Small Users Fueling The Valley's Industrial Condo Boom

Only a few industrial condos have been built in the Valley, primarily in the Deer Valley and East Valley areas, Hillery says, but more are coming. And they are being purchased as quickly as they can be built.

At the Deer Valley Business Center, a three-building, 72,000 sf complex at 1515 W. Deer Valley Rd. in Phoenix, seven of the 27 office condos are already under contract at shell space rates of between $105 to $115 per sf for space as small as 2,700 sf.

"The interest rate is a strong contributing factor," noted Hillery, who is marketing the Deer Valley property with Cushman & Wakefield's Jim Wentworth. "But people are also looking at ownership and the ability to control their own destiny. With their own building, they're controlling their own occupancy costs and adding value to their business." "It's become the newest niche market," Mike Goldwater, with Ross Brown Partners, tells GlobeSt.com.

Goldwater, who along with co-broker Jim Stockwell, is marketing the Elliott Business Center, a 147,500 sf industrial condo project at Elliott and McQueen roads that is among one of the first in the East Valley, says interest in the project has been so intense that 40 percent of the condos have already been sold or are in escrow three months before the center's scheduled January completion of Phase I.

"When you start looking at space below 8,000 sf, it becomes very difficult to find and below 5,000 sf, it just doesn't exist," Goldwater explained. "This project allows small businesses to purchase a condo as small as 3,300 sf and build equity."Goldwater says he anticipates the Elliott Business Center will be about 70 percent sold out at prices ranging from $95 to $106 by the time it is completed. Those units each feature an office area, small yard, access to three truck wells and street frontage.The demand for smaller industrial space is so high, both brokers says, that developers should soon begin building more of the units throughout the Valley.