As the local industrial market approaches historically low vacancy rates, concern was growing that 蜜柚直播 could be passed over by companies looking to expand.
But two major projects near the airport could help bring those companies to town.
Local developer Ben Day has broken ground on a 76,200-square-foot speculative industrial building on Valencia Road and 蜜柚直播 Boulevard.
With smaller bays and 28-foot ceiling heights, the Daybreak Distribution Center will be ideal as a warehouse and distribution site for companies such as Amazon or UPS.
鈥淲e can accommodate a couple of tenants or up to four of five, if necessary,鈥 Day said. 鈥淲e鈥檙e building with the flexibility to put in smaller tenants.鈥
Daybreak has the capacity for up to 28 bays and a high-pressure fire sprinkler that allows for inventory to be stacked high.
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鈥淚 think 蜜柚直播 has a promising economic future and I鈥檓 investing in that,鈥 said Day, who is putting about $8 million into the building, on the northwest corner of the intersection that used to be a car rental site.
The Oro Valley developer鈥檚 previous investments are in the multifamily market and this is his first industrial build.
鈥淢y gut told me the vacancy rate was going to start dropping and there was such a need for newer product,鈥 Day said. 鈥淲hat is available is shorter and older.鈥
He hopes to have the shell completed and a certificate of occupancy by the end of October.
Another major industrial project is being developed at the 蜜柚直播 Airport Commerce Center on Drexel Road, east of 蜜柚直播 Boulevard.
Oregon-based Harsch Investment Properties just closed its purchase of 12 acres of vacant land for $1.6 million.
The company plans a 240,000-square-foot building with 12 bays and the Early Suppression Fast Response sprinkler system that is ideal for high-stacked storage.
鈥淲hile our giant competitors like to build 1-million-square-foot boxes, we like to build smaller with lots of flexibility,鈥 said Jordan Schnitzer, CEO of Harsch. 鈥淥ur competitors build and sell and don鈥檛 care about the community whereas we鈥檙e as concerned about the second tenant and the third tenant as much as the first tenant.鈥
He envisions the building will accommodate businesses such as a pool supply company, tile maker or pharmaceutical operation.
In 2018, Harsch broke ground on the first spec industrial building in the 蜜柚直播 market in nearly 10 years.
The 157,000-square-foot facility at 6850 S. Brosius Ave., just north of the airport, is half leased by Home Depot鈥檚 appliance distribution. Two other leases are being finalized.
In 2018, Oregon-based Harsch Investment Properties broke ground on the first spec industrial building in the 蜜柚直播 market in nearly 10 years. It is a 157,000-square-foot facility.
鈥淚鈥檝e watched 蜜柚直播 for a number of years as it has grown and 鈥 as wonderful as it was years ago 鈥 I think it鈥檚 more wonderful,鈥 said Schnitzer, whose first investment in the local market was the purchase of Butterfield Corporate Plaza, 3700 E. Columbia St., in 2015.
鈥淲e were cautious because it was a smaller market with not a lot of industrial activity and it took a lot longer to come out of the recession,鈥 Schnitzer said. 鈥淏ut, we like to help build employment.鈥
He estimates construction of the new building will take about nine months and 15 months to lease up.
Robert Glaser, an industrial broker with Picor, predicts both new buildings will be occupied quickly.
鈥淣ormally for buildings like Daybreak or the new Harsch build, it might take up to 18 months to lease,鈥 he said. 鈥淚鈥檓 thinking it will be more like three to nine months.鈥
The vacancy rate for industrial buildings is around 5.75% right now as the boom in e-commerce has fueled the need for warehousing and distribution space, he said. Industrial properties are also in high demand from the marijuana industry looking for manufacturing sites.
鈥淭he way the trajectory of the market looks now, when they are finished, the vacancy rate will be in the 4 to 4.5% range but a lot of that product will be functionally challenged,鈥 Glaser said. 鈥淣ew build will be very sought after.鈥
National companies, in particular, aren鈥檛 interested in retrofitting an older building or waiting for new construction.
鈥淲hen they come to a market they are looking for new, contemporary buildings 鈥 it鈥檚 like having good roads and a good workforce,鈥 Glaser said. 鈥淔rom an employment standpoint, the national tenants tend to pay well.
鈥淭hat鈥檚 the benefit new, speculative buildings provide.鈥
A recent report from the National Associations of Realtors says 蜜柚直播 is one of the top 10 commercial real estate markets for 2021.
Investments in the multifamily and industrial markets were specifically cited as promising signs of recovery.
Warehouses, distribution centers set up in 蜜柚直播 to meet online shopping growth
