EXEC-DESK: PHOENIX MARKET UPDATES FROM RISE48 EQUITY CEO

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A look into the recent trends in Arizona, including expansion projects and growth in job markets

Arizona is a well-loved state as many people praise it for its multiple benefits, including its excellent workforce and job market trends. Here’s a review of the recent development in Arizona rankings, manufacturing, industrial expansion, and job market trends.

Statistics for Arizona and its cities

According to the Arizona Commerce Authority, the unemployment rate in Arizona is 3.7% and -0.5% year-over-year. The year-over-year change in non-farm employment is +3.4%, and Arizona is the 2nd fastest growing population in the nation.

Additionally, Tempe has been ranked the no.2 best place to reside in the US. According to AZ Big Media, the digital platform Money recently announced its yearly ranking of the best places to live. The list features 50 cities and towns that share the characteristics of having affordable homes, strong labor markets, and economic, racial, and cultural diversity. According to the list, Tempe is in second place for the best place to live.

people walking and biking in downtown Phoenix, Arizona

According to AZ Big Media, Phoenix is among the ten most expensive cities for first-year homeownership. In the US, mortgage rates have risen over three percentage points for 2022 reaching new highs above 6.0%. The result of this is that new homebuyers will be faced with a significant increase in home prices, driving many to rent. While homeowners may decide to refinance during their mortgage, which will help them secure a lower rate, most experts say this will not likely cause the rates to drop in 2023.

City of Phoenix at Sunset
New jobs in Arizona as a result of expansion in the area

According to Andy Blye of the Phoenix Business Journal, Software company BatchService within the real estate sector continues to grow rapidly since it was founded in 2018 and recently got its own HQ building in Tempe.

BatchService currently employs about 300 people, about 70 of which are in the Valley. While the company is only occupying the first floor right now, Jess Burrell, co-founder of BatchService, says the Tempe office has enough space to support as many as 400 people in the coming years. 

In another  Phoenix Business Journal by Brandon Brown, we learn that Sky Harbor will get $194 million over the next five years to be used for making a new taxiway.

The announcement was made by the Mayor of Phoenix, Kate Gallego, US Rep Greg Stanton, along with adviser to President Joe Biden and the infrastructure coordinator for the White House, Mitch Landrieu.

The entire project is expected to cost $260 million. The government officials say the project will strengthen the economy once it is finished and help the labor market during the construction process. Landrieu says this one project will create 3000 jobs.

According to Gulfstream, Gulfstream increases Mesa service capacity with a new hangar space and adds jobs. A new hangar space has been added adjacent to Gulfstream Customer Support’s new service center in Mesa, Arizona, which continues to move towards completion in the next year at Phoenix-Mesa Gateway Airport. The new hangar is at the SkyBridge development, which is at the airport and adds to the hangar space that Gulfstream established at the facility in March.

 The new service center is 225,000-square-foot/20,908 square-meter and comprises a more than $100 million investment. Over 80 employees were trained and hired to support customer aircraft at the facility. Gulfstream expects that number to increase to over 200 once the larger facility is complete.

Gulfstream Plane on a Runway

While according to Ron Davis of the Phoenix Business Journal, Northrop Grumman has 1000s of employees working out of the Chandler facility and has plans to employ hundreds more in Arizona. Northrop Grumman moved into its new office at 1575 S Price Road in the second half of 2019 and had the space to accommodate 2200 people.

Northrop Grumman has almost 2500 employees who work out of the Chandler facility. The company wants to fill more than 300 open positions across Arizona, nearly 200 of which are for the Chandler Operations. The company says the growth results from Northrop Grumman gaining significant contract awards.

Old Town Scottsdale Arizona

Audrey Jensen of the Phoenix Business Journal says the original hotel project was called Crystal Lagoons and had the initial goal of being open ahead of the February 2023 Super Bowl. However, the timeline went far beyond this due to supply chain and labor shortage delays, plus the resort changing ownership and becoming a new concept. It is about 30% completed and is expected to provide 1800 jobs in Glendale at full build-out.

Lastly, Audrey Jensen of the Phoenix Business Journal says almost two years after its original plans got the city’s approval, the developers of a food innovation center and international market in south Phoenix are ready to begin construction.

The 1.2 million-square-foot facility will have a produce distribution center, community park, year-round farmer’s market, new retail buildings, and business park for agricultural education and research facilities. It is expected to create 1500 jobs. The project, worth more than $200 million, will be constructed on 140 acres at Del Rio’s former landfill site and former city park south of downtown Phoenix.

Manufacturing and expansion in Arizona

There’s no slowing down for Arizona. Anne Cosgrove of Business Facilities reports that Arizona is strategically situated in the country’s southwest region. The state is connected to many major markets throughout the region via major interstates, transcontinental and interstate railroads, and freeways.

This infrastructure allows for a highly effective flow of people and products, such as one-day truck haul routes between Arizona and states like California, Nevada, Colorado, Texas, New Mexico, and Utah, plus deliveries in and out of Mexico.

The state’s available workforce is skilled and abundant and ready to meet the needs of companies in growing industries.

The state’s renowned universities and community colleges are graduating some qualified students who are prepared to enter the skilled workforce.

Arizona Sunset

According to Audrey Jensen of the Phoenix Business Journal, year over year through August, Commercial Edge data reveals that Phoenix witnessed a 7.2% increase in average rents and was ranked fifth in the US for in-place rent growth for markets with and without ports. In-place or contract rent is rent on existing leases at a property.

According to the report, Phoenix has a 3.8% industrial sector vacancy and continues to attract investors and tenants for reasons like strong population growth and a lack of natural disasters. Limited availability and supply in Southern California markets have also overflowed into the Valley.

According to AZ Big Media there is more development that will help Arizona’s drought. The article says Kyrene Water Reclamation Facility, which was constructed in the late 1980s and was closed down by budget cuts in 2010, is being returned online as part of Tempe’s response to the drought that is currently taking place. The plant will collect and recycle wastewater utilized mainly to recharge aquifers beneath the city.

Phoenix Sky Harbor Airport Termonal

According to Erin Edgemon of the Phoenix Business Journal, Casa Grande cemented its entry into the semiconductor industry with Chang Chun Group recently beginning construction on its $300 million plant. It is expected to employ over 200 people when it’s opened in 2023.

The Taiwanese company is constructing a 540,000-square-foot distribution and manufacturing facility on approximately 84 acres near the northwest corner of Clayton and Burris roads. The facility will create electronic-grade chemicals for Taiwan Semiconductor Manufacturing Co., which is constructing a $12 billion fabrication facility in northern Phoenix.

 AZ Big Media says Phoenix-Mesa Gateway Airport chose McCarthy Building Companies as its general contractor to start constructing a new 30,000-square-foot terminal addition, which will replace a temporary structure that has been around for 13 years.

The project is worth approximately $25 million. It is partially funded by a federal Bipartisan Infrastructure Law (BIL) grant. It will give Gateway Airport a modern, larger, energy-efficient, and ADA-enhanced commercial passenger facility designed to accommodate future growth. Currently, the airport’s terminal contains ten gates. However, the current 10,000-square-foot temporary structure limits overall capacity and efficiency.

Also, according to Ron Davis of the Phoenix Business Journal, another almost 2 million square feet of industrial space is planned near the Phoenix-Mesa Gateway Airport. The Mesa City Council approved the subdivision plat on October 3 from developer Scannell Properties, based in Indiana. They were approved for a nine-building project called Mesa Gateway 202. It will include approximately 1.8 million square feet of new industrial space and the next 100,000 square feet to make new office space in the southeast corner of Warner Road and Loop 202.

Lastly, According to Audrey Jensen of the Phoenix Business Journal, the city of Surprise has historically been known to residents as a retirement community. However, as Phoenix Metro keeps garnering attention and industries expand to the state, Surprise, which has a population of about 150,000, is witnessing a shift in its housing, population, commercial offerings, and image. Over the last decade, Ottawa University constructed its campus there, adding 100 more students. The city’s spring training facility has tens of thousands of visitors annually and new industries like healthcare. Plus, more homes are being built.

downtown phoenix arizona street

Rise48 Equity has completed $1,725,751,000 in total transactions since 2019. We currently have $1,285,186,000 of Assets Under Management, all in the Phoenix MSA.

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