Top 20 metropolitan areas saw a decline of 22 percent in construction activities through the first six months of 2020.
However, construction in Phoenix leaped to 82 percent. That’s an increase of $2.8 billion in projects, according to Dodge Data and Analytics. Since the start of the COVID-19 crisis, consumers have embraced the idea of shopping from local eCommerce boutiques and malls. As a result, the demand for manufacturing centers, warehouses, and distribution centers has increased dramatically.
During a virtual breakfast meeting of the nonprofit Valley Partnership, the voice of the real estate industry in the region, said Phoenix metro is benefiting a lot from the demand. This is because of its optimal location, where almost 35 million consumers reside within one day’s driving time of the Valley. Here are other reasons industrial development in Metro Phoenix will continue to grow over the next year and beyond.
The Valley’s “Value Added” Benefits
Kevin Czerwinski, Jenna Borcherding and Tony Lydon, three of the state’s leading experts in commercial real estate, say the region’s many value-added benefits will continue attracting investors. According to Lydon, managing director of JLL, many operators and occupants come to Arizona because they can save 30 to 40 percent of operating costs than other high-tax states. Other benefits include tax incentives for database centers, less government red tape, a large growing population base, and favorable weather.
Valley is Under Developed
Phoenix has plenty of room for commercial real estate development. The region has an industrial base of 350 million square feet, with 150 million square feet in the West Valley, inclusive of the ever-expanding 303 freeway corridor. With such vacant land, property investors are likely to flock to the region’s real estate market. In a bid to develop the bare lands, developers will require heavy equipment like compact trucks for site clearing, grading, and digging. The use of trucks will also increase demand for high-quality skid steer rubber tracks as contractors look to enhance efficiency.
Phoenix to Set Record for Industrial Construction in 2021
Industrial construction is set to increase by next year, as developers work hard to deliver about 14.8 million square feet of industrial space by the end of this year. This figure is more than double the supply in 2019. As a result of increased commercial development and construction projects, the sector will see a rise in job opportunities.
According to leading experts, Phoenix’s industrial development projects will continue to leap in 2021 and beyond. This is because of the optimal location and value-added benefits in the Valley. The vast underdeveloped land is also a key factor luring developers to invest in commercial real estate.