The economic crisis has deflated activity even in one of the East Valley’s most dynamic growth areas — Chandler’s Price Road Corridor.
Projects that were launched prior to the lending freeze are continuing, but new startups have ground to a halt and new offices are coming onto the market without tenants.
“It definitely has slowed down,” said Christine Mackey, Chandler’s economic development director. “Projects that were under construction are continuing, but it’s very challenging for new projects that need to come out of the ground. They’re trying to find financing, and it’s the credit freeze that has affected them.”
A drive down Price Road south of the Loop 202 reveals a few construction projects still under way. Chandler Echelon, a four-story, 185,000-square-foot office building at the southwest corner of Price and Loop 202 developed by Scottsdale-based Lees Mayfield Co., has just been completed. But no tenants have signed up yet, said Brad Anderson, senior vice president of CB Richard Ellis, leasing agent for the property.
“We do have several interested parties, but we have yet to announce the first lease,” he said. “Hopefully we are going to be doing that shortly.”
Despite the slow leasing pace, Anderson is optimistic about the future of the project because of its location near the freeway and large employers.
“We’re not going to take the view that we’re immune to the negative impacts of the economy, but we have a great project to sell,” he said.
Still under construction at the 20-acre site are a Courtyard by Marriott hotel and a Fairfield Inn. They are expected to be finished by summer.
Nearby at the southeast corner of Price and Loop 202 is another office complex that is ready to open — Allred Park Place, which includes three buildings encompassing 258,000 square feet, developed by San Diego-based Douglas Allred Co. That project has signed its first tenant: Healthways, a Tennessee-based provider of wellness programs. More space is available, said broker Mark Krison, also a senior vice president at CR Richard Ellis.
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Two other phases are planned for the complex. Their timing will be tied to demand, he said.
“I don’t have a crystal ball,” he said. “We’re kind of in uncharted territory. We haven’t seen (economic) situations develop like this before.”
Park Place also is the site of two more hotels under construction — a Hampton Inn and a Homewood Suites — that are expected to be finished in March.
A total of 546 rooms are under construction at the four hotels, Mackey said. That doesn’t include 199 rooms at a new Hilton Hotel opening this month at Frye and the Price Freeway, she said.
She believes the market can absorb the additional rooms, even with the economic slump.
“Chandler’s hotel occupancy rates are very high,” she said. “We have technology companies that have employees who travel, so there is a demand for room-nights for employees in that corridor.”
The only other project under construction in the technology corridor is an 82,000-square-foot Orbital Sciences expansion, part of a 74-acre mixed-use project at the northwest corner of Price and Dobson roads called the Waters at Ocotillo.
Orbital is one of the few companies in expansion mode today, having secured a NASA contract to resupply the International Space Station using a new rocket the company is designing called the Taurus II.
Most other projects are on hold until the economy turns around.
Tempe-based Lawrence & Geyser Development completed a retail center at Downtown Ocotillo in October. But the condo housing component and two office buildings have not been started at the 30-acre mixed-use project and no groundbreaking is imminent, said Spike Lawrence, partner in the firm.
Starwood Hotels is scheduled to begin construction on a six-story Aloft hotel at Downtown Ocotillo later this spring, “God willing,” Lawrence said.
He believes the retail center will be successful, even though it came on the market just as the financial crisis hit. He said the project is about 65 percent leased.
“We have a good base,” Lawrence said. “We are well positioned to make it through.”
The nearby Orbital expansion, which will accommodate 300 new jobs, is a major plus, he said. “Those are real jobs, $90,000-a-year salaries,” he said. “You cannot understate the importance of that.”
Another proposal with an uncertain outlook is a further expansion of the 365 Main data center at Price and Germann roads.
The facility provides data storage services for Charles Schwab and other clients. The San Francisco-based data-services company is in expansion mode and is building a new center in the Bay area, said Miles Kelly, vice president of marketing and strategy.
He declined to say if 365 Main plans to expand the Chandler site, but he said “it would be logical for us to look to grow there.”
In 2008 the company completed an expansion within the existing building that doubled the amount of computing space available for lease to clients, he said. Also the firm increased the power supply to the building, he said.
The company has fared well during the downturn because many businesses are beefing up their technology investments to improve productivity rather than hiring new employees, Kelly said.
“We have actually seen some pretty handsome leasing activity through 2008,” he said.
Wells Fargo, which moved into a $74 million, 400,000-square-foot operations center at Price and Queen Creek roads in 2004, has received zoning approval to add a data center at the site. But spokeswoman Marjorie Rice said it’s “premature” for the bank to talk about actually building the center. That will depend on future needs, she said.
The site has the potential for more than a million square feet of office space, she said.
Another site of interest to city officials is the former Motorola plant at 2501 S. Price Road.
As part of its downsizing, Motorola has moved its Chandler employees to Tempe and is offering the factory — where the Iridium satellite phone system was developed — for sale.
The Chandler City Council discussed the 152-acre site at a closed meeting in December and revealed little afterward.
However, councilman Kevin Hartke said officials “are engaging with someone who is interested” in the property.
Motorola officials declined comment.
Mackey, Chandler’s economic development director, said a developer would like to turn the site into a science and business park, keeping the existing building and adding others around it for high-tech tenants.
She believes the sale could be announced early this year.
One of the last pieces of the Price Corridor puzzle — Park Ocotillo, an office-industrial park at the southwest corner of Queen Creek and Price roads — has obtained zoning approval, but no time has been set to start construction, Mackey said.
City officials also see the corridor as a potential location for solar manufacturing companies. Mackey said economic development planners have given tours of available sites to officers from several firms but none have made any commitments yet.
Tribune reporter Gary Grado contributed to this report.