The land cost in the fast-growing suburb of Chandler has risenso dramatically in the past few years that it would be difficult,if not impossible, to develop a multi-tenant industrial project andstill offer rents anywhere near the going rate, Pat Feeney, abroker in the Phoenix office of CB Richard Ellis, tellsGlobeSt.com. "Land values have gone up," he says. "To buy land andbuild from the ground up, the lease rates would be off the charts.The rental rates to justify the development of that would beprobably 25% to 30% higher than existing rates."

As long as the occupancy rate remains in the 90% range in theChandler area, expect that rents will continue to rise, saysFeeney. "It's a good value," he adds.

At the second quarter end, the industrial vacancy rate was 5.8%,1.4% below the Valley's average. Chandler is also one of the fewsubmarkets that had positive net absorption during the secondquarter. More than 60,000 sf of industrial space was taken off theChandler market during the quarter while the overall marketexperienced more than 1.8 million sf of negative netabsorption.

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