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PHOENIX-Chicago-based First Industrial Realty Trust has kicked off work on a 259,000-sf project near Sky Harbor International Airport in Phoenix. Estimated development costs are more than $15 million.

The Red Mountain Freeway Center consists of two 62,400-sf flex buildings and a 131,700-sf structure on the site of the former East High School. A 9.4-acre tract is being held in reserve for a 110,000-sf build-to-suit.

The project site is at the southeast corner of 48th Street and the Red Mountain Freeway section of Loop 202. “Any user that’s coming to town will want to be centrally located and be close to the freeways and near the airport,” David Carder, a broker in the Phoenix office of CB Richard Ellis, tells GlobeSt.com. “This building has all that, and is close to downtown Tempe and downtown Phoenix. They can draw employees from just about any part of the Valley.” Tenants also have a perk in that their signs will face Loop 202, which falls just north of the property. A May 2002 delivery is planned.

Carder, the project’s listing broker, says the structures are designed with maximum flexibility, capable of supporting a back-office operation and parking ratios of six vehicles per 1,000 sf. Ceilings are 25-foot clear heights and the buildings’ backs are below grade to accommodate truck wells. The entry is corporate-style and includes a mezzanine. “We can do just about any use,” he says.

The airport submarket has fared better than most in the Valley during the economic slowdown. Through the third quarter, the Sky Harbor area has posted positive net absorption of 357,000 sf in sharp contrast to the Valley’s overall 700,000-sf negative net absorption. The submarket’s vacancy stands at nearly 8% whereas the Valley’s overall rate is 8.7%. “The airport market has consistently performed well,” Carder says. “The airport is located in the middle of town and it’s an economic engine. This property has been well received by users.”

The airport expansion is driving a demand by tenants, with Sky Harbor officials developing a game plan to eventually displace many industrial buildings. Particularly hard hit will be the airport’s north side near Washington Street, where buying is under way as buildings are vacated. Tenants who want to remain in the area will have to look for new space, Carder says.

The Phoenix firms of Patrick Hayes Architects and Summit Builders hold the architectural and general contracting awards, respectively. Carder along with CB Richard Ellis’ Bob Crum and Mark Krison are marketing the project for First Industrial, which has two other projects under way in the Valley.

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