completion in May of 2023. The second phase consists of a single building with over 1 million square feet under roof. Marketing materials for the project boast of the buildings’ 7-inch concrete slabs with 40 feet of interior height – features that accommodate heavy machinery. Greg Ringle, the vice president of construction for project contractor Derek Builders, said the company would be pouring 50,000 cubic yards of concrete at the site in the next year, or enough to build a sidewalk from Mesa to Tucson. Ringle threw out other stats to highlight the scale of this project. “We’re gonna put over 156,000 man hours into this site,” Ringle said. “We’re going to move 40,000 cubic yards of dirt, and we’re gonna burn 160,000 gallons of fuel getting that done, and y’all know how that feels going to the gas pump today.” Pete Wentis, senior vice president of CBRE, the firm in charge of signing up future tenants for Gateway Grand, said the market is currently strong for manufacturing space in the East Valley. “We can’t build the buildings fast enough” to keep up with demand, he said, noting that many new projects are reaching completion fully leased. The arrival in the East Valley of high tech manufacturers has created momentum, Wentis said. He said of many national companies, “if they’re not in Phoenix (yet), they’re trying to get in Phoenix.” But while Mesa’s industrial real estate market has been hot, there are signs of cooling in the broader economy. The Federal Reserve raised interest

City and Greystar representatives broke ground for the 2.1-million-square-foot industrial

park called Gateway Grand. (David Minton/Tribune Staff Photographer)

rates .75% to combat inflation, and Mesa’s financial planners are anticipating an economic cool down in 2024. Wentis said that higher interest rates could make financing for business expansions more challenging, but he said “the demand side of the equation is still very strong.” He said there is good access to power, water and fiber beneath Pecos Road, and the area has good access to transportation, including the freeway and possibly rail in the future, as Union Pacific Railroad is working on adding a 6-mile track through the Pecos manufacturing zone “If you’re backing that industrial cake … we’ve got all the ingredients for success,” Wentis said. 