Following the Land Panel was the Office/Industrial Panel. Key characters from this group were: John DiVall, Liberty Property Trust; Kurt Rosene, The Alter Group; Dave Warren, DW Capital Partners; moderated by Craig Coppola, Lee & Associates.
Craig did a good job leading the discussion and tried to get the inside scoop when he could from the panelist when the discussion would turn to specific projects in town.
Here are a few of the bullet points:
- The Build-to-Suit Premium today is about $2-3/SF/Year vs retrofitting a property
- Office space is becoming more shared environments and more workers are mobile
- Anchor Center – 350K SF office building – was renovated and has completed over 110K SF of new leases since renovation
- Infill locations are still key because of the live/work/play demand from employees
- Tech is leading the comeback in office – this user likes to “fall out of their cube/desk and land in their bed”
- In sourcing is the new trend in Industrial Manufacturing
- Very few Corporate HQ’s in Phoenix – typically have been organically grown (ex Medicis, US Airways)
- Discussing of the Liberty Property Trust acquisition of the 100 acres in Tempe and the plans for back office space. The tenants they are attracting are going to be existing tenants wanting to relocate to new facilities vs new tenants from outside the market
- Trend from tenants is still the upward movement from B to A buildings. A property vacancy is about 17% vs market of 26%
- Corporate America has cash and will take advantage of a deal
- 5K SF Office and 30K SF Industrial users are still very weak (small business)
- Labor costs are going up
- Construction costs hit a bottom in 2010 are slowly inching up
- 2012 – most expensive office sale was the Max at Kierland ($300/SF), the cheapest office building sale was $7/SF
- Parking Obsolescence is occurring in the office stock in Phoenix. New office buildings were planned at 4:1,000; now they need to be 6:1,000. Prediction is that older buildings will just never fully lease once the parking is absorbed by existing tenant mix. B/C office buildings will have to become something new.
- Prediction is that 2015 will be the Landlord driven market
- Areas of interest: N Tempe, N Scottsdale, Central Scottsdale, Camelback corridors
If you are there, what did you takeaway?