Scottsdale is focus of commercial building boom

Nearly half the office space under construction in the Valley is being built in Scottsdale, but it could mean the city is in the midst of a “last big push” of new commercial construction.

Experts: Growth will keep Scottsdale housing prices high

View Scottsdale growth graphic

The boom could increase the amount of office space here by more than 20 percent and mean an additional $60 million in annual commercial rent payments, estimated Rick Kidder, Scottsdale Area Chamber of Commerce president.

“That’s pretty staggering,” he said.

Nearly 3.7 million square feet of office space is under construction in the Valley this year, according to the first-quarter MarketView report released last month by real estate services firm CB Richard Ellis. Of that, more than 1.6 million square feet is being built in Scottsdale, said company spokeswoman Kathrine Haug.

More than 1.1 million square feet of office space is under construction in the Airpark business area and north Scottsdale, north of Cactus Road, Haug said. Another 164,000 square feet is being built in central Scottsdale between Cactus Road and Lincoln Drive, while nearly 355,000 square feet of office space is under way from Lincoln Drive to the city’s southern border, she said.

The growing business base here is good for residents because it helps keep property taxes low, but land for new construction is dwindling, said Dave Roderique, Scottsdale economic vitality director. Most of the development is happening in the Airpark, which is getting close to buildout, he said.

“Eventually, we’re going to have an issue in terms of land availability,” Roderique said.

Scottsdale is attractive to business because of its proximity to housing priced for executives, the accessibility of Loop 101 and amenities like golf and restaurants, he said.

“It has to do with where the market is looking at, where people want to be,” he said.

The large number of businesses helps keep Scottsdale property taxes an average of 38.5 percent lower than other Valley communities, he said.

“A portion of that is attributable to the fact that we have a very high business base here,” Roderique said. “It’s very positive in terms of jobs for area residents and financially for the city. If you live in a community with a large percentage of business, the businesses bear a large percentage of (property taxes).”

Kidder said he’s not surprised that businesses are clamoring to build offices here.

“Place matters. A Scottsdale mailing address is of great importance,” he said. “The Airpark quite frankly has become the top business center in the state.”

Kidder said Scottsdale may be in its last big push of office construction. Once the vacant land has been built out, which could happen by 2020, many properties could be redeveloped, he said. The process is expected to start with the west side of the Airpark, he said.

“There’s already redevelopment at work,” Kidder said.

One example is Scottsdale Crossing, a 28.6-acre, 1.2-million-square-foot development that will replace the existing Dial Corp. offices at 15101 N. Scottsdale Road. The project is expected to include residences, restaurants, a park, shops, offices, two parking structures, a boutique hotel and a movie theater.

“You’re going to see more and more of that,” Kidder said of redevelopment.