The year 2015 is a coming-of-age turning point for Arizona’s Phoenix (PHX) East Valley. Local governments and private sector initiatives have transformed the area from a Fortune 500 business relocation magnet to a region that can grow its own industry game changers. Areas of skilled workforce, innovation, and robust infrastructure are driving emerging business and helping to revive recovering sectors.
PHX East Valley residents have a lower than average median age (34.9) and higher educational attainment then the rest of the country. With the number of students currently enrolled in college and university programs approaching 140,000, the region has an annual “renewable” source for job applicants. This skilled workforce is developing new products and technology for the private sector, helping to retain and attract large business offering high-wage jobs in science, technology, engineering and math (STEM) areas. Among public-private economic development projects are Arizona State University's TechShop, a do-it-yourself workshop in Chandler, Ariz. and Heliae, a life-science research firm that develops algae-based products in Gilbert, Ariz.
The PHX East Valley is truly coming of age today largely due to years of highway, utility and airport infrastructure planning that have made it a highly-valued connectivity point for commerce. Work commutes are short and easily accessible through state-of-the-art transportation systems comprised of major highway and interstate routes. Four airports offer the optimal landscape for aerospace, defense, aviation and other high-tech industries to grow. Able Engineering, a Mesa-based aircraft parts provider, is a notable example of how local resources are retaining business and fostering development. The City of Mesa and the Phoenix-Mesa Gateway Airport Authority initially attracted Able to the East Valley by developing a bond financing mechanism that paid for the construction on their original facility. More recently, the company is partnering with the City and the airport to expand its building by 50,000 square feet and add 100 high paying jobs over the next several years.
“The economic growth and superior quality of life found in the PHX East Valley didn’t happen overnight,” said Roc Arnett, president of East Valley Partnership. “Public and private sectors have collaborated to create new sources of growth in well-performing industries that include high-tech, finance, manufacturing, and healthcare. This economic transformation has reignited the real estate industry.”
According to a 2014 fourth quarter Cushman & Wakefield Office Report, the East Valley represented the majority of significant lease and sales transactions in the Metro Phoenix area. North Tempe has the lowest overall vacancy rate of 10.8 percent, followed by the Chandler and Gilbert submarkets at 16.2 percent. Demand also increased from large users expanding or relocating to the market. As a result, average asking rental rates accelerated, reaching $21.05 per square foot, up 2.2 percent from 2013.
“Historically, the East Valley has thrived on real estate development and we’ve seen a significant comeback,” said Matt Nebeker, director at Cushman Wakefield. “The tech and R&D industry growth will continue to fuel the Southeast Valley activity and be very sustainable,” he said.
Significant lease and sales transactions in the market include Wells Fargo occupying nearly 200,000 square feet at 1150 W. Washington St. in Tempe and GM IT Innovation Center taking 113,171 square feet on Price Road in Chandler.
“2014 was the strongest year of the recovery, with more leasing activity and a depletion of large blocks of space. These are key indicators of cyclical shift and progress towards equilibrium,” said Jerry Noble, managing director of Cushman & Wakefield.
Noble commented the region’s emerging business clusters, saying, “It is clear that developers are satisfying existing demand and being judicious about building in highly desirable areas. The East Valley and Loop 101 locations continue to be in high demand, especially from tech and financial companies.”
The largest project underway is the 2 million-square-foot, mixed-use Marina Heights, located along Tempe Town Lake and anchored by State Farm. The first 370,000-square-foot building is expected to be complete in 2015. Another 250-acre mixed-use development, Rivulon, will offer ample office, retail and hotel space in Gilbert.
About PHX East Valley
PHX East Valley is a national initiative led by the East Valley Partnership to systematically publicize the outstanding business and quality of life assets in the East Valley region of Greater Phoenix. Campaign efforts include coordinated events, corporate collaborations and the growth and promotion of emerging economic clusters unique to the community. For more information, visit www.evp-az.org.
About East Valley Partnership
East Valley Partnership was created in 1982 as a 501(c)(6) nonpartisan coalition of civic, business, educational and political leaders dedicated to the economic development and promotion of the East Valley of Greater Phoenix. The partnership advocates for changes/improvements in areas such as economic development, education, transportation and infrastructure, arts, healthcare, and other important areas. For more information, visit www.evp-az.org.
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