AZ Big Media Here’s how the sale of 10 West Commerce Park broke Buckeye’s record


Phoenix-based developer Creation announced on June 22, 2022 the sale of 10 West Commerce Park in Buckeye for $130 million – another high point for industrial construction deals within the municipality. The 860,602 square foot facility — which now houses a Funko distribution center — was sold to Intercontinental Real Estate Corporation in a joint venture with a subsidiary of Cohen Asset Management.

“This transaction is significant because it cements Buckeye as the premier emerging industrial submarket in the Southwest Valley for employers,” said Grant Kingdon, Vice President of Transactions for Creation. “Investors and job facility developers have taken note of the potential that exists in Buckeye and will continue to invest in the community which in turn will attract top employers to the area for many years to come. “

Will Strong, vice president of Cushman & Wakefield, notes that the origins of the deal go back to another Buckeye transaction that his company represented. Discount chain Five Below has chosen the city to house its western US distribution center, building an 850,000 square foot facility that is expected to create 290 jobs in the community over five years.

“Creation knew there was all this great tenant activity, so they bought the land to [10 West Commerce Park] next to Five Below,” he says. “Funko showed up and leased it for 10 years, and they’re moving all of their western US operations to this building. And then we came in with an offer from Cohen Asset Management – ​​which has always been one of the largest and most active industrial buyers in the market – and they bought it and we closed after the completion of the building.

Tier 1 market

In a metropolitan area like Greater Phoenix – which to the outside observer looks like a contiguous city – what’s good for one municipality often helps others. Industries tend to cluster, as evidenced by the growth of the electric vehicle sector in the East Valley and Pinal County. As more businesses see Metro Phoenix as a viable place to do business, communities including Buckeye are thriving.

“The Phoenix Metro benefits from a handful of tailwinds that are unique in the market,” says Kingdon. “The first is our proximity to the land-constrained and expensive Inland Empire. As rental rates and land prices in the Inland Empire continue to climb at record rates, tenants are turning to other markets for cost-effective options Metro Phoenix (Southwest Valley in particular) is the most logical option for moving from the Inland Empire.

10 West Commerce Park is an example of this dynamic, having not only broken the record for the highest gross sale of industrial buildings in Buckeye, but was also the first in the city to be built speculatively. Without evidence of sufficient demand, speculative construction can be a risky proposition.


READ ALSO: Here’s why West Valley’s $142.5 million land deal took decades to close


“Phoenix always had a reputation as this booming housing town,” Strong says. “But all of these companies have come here in the last 10 years. We used to do 5 million square feet of net absorption. Last year we did 27 million feet, and we’re going to top that this year. My intuition tells me that 70% of what’s on the market right now is engaged in some way, whether it’s officially leased by a company or more likely than not a user will take the building. ”

Many users, Strong continues, want to be as close to California as possible, but they also need the workforce, a pro-business community and employee housing. He describes Buckeye as “ground zero” for businesses looking for locations that fit that description.

“Phoenix is ​​now considered a primary market,” Strong notes. “We have all the diversity in the economy that you would expect from a very mature market. [Capitalization] rates and prices move in this interest rate environment, in the same direction as other primary markets.

Kingdon agrees, adding, “Despite the high market volatility, industrial building sales in Phoenix will continue to trade. Phoenix has evolved into a Tier 1 coastal gateway market that continues to attract top-tier investors. »

Can it last?

As more businesses choose to locate in the valley, supply and demand effects have shaped the market. A Q2 2022 Industrial Market Report from Kidder Matthews notes, “Investors are bullish in the Phoenix industrial market and strong competition from buyers has pushed selling prices to a record high of $171. [per square foot] in [the second quarter]. The pool of buyers has deepened in the local market, especially with California-based investors seeking affordability and value relative to their own state.

Even with high prices, Strong believes Greater Phoenix is ​​still well positioned to attract more investment. “Rents have so much more room to grow, so there’s a lot of intrinsic value in these buildings,” he concludes. “Buildings and land sell for two or three times in Southern California and elsewhere, so if you compare Phoenix to some of these other markets, it’s not even close. Even the prices are going up little by little, there’s still a ton of wiggle room.

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