Colliers International’s annual report shows growth plans for the Scottsdale Airpark commercial real estate market while undergoing transitions as plans are underway for the airport.
Jim Keeley, founding partner of Colliers International’s Scottsdale office, released his annual Greater Scottsdale Airpark 2030 Report for last year. The 2030 Report, first published in 1989 as the 2010 Report, provides a current and historical perspective on economic activity, growth and trends for the Greater Scottsdale Airpark, according to a press release.
“This past year brought an overall fresh attitude to the airpark that embraces innovation, live/work/play and the transition to a millennial workforce,” said Keeley, SIOR, CCIM, in a prepared statement.
“The newly built ‘Sneaky Big Studios’ and the influx of technology companies are creating a dynamic, new energy to the area.”
Among the biggest changes in the airpark was the city’s agreement to tear down the airport terminal and renovate with two new hangars and an updated terminal.
“This modernization of facilities will ensure that the Scottsdale Airpark will remain a destination of choice for private and corporate aviation,” Mr. Keeley added.
The recession cycle allowed the City of Scottsdale time to implement other new transportation decisions, including roundabouts on Hayden Road and Raintree Road.
These improvements will also solidify the future of the airpark as a thriving business hub, the release said.
“This real estate cycle is quite different from those of the past 50 years,” Mr. Keeley said. “We have far less vacant space because of job growth which has driven up the price of buildings. For the first time in Arizona’s economic history, this growth in employment was not driven by residential construction.” According to the report, residential construction is expected to improve in upcoming years, which will increase commercial and industrial property values.
“We have experienced very little construction in the past seven years and our inventory has been absorbed by schools, insurance companies, financial institutions, churches and other users. Significant absorption and low vacancy has driven up rental rates, which we anticipate continuing,” noted Mr. Keeley.
The airpark posted a year-end 2016 vacancy rate of just 10.3 percent, the lowest since 2006. Approximately 3,075 companies operate in the area, employing more than 56,000 people, the release said. Approximately 38 percent of the commercial space in the airpark is office buildings and another 27 percent is industrial/flex facilities.
“The Airpark continues to attract leading companies, either with their headquarters or subsidiaries,” said Mr. Keeley. “It has been reported that eight billionaires operate in the Greater Scottsdale Airpark.”
A number of sizable transactions took place in or near the airpark in 2016. Optima Kierland, a 12-story, 220-unit residential project is under development. The 202-unit Sunset Commons apartment community is underway and residents will take occupancy in 2017. Additionally, Bahia Drive will be the future home of an exciting three-story live/work condo community called Soho, the release added. On the retail side, Potato Barn opened its new furniture showroom on the Loop 101 freeway.
The office market received some very noteworthy deals in 2016. Scottsdale Quarter opened its new six-story office building and is expected to lease up quickly with the highest rents in the Airpark. YAM Holdings moved to a new 60,000-square-foot modern headquarters building. Van Trust Real Estate relocated its corporate headquarters from Phoenix to the Greater Airpark Perimeter Center.
According to the Colliers report, the airpark can look forward to an exciting 2017 as the Live/Work/Play evolution will birth more than 800 new apartment and condo owners residing in the area. A group of Airpark stakeholders want to “brand” the airpark employment base with the area expected to attract more aerospace, defense and technology focused companies.
