Despite a slowdown seen across the Phoenix market, companies are still relocating to Phoenix from California and elsewhere, driving value and demand for free-standing industrial assets.
PHOENIX, Ariz. (September 21, 2023) – DAUM Commercial Real Estate Services, announces the sale of a 23,443 square foot industrial building in the Phoenix, Arizona submarket of Gilbert for $5.5 million. Dan Casey, Associate Vice President, of the Daum Commercial Phoenix office represented the seller in the transaction.
Owner/user, investor, and tenant demand remains strong in the Phoenix market with limited Valley wide inventory of free-standing buildings between 10,000 to 50,000 square feet. According to CoStar, vacancy rates for existing single-tenant buildings in this size range hover around 2.8%.
“Despite the increases in interest rates and ongoing uncertainty, companies are still relocating to Phoenix from California and elsewhere, driving the price and demand for properties like this,” says Casey. “This property attracted multiple local and out-of-state investors, tenants, and owner/users almost immediately. Within the first week of listing, the seller had multiple lease and sale options, ultimately awarding the bidding process to a Phoenix based owner/user at an above asking price.”
Being willing to go the extra mile is a hallmark of Daum Commercial’s approach to real estate transactions. The prior tenant of the warehouse property effectively abandoned their lease. With the owner based in Southern California, Casey served as the owner’s representative not just in determining the value and negotiations with prospective buyers, but also with the contractors and other agents who were tasked with cleaning and preparing the property for sale.
“Into this chaos stepped Dan Casey, who had previously secured an attractive long-term lease on my other warehouse in Gilbert,” says Larry Uhl, CEO of Sunstone Rover LLC, and seller of the property. “Through the following six months, Dan served multiple roles securing the building, orchestrating the cleanup, and meeting contractors or other agents with no complaints and no compensation. I cannot count the number of times he went to the warehouse as my representative. Identifying an extremely well-suited buyer for the building, Dan led the due diligence and documentation phases of the sale and was able to close on the exact date indicated in the term sheet, a rarity these days.”
The property is located at 1416 West San Pedro Street in Gilbert, Arizona, a growing submarket in the southeastern Phoenix Metro area. Over the past 20 years Gilbert has been one of the fastest growing towns in the United States. The town’s population grew 28.5 percent between 2010 and 2020, according to the 2020 Census. Gilbert is also a wealthy and well-educated suburb. The reported median household income is over $104,000, higher than both the Arizona and national medians, and the population is well educated with over 47 percent attaining a college or graduate level education. These demographics highlight why Phoenix has been such a hot bed of commercial real estate the past few years. From office to industrial to multifamily, there have been major investments made in the Phoenix area, some of which is currently driving an overabundance of supply. A drop in net absorption to 835,106 square feet highlights the weakened overall demand for new space. Sales volume on the year, while 78 percent higher in the Q2 than Q1, is still down 46 percent compared to the first half of 2022, according to Daum Commercial’s Phoenix Industrial Q2 Market Report. One particular positive note on current market conditions include an ongoing rise in the median per square foot price for Phoenix-area industrial properties to $188.36.
With the sale, the building will become the headquarters of Swain Electric, a Gilbert-based electrical contractor. The buyer is a family-owned corporation and was represented by Blake Hardison at Ike Commercial Real Estate.