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, "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.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.