PHX East Valley Fueling Arizona’s Economic Growth in 2016

Known for its pro-business climate, high quality of life, diversified economy with a skilled workforce, robust infrastructure and public-private collaboration, the PHX East Valley region continues to experience significant growth fueled by emerging local business and national corporate relocations.


Comprised of the cities of Chandler, Gilbert, Mesa, Tempe, Apache Junction and Queen Creek, the region offers a labor force of more than 750,000 workers highly skilled in scientific, technical, healthcare, and professional services and comprises 42 percent of the total workforce in the metro-Phoenix area.

east valley fueling

Forbes recently ranked Arizona as the best state for future job growth spurred by an increase in population fueling jobs in healthcare and consumer services, as well as affordability over the West Coast. Work commutes are short and easily accessible through major highway and interstate routes, while light rail continues to expand in the PHX East Valley adding thousands of riders per day and setting in motion a revitalization process in Mesa, spurring both residential and commercial development activity.


Decades of aviation investment and planning has also made PHX East Valley an optimal landscape for aviation, aerospace, defense and other high-tech industries to thrive. The region has become a key point of commerce in the Southwest boasting an array of assets that include industry giants like Boeing, MD Helicopters, Honeywell, Orbital ATK, Able Engineering, two commercial service airports and two of the busiest general aviation airports in the country.


“Together, public and private sectors continue to create new sources of growth in well-performing industries in the region that include high-tech, finance, manufacturing, and healthcare,” said Mike Hutchinson, interim president for East Valley Partnership. “As businesses make the decision to relocate to PHX East Valley, the economic transformation continues to reignite the real estate industry,” he said.


According to a 2015 fourth quarter Cushman & Wakefield Office Report, the PHX East Valley represented the majority of significant lease and sales transactions in the metro Phoenix area.


The Tempe north submarket had the greatest net absorption with more than 616,000 square feet, accounting for 41 percent total occupancy growth in the market. The gain is largely due to State Farm occupying its first building of 375,000 square feet located in the 2 million-square-foot, mixed-use Marina Heights, located along Tempe Town Lake. The five-building campus is the largest office project in Arizona’s history and will house up to 10,000 employees as a regional hub for the insurance company.


“The Tempe North submarket continues to be the overall leader for office space in the Valley,” said Patrick Devine, senior director with Cushman & Wakefield. “During the fourth quarter of 2015, that one submarket accounted for 41% of the total office absorption in the metro area, recording one of the lowest vacancy rates in metro Phoenix. The area’s ability to attract large corporate users such as State Farm and the build-to-suit office campus for Northern Trust at Discovery Business Campus, generated the bulk of new construction in the Valley during 2015.”

Seattle-based Amazon also leased 60,000 square feet in Tempe, at the ASU Research Park. Amazon will use the Class A office space to support its customer fulfillment network and marks its first entry into the East Valley. Tenants at the park include GoDaddy and Avnet Technology Solutions.

Devine goes on to add, “We are continuing to see developers look at infill locations and develop new or renovate existing properties to meet the demand for Class A and creative office space. Prime opportunities for these new projects can be found throughout the East Valley.”


“East Mesa presented a great opportunity in 2015 because of a lack of large distribution space in an industrial submarket that provided direct access to multiple freeways,” said Cushman & Wakefield Industrial Services Associate, Phil Haenel. Pacific Realty Advisors developed two spec buildings at Broadway 101 Commerce Park, a 148,000-square-foot facility and a 65,000-square-foot building that both completed at year-end. “The activity on both buildings has been really strong,” Haenel said, “and at the same time we have seen increased activity with smaller users in the market for space less than 10,000 square feet, in part because of the resurgence of construction activity.”


“While office users have historically focused on locations with close proximity to amenities, we are now seeing that same interest from industrial users in the East Valley market,” Haenel added. “Their employees want the same convenient access to restaurants and retailers.”


Chandler is another community experiencing a surge in commercial development activity with more than 1.5 million square feet of new space under construction and another 1.7 million square feet in the planning stages. There is also growing interest in redevelopment with the city launching an adaptive reuse program to support continued investment downtown and in other established neighborhoods. “Chandler is one of the most stable destinations for private sector capital investment in the United States,” said Chandler Mayor Jay Tibshraeny. “We are one of a select number of municipalities to achieve a AAA rating from each of the major bond rating agencies, which signals to developers and business leaders that an investment in Chandler is a safe and smart decision.”


Rivulon is a 250-acre mixed-use development in Gilbert that upon build-out will include approximately 3 million square feet of Class A office. In December 2015, Rivulon completed a four-story, 125,000-square-foot Class A spec office building as well as the new corporate headquarters of Isagenix International, a developer and manufacturer of products for the health and wellness industry and one of the fastest-growing companies in North America. In addition to office, Gilbert has seen a tremendous amount of Class A industrial growth with developments like Park Lucero, a 631,000-square-foot, 43-acre development suited for tenants 15,000 square feet to 164,000 square feet.


“The business-friendly and pro-innovation environment that PHX East Valley offers is a diverse commercial and residential real estate market that meets the demands of Fortune 500 companies, C-level executives, residents and families through mixed-use developments and master-planned communities,” Hutchinson said.


The region is also home to Arizona’s top-selling master-planned community that ranked amongst the Top 10 nationally, Eastmark in Mesa by DMB. At 3,200 acres, the community is currently home to more than 2,000 residents. Located in a tech corridor, DMB was instrumental in helping attract Apple to the Mesa community in 2015, for a worldwide $2 billion data center to eventually house 150 executive-level Apple employees.

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