Between 1976 and 1987, the focus of Chandler’s economy evolved from cotton to the electronics manufacturing industry that employed 70 percent of the city’s workforce.
That shift toward tech has only intensified in the ensuing 30 years as Chandler’s economy has become increasingly reliant on microchips.
And no area better exemplifies the city’s economic evolution than the Price Corridor, the stretch of land that is home to technology companies like Intel, Orbital ATK and PayPal.
Despite the presence of those heavy hitters, much of the land in the corridor still betrays the city’s agricultural past. Acres upon acres of fading former cotton fields run up against new corporate campuses.
That landscape is rapidly changing, though.
And if market projections play out, those open fields will become much less common over the next several years as demand for more class-A office and industrial space reaches fever pitch in Chandler.
The vacancy rate for industrial space in Chandler is 5 percent, and the vacancy rate for office space is a similarly low 9.9 percent, according to the latest CoStar statistics provided by the city.
Those are some of the lowest numbers in the Valley, indicating that the city is becoming a preeminent destination for businesses.
Much of that can be attributed to an environment in the East Valley that is attractive to employees due to the concentration of quality schools, housing and lifestyle amenities.
“The Chandler-Gilbert-Mesa-Tempe submarket is a highly desirable place for employees to live,” said Mark Stapp, Fred E. Taylor Professor of Real Estate at W.P. Carey School of Business at Arizona State University. “Employers want to locate in places where employees want to live.”
Growth in the area is buoyed both by interest from new companies moving to Chandler and expansion by existing businesses.
That growth is “underpinned by the fact that we have a very strong economy,” city Economic Development Director Micah Miranda said.
Microchip Technology is adding 260,000 square feet to its campus, and CyrusOne is continuing the buildout on its 2 million-square-foot data center at the Continuum business park, Miranda said.
The Price Corridor, in particular, has ready access to a large employment pool due to its location near the freeway system, which gives the area regional accessibility to amenities and employees in neighboring cities such as Tempe and Scottsdale.
“The most compelling factor is the amount of new employment coming to the area, and the amount of demand for big quality office space, as evidenced by the quality tenants coming to the area,” said Phillip M. Breidenbach, Colliers executive vice president, who represents several properties in the Price Corridor.
Mammoth Park Place underway
Developers are eager to meet the growing demand for space, with multiple major projects set to come online in the near future.
Arguably the most significant of these developments, in terms of sheer size, is Park Place, the 170-acre office and flex project from Douglas Allred Company that straddles both sides of Price Road just south of the Loops 101-202 interchange.
The project is already well underway, with most development concentrated in the central phase off Spectrum Boulevard and some retail and hotel development along Price Road.
The project’s existing office buildings are 100 percent leased by tenants that include Orbital ATK, Tivity Health, Infusionsoft, Argosy University and embattled pharmaceutical company Insys Therapeutics.
But the site still contains massive tracts of empty land.
“Last year, building 10 leased to Orbital ATK … (and) Allstate is committed to building 4,” said CBRE Executive Vice President Brad Anderson, who represents Park Place. “That was a big win for Park Place.”
Activity is expected to ramp up over the next several months, he said.
Allred plans to break ground on roughly 1 million square feet of new office space this year and already is in lease negotiations for a substantial portion of that space, though Anderson declined to identify the suitors because of ongoing negotiations.
“There is a tremendous amount of positive growth in this market that hasn’t, quite frankly, been seen” in some time, Anderson said.
A Marriott hotel and conference center are also under construction at Park Place across the street from a retail building that already has secured Starbucks as a tenant.
Fashion Center surrounded
Activity also has picked up north of the freeway interchange in the area surrounding Chandler Fashion Center.
Rockefeller Group has developed three buildings totaling over 240,000 square feet in its Chandler Corporate Center project just west of McClintock Drive and north of Chandler Boulevard.
Chandler Corporate Center IV, the last of the three buildings, secured a subsidiary of Enterprise Rent-A-Car as a tenant for 43,000 square feet, which amounts to about half of the building.
“(Rockefeller) just keeps building them and filling them, and now they’re at the point where they are just out of land,” said Breidenbach, who represents the property.
VanTrust Real Estate’s One Chandler Corporate Center is located right down the street from the Rockefeller development and its first phase is currently under construction. VanTrust expects to bring in tenants by midsummer.
The first phase will include a 117,000-square-foot class-A office building.
The timeline for future phases of the project – located on a 26-acre site – will be determined by market demand, Breidenbach said.
While it may seem as though these projects are popping up all at once, many actually have been in development for some time.
“A lot of these projects have such a long lead time that the general public doesn’t realize they have been in the pipeline for several years,” Miranda said.
With the flurry of activity, it is easy to forget that less than a decade ago, the Price Corridor was much less active than it is today as the fickle and cyclical nature of the real estate market wreaked havoc on one of the city’s most prominent undeveloped sites.
In fact, the rapid development of the mixed-used project Chandler Viridian is a stark reminder of how much of the market can change in a few short years.
Area recovered from recession
Chandler Viridian, which will feature a high-end office building, retail space, a new hotel and luxury apartments, is located on the same site next to Chandler Fashion Center that once housed the infamous Chandler Elevation project.
An ambitious condo and hotel development, Chandler Elevation devolved into nothing more than an eyesore when its developer ran out of funding in 2006.
The concrete shell of the project sat vacant and unfinished on the site for years due to a complex web of legal disputes between the developer and lenders.
Eventually, international real estate development company Hines purchased the property for just $8.25 million in 2014 with plans to build the Chandler Viridian mixed-use complex. It knocked down the old shell in November 2015.
The new project already has surpassed its predecessor as the Broadstone apartment complex, Cambria hotel and some retail space are open for business.
Jerry Roberts, executive managing director at Cushman & Wakefield, noted that prior to the recession in 2008 “everything getting built (in the Price Corridor) was getting gobbled up.”
He said the same attractions that made the region popular back then – solid employment and a residential base – are attracting employers back to the region post-recession.
Hines plans to complete the shell of the office building at Viridian in November and bring in the first tenants at the beginning of January 2019.
The building will feature modern class-A amenities like high ceilings, energy-efficient glass and heavy parking ratios with a garage on site, Roberts said.
Roberts, a representative for the property, does not see Viridian falling victim to the same market pressures that took down Elevation. He said Elevation was actually a solid concept that was ahead of its time.
“If you’re going to have an urban mid-rise residential project in Chandler, that was the place to do it, but it was at the end of that cycle,” Roberts said. “Probably, in hindsight, it was 10 years too early.”
Some sites still waiting
Despite the progress being made at Viridian and other projects throughout the Price Corridor, not every site is seeing a flurry of activity.
Rockefeller Group, the same company behind Chandler Corporate Center, also owns an over 20-acre plot of land at Chandler Boulevard and Price Road.
The company initially entered into a development agreement with the city in 2011 to develop an office complex on the site.
The development agreement had built-in deadlines for the company to meet specific development milestones and the city has since extended those deadlines.
The most recent extension, approved by city council last Nov. 9, established that Rockefeller must submit construction plans to city for the first building by May 31. It further states that the company must receive a certificate of occupancy by May 27, 2020.
Representatives for the property would not confirm Rockefeller Group’s future plans for the site, which is currently listed for sale on Collier’s website.
Overall, the real estate market in the Price Corridor is a strong one, with an even balance of building development and tenant demand. Despite the influx of new space opening in the area, there currently is little risk of overbuilding.
“This entire marketplace has been operating almost in equilibrium,” Stapp said. “You are not seeing a lot of speculative development, but the spec that is there is very well thought out.”
He added that the Price Corridor and Chandler in general could see significant effects from the South Mountain Freeway, which will give the area access to the employment pool in the Southwest Valley and access to new employment opportunities when it opens at the end of 2019.
“There may be an opportunity for redistribution of economic expansion and employment opportunities for people on the west side now,” Stapp said. “You may get more fulfillment and distribution opportunities in the Southeast Valley instead of where they are traditionally in the West Valley.”